Income Tax Appellate Tribunal - Jaipur
Shri Siddharth Goel, 429A, Kutchery ... vs Acit Circle-2, Ajmer, Circle-2, Ajmer on 13 January, 2020
vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES 'B' JAIPUR
Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k
BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 744, 745 & 1097/JP/2019
fu/kZkj.k o"kZ@Assessment Year : 2011-12, 2012-13 & 2014-15
Siddharth Goel, cuke Assistant Commissioner of
429A, Kutchery Road, Vs. Income Tax,
Ajmer-305001 Circle-02, Ajmer
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABFPG0284Q
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri Sunil Porwal (CA)
jktLo dh vksj ls@ Revenue by : Shri K. C. Gupta (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 09/01/2020
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 13/01/2020
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. These are three appeals filed by the assessee against the order of ld. CIT(A), Ajmer dated 22.04.2019 & 21.08.2019 sustaining the levy of penalty u/s 271(1)(c) for A.Ys 2011-12, 2012-13 & 2014-15 respectively. Since the common issues are involved, all these appeals were heard together and are disposed off by this consolidated order.
2. During the course of hearing, the ld. AR submitted that the penalty has been levied by the Assessing officer on estimation of rental income of Chitrakoot Place wherein the Assessing Officer has initially estimated the rental income at Rs. 4,43,496/- which on 1 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer appeal has been reduced by the ld. CIT(A) to Rs. 2,50,000/- for A.Y 2011-12. Similarly, for A.Y 2012-13, the AO estimated the rental income at Rs. 5,50,000/- which on appeal has been reduced to Rs. 3,50,000/- by the ld. CIT(A). Similarly, for A.Y 2014-15, the AO has estimated rental income at Rs. 1,10,000/- which on appeal has been reduced to Rs. 66,000/- by the ld. CIT(A). It was submitted that the element of conscious concealment and inaccurate particulars are not present in the instant case as there is no direct evidence to show or some circumstances found from which it can be gathered that omission was attributable to an intention or desire on part of the assessee to hide or conceal his income. It was submitted that there is no positive act of concealment on part of the assessee and thus penalty should not be levied and reliance was placed on the decision of Hon'ble Punjab & Haryana High Court in case of Harigopal Singh vs CIT (2002) 258 ITR 95. It was further submitted that in the show-cause notice, the AO has not specified the limb on the basis of which penalty was proposed to be levied and the AO has simply issued a pre-printed form without striking off the unnecessary portion of notice which shows non-application of mind by the AO and reliance was placed on the decision of Hon'ble Karnataka High Court in case of Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565.
3. It was further submitted that for A.Y 2011-12 and A.Y 2012- 13 , the AO has also levied penalty on disallowance of depreciation on an air conditioner. It was submitted that mere disallowance of claim of depreciation cannot form the basis for levy of penalty by the Assessing Officer and reliance was placed on Hon'ble Supreme Court decision in case of Reliance Petro Products. Further, for A.Y 2 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer 2014-15, it was submitted that the Assessing Officer has levied penalty on non-disclosure of interest income of Rs. 4579/-. It was submitted that the said amount represent the TDS on interest income and the assessee has inadvertently reported the net interest income basis the amount received/credited in his bank account instead of gross interest income. It was accordingly submitted that being an inadvertent mistake, the same should not form the basis for levy of penalty.
4. Per contra, the ld. DR submitted that it is not correct to say that the rental income is basis pure estimation. In fact, the AO has reopened the assessment proceedings basis this very reason and carried out detail examination and basis thereof, the estimation was made and our reference was drawn to the Page No. 8 of the Assessing Officer order for A.Y 2011-12 which reads as under:-
"The assessee's A/R's reply and the details filed have been taken into consideration. After considering the same, the following facts have emerged:-
1) The assessee's plot is located at Prime Location.
2) The assessee himself has admitted that the marriages are mainly solemnised on auspicious days according to 'MAHURATS".
3) The total Mahurats for marriages during the year were '28' as against the 17 Bookings mentioned/stated by the assessee in his reply.
4) Moreover, Birthday parties are also organised in the Garden and the booking/sales for the same has been 3 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer claimed to have been part of the Receipts of the Mango Masala.
5) Besides these other functions are also organised in the Plot, such as Garba as claimed by the assessee.
6) Further, if Garba is organised in the same Plot; then, the marriages can be organised in the said plot; as the gathering in the Garba Festival is ought to be more than the gathering in Marriage. Thus, more vehicles have to be parked for the more gathering. Therefore, the assessee's plea for the constraint of the parking is also not tenable.
7) Thus, in view of the above, the Plot is ought to have been let-out at least for the number of occasions on which the Mahurats are there as per the Panchang; i.e.
28.
8) Further, considering the fact that the parties who had booked the Plot for the functions have admitted to have paid the sum as mentioned by the assessee. The rates are varying from Rs.10,000/- to Rs.20,000/-. Therefore, for the remaining 11(28-17) Mahurats, the rate of booking is adopted at Rs.15,000/- each and thus, the resultant sum of Rs.1,65,000/- is added to the total Income.
9) The claim of the House taxes and the other Misc Expenses is not allowable in view of the fact that the same was not on account of the Plot under consideration and the evidences of the Misc. Expenses have also not been submitted. In view of the same, the 4 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer sum of Rs.99,496/- (Rs.90,168/- for municipal taxes plus Rs. 9,328/- for other expenses) is disallowed and added to the total income of the assessee.
10) Taking into consideration the rates for marriage bookings, the other small party(ies)'s rates is adopted at the sum of Rs.5,000/- each and the number of parties are estimated at 10. Thereby, the same results in addition for the sum of Rs.50,000/-.
11) The total Exhibitions are estimated at 5 numbers for 3 days each @ Rs.5,000/- per day at the sum of Rs. 75,000/- and One Garba party is estimated on account of Navrataras of Winter for 9 days @ Rs.5,000/-per day. Thereby, the sum of Rs.45,000/- is added on account of Garba Party.
12) Considering all above, the sum total of Rs.4,34,496/- (165000 + 99496 +50000 +75000 +45000) is added on account of the Income of Chitrakoot Plot. Penalty proceedings u/s 271(1) (c) are being initiated on this issue for furnishing inaccurate particulars of the income."
It was submitted that similar findings are recorded in other two assessment years. It was accordingly submitted that there is no infirmity in the order of the lower authorities and levy of penalty on rental income may be confirmed.
5. It was further submitted by the ld DR that the air conditioner was used for personal purposes and therefore, there was no basis for claim of depreciation of such air conditioner for business 5 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer purposes and levy of penalty should be confirmed. Further, he relied on and supported the order of the lower authorities and our reference was drawn to the finding of the ld. CIT(A) for AY 2011-12 which reads as under:-
"I have gone through the penalty order, statement of facts, grounds of appeal and written submission carefully. It is seen that the appellant either during the course of assessment proceedings or penalty proceedings has not been able to show that he had declared correct rental income was genuine. Further, the claim of inadmissible depreciation of Rs. 3,251/- has also been admitted by the appellant. Therefore, I am of considered view that the AO has rightly levied the penalty of Rs. 78,255/- u/s 271(1)(c) in respect of addition/ disallowance of Rs. 2,53,251/- (Rs.2,50,000 + Rs. 3,251). Accordingly, the penalty of Rs. 78,255/- levied by the AO u/s 271(1)(c) is hereby confirmed."
6. We have heard the rival contentions and purused the material available on record. We find that for A.Y 2011-12, the rental income has been determined by the Assessing officer not basis any material or direct evidence found against the assessee but basis the hypothesis that the plot ought to have been let-out at least for the number of occasions on which the Mahurats are there as per the Panchang i.e. 28 during the respective year. Therefore, for the remaining 11 Mahurats other than 17 mahurats for which assessee has already offered rental income, basis the average rate of booking of Rs 15,000/-, rental income was estimated at Rs.1,65,000/-. Further, rental for small parties, exhibition and garba party were again estimated by the Assessing 6 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer officer. Similar findings are recorded for other two assessment years. The said determination of income could form the basis of addition in the quantum proceedings, however for the purposes of levy of penalty, mere addition made in the assessment order could not form the basis of levy of penalty. It is a settled legal proposition that assessment and penalty proceedings are separate proceedings and therefore, mere addition made in the assessment order is not sufficient for levy of penalty. Further, we find that against said estimation of income done by the Assessing officer, the ld CIT(A) has reduced the quantum of estimation of rental income. Therefore, where there is no positive evidence or material beyond doubt of assessee having concealed the particulars of income or furnishing inaccurate particulars of income, mere addition in the quantum proceedings is not sufficient to hold assessee liable for levy of penalty. In this regard, useful reference can be drawn to the decision of Hon'ble Rajasthan High Court in case of Mahendra Singh Kedla (DB Appeal No. 174/2010 dated 19.03.2012) wherein it was held as under:
"6. We have considered the submissions of learned counsel for appellant and examined the reasons assigned by Appellate Authority as well as Appellate Tribunal for setting aside the penalty order.
7. The appellate authority as well as the appellate Tribunal both considered the matter in detail and by speaking order set aside the penalty levied by Assessing Officer, in the facts and circumstances of the present case. The relevant portion of Para 7 of order of the Tribunal is reproduced as under:-7
ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer Para 7. ..... ....... ..... ..... ...... ......The enquiry conducted by the AO may lead to arrive at the findings as to whether the particulars disclosed are truthful or false or not proved to be satisfactory. In the first case it would be a positive case of no concealment, in second case it would be a positive case of concealment and in third case benefit of doubt will go in favour of the assessee. The case of the assessee falls within third category where the alleged fact of introduction of capital is found to be not proved satisfactorily. Therefore, it is not a case of positive concealment and benefit of doubt goes in favour of the assessee. There is no dispute that trading addition was made on the basis of estimation because the results shown by the assessee was not found satisfactory by the AO. Where an estimated addition was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee to the extent of amount in difference shown by the assessee and estimated by the department depends upon the facts and circumstances of the case.
..... ..... ..... .... ..... ..... ..... .......
Under these circumstances when in the present case there was no positive evidence beyond doubt regarding estimated trading addition that the amount in difference between the result shown by the assessee and that estimated by the AO was resultant of concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee, penalty under section 271(1)(c) of the Act cannot be levied. The AO had rejected the books of account and estimated the trading addition on the basis that the assessee had not maintained site-wise account, no head-wise details of claimed purchases were furnished, no separate head of expenses was maintained, work in progress was not declared, some wages were shown outstanding without complete details of creditors, stock register was not maintained and misc. expenses on water transportation etc. were not verifiable and purchase vouchers of sand, steel, bajri etc. were self made etc. Assessee explained reasons for the above defects which were not accepted by the AO as not found satisfactory. The AO accordingly made estimation. The circumstances suggest that it may be just and proper case of making estimated trading addition but an inference therefrom 8 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer cannot be drawn beyond doubt especially keeping in mind the nature of work in not maintaining those books and details supported with proper vouchers etc. that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee to attract the penal provisions. In view of above discussion and keeping in mind the fact and circumstances of the present case, we are of the view that the ld. CIT(A) was justified in deleting the penalty in absence of positive evidence with the department that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee towards the addition in question. The first appellate order on the isuse is thus upheld.
8. The above finding of the Tribunal makes it clear that additions made by the Assessing Officer were based on estimation only. A fact or allegation based on estimation cannot be said to be correct only, it can be incorrect also.
Therefore, in the facts and circumstances of the case, penalty was wrongly levied by the Assessing Officer. The basis for levying penalty in the present case is only estimation, which is purely a question of fact and there is a concurrent finding of fact recorded by first appellate authority as well as the appellate Tribunal both."
Similar view has been taken by the Hon'ble Punjab & Haryana High Court in the case of Harigopal Singh vs. CIT (Supra). In light of above discussions, respectfully following the decisions referred supra, levy of penalty on estimated rental income cannot be sustained and is hereby directed to be deleted.
7. Further, mere disallowance of depreciation claim where all particulars are on record and inadvertent mistake of disclosing the interest income net of TDS instead of gross of TDS in the return of income where both interest income and TDS is apparent from the return of income cannot form the 9 ITA No. 744, 745 & 1097/JP/2019 Shri Siddharth Goel, Ajmer vs. ACIT, Ajmer basis for levy of penalty on account of furnishing inaccurate particulars of income and is hereby directed to be deleted.
In the result, all the three appeals filed by the assessee are allowed.
Order pronounced in the open Court on 13/01/2020.
Sd/- Sd/-
¼fot; iky jko½ ¼foØe flag ;kno½
(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 13/01/2020.
*Ganesh Kr.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Siddharth Goel, Ajmer
2. izR;FkhZ@ The Respondent- ACIT, Circle-02, Ajmer
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA. No. 744, 745 & 1097/JP/2019} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 10 11