Income Tax Appellate Tribunal - Hyderabad
K. Hemalatha, Hyd, Hyderabad vs Assessee on 5 October, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND
SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 551/HYD/2016
Assessment Year: 2005-06
K. Hemalatha, Asst. Commissioner of
HYDERABAD Vs Income Tax,
[PAN: AQLPK6573D] Central Circle-2,
HYDERABAD
(Appellant) (Respondent)
For Assessee : Shri P.V.S.S. Prasad, AR
For Revenue : Shri K.J. Rao, DR
Date of Hearing : 01-09-2016
Date of Pronouncement : 05-10-2016
ORDER
PER B. RAMAKOTAIAH, A.M. :
This is an appeal by assessee against the order of the Ld.Commissioner of Income Tax (Appeals)-9, Hyderabad dated 29-02-2016, confirming the penalty of Rs. 1,77,473/- u/s. 271(1)(c) of the Income Tax Act [Act].
2. Briefly stated facts as mentioned in the order of CIT(A) are as under:
"1.0 The appellant Smt K. Hemalatha is an individual. A search operation was conducted on the appellant's son-in-law Shri K. Srinivasa Rao at his residence situated at Plot No.1219 Road No 36, jubilee Hills, Hyderabad on 09-10-2007. Consequent to search operation notice under sec.153C dated 26-06-2008 was issued for the AY 2005-06 to the appellant. Appellant filed her return of income on 01-08-2008 by admitting total income of Rs 89,310/- and an agricultural income of Rs 1,26,500/-. Learned DCIT, central circle -2, Hyderabad (AO) issued notice under Sec I.T.A. No. 551/Hyd/2016 :- 2 -: K. Hemalatha 143(2) and Sec 142(1) dated 06-04-2009 and conducted the scrutiny proceeding calling for information and details from time to time. Appellant submitted details called from time to time before the learned AO.
1.1 The learned AO questioned the appellant as to the source of opening balance of her capital account amounting to Rs 22,94,430/-. Appellant explained that out of the said amount of Rs. 11,00,000/- pertain to the sale proceeds of house sold at Kovvuru, Andhra Pradesh which as declared in the accounting year relevant to the A.Y. 2004-05. In respect of balance amount of Rs 11,94,000/-, it was explained that it was accumulation of agricultural income, terminal benefits received on the demise of appellant's husband Shri Kesava Rao and other miscellaneous income. Such valid explanation has been rejected by the learned AO and added the said amount of Rs 11,94,000/- as unexplained cash credit under sec.68 of the Act.
1.2 Aggrieved by the addition of Rs 11,94,000/- made by the learned AO, the assessee went on appeal against the order of the Ld AO before the CIT(A).
1.3 The Learned CIT(A) in his order gave relief for an amount of Rs 3,53,000/- out of addition of Rs 11,94,000/- and confirmed the addition for the balance of amount of Rs 8,40,500/-.
2. Aggrieved by the confirmation of addition of Rs 8,40,500/- the assessee has come on appeal before the Hon'ble Tribunal.
3. The Hon'ble Tribunal vide its order dt 16-11-2011 gave further relief of Rs 2,10,000/- and confirmed the balance addition of Rs 6,30,500/-.
4. As part of the addition of Rs 6,30,500/- as mentioned above was confirmed by the appellate authority the assessee received a notice u/s 274 read with section 271 (1)(c) dated 09-02-2012.
5. The assessee vide her letter dated 22-02-2012 stated that even though the Hon'ble Tribunal sustained addition of Rs 6,30,500/- the fact is that there is no concealment of income. The agricultural income earned year after year had been accumulated in her capital account over a period of 12 years and sale proceeds of house at Kovvuru were also credited to the capital account. She was unable to produce proof of the agricultural income though it was really earned. Hence there is no concealment of income.
6. The Ld AO ought to have appreciated that even in the absence of returns of income prior to the assessment years 2002-03 the appellant would have made savings over her life time from agricultural income etc. which would have contributed to her capital balance as on 1-4-2004.
I.T.A. No. 551/Hyd/2016
:- 3 -: K. Hemalatha
7. The Appellant did not have any income other than agricultural income prior to the AY 2002-03. Hence there was no requirement to file return of income for the years prior to AY 2002-03.
8. In response to the notice the assessee filed a reply dated 22-02-2012 wherein the above facts were stated that the levy of penalty is not automatic when an addition is made and cited various case laws wherein penalty was not levied.
3. Ld. CIT(A) confirmed the penalty stating as under:
"4.1 I have carefully considered the penalty order, the submissions of the assessee and the facts of the case. The only issue involved is this case is the levy of penalty u/s. 271(1)(c) of the IT. Act of Rs. 1,77,473/- for the A.Y. 2005-06. The brief facts of the case are while completing the assessment for the A.Y. 2005-06 u/s 143(3) r.w.s. 153C of the I.T. Act on 24.12.2009, the Assessing Officer made an addition of Rs. 11,94,000/- as unexplained credit, as the assessee failed to adduce any evidence in support of her contentions that this amount of Rs. 11,94,000/- represents her accumulated savings. On appeal, the CIT (Appeals) has given relief to the extent of Rs. 3,53,500/- and confirmed the remaining addition of Rs. 8,40,500/-. On further appeal, the Hon'ble ITAT gave further relief of Rs 2,10,000 and confirmed the balance of Rs 6,30,500/-. Therefore, penalty u/s 271(1)(c) was levied by the Assessing Officer in respect of income of Rs. 6,30,500/- by relying on the explanation 1(A) to sec. 271(1)(c).
4.2 During the course of the appellate proceedings the assessee contended the even though the Hon'ble ITAT sustained the addition of Rs. 6,30,500/-, there is no concealment of Income as the assessee had accumulated agricultural income over a period of 12 years along with sale proceeds of house at Kovuru, and further submitted that she is unable to produce proof of the same. The assessee relied on the following case laws in support of in her contention.
1. Jasbir Singh Saini Vs. Income Tax Officer [2015] 61 Taxmann. Com 230 (Chandigarh- Tribe.).
2. Kanbay Software India (p) Ltd Vs. DCIT Pune [2009] 131 SOT 153 (Pune).
3. DCIT Vs. Koatex Infrastructure Ltd [2006] 100 ITD 510(Mum.).
4. DCIT Vs Saraya Industries [2007]14 SOT 55 (Delhi) (URO).
I.T.A. No. 551/Hyd/2016
:- 4 -: K. Hemalatha
4.3 However, the assessee's contentions are not acceptable as the assessee has not explained properly the sources for the said accumulated savings. After verifying the facts and the contentions of the assessee, the Hon'ble ITAT Hyderabad confirmed the addition of Rs. 6,30,500/-. Even during the appellate proceedings, the assessee submitted that she is unable to produce any proof of the same. Therefore, in the absence of any documentary evidence, the assessee's claim cannot be accepted. As rightly stated by the Assessing Officer, the assessee is very much hit by the explanation 1(A) to sec. 271 (1)(C) of the IT Act which clearly stipulates that when a person fails to offer an explanation or offers an explanation which is found to be false, then such income shall be deemed to be concealed income. Therefore, as the assessee has failed to substantiate her claim with respect to the amount of Rs.6,30,500/-, the same being confirmed by the Hon'ble ITAT, the assessee can be said to have concealed the particulars of the income to that extent. Moreover, the facts of the case laws as relied upon by the assessee are different from the facts of the instant case and hence cannot come to her rescue. Further, I place reliance on the following case laws:
(i) Loknath Chowdhary Vs. CIT (Cal) 155 ITR 29.
(ii) Rahmat Devft & Engineering Corporation Vs. CIT (Cal) 130 ITR 602.
(iii) CIT Vs. Rattam Singh Grewal (P&H) 304 ITR 75.
(iv) Charndatt H. Danget Vs. Income Tax Officer (ITAT, Mumbai) 126 ITO 483.
In the above cases, it was held that unexplained investment is deemed to be income for the purpose of levying penalty if no satisfactory explanation is offered and penalty is leviable. These decisions are applicable in the assessee's case as he has not furnished satisfactory explanation either during the assessment proceedings or the appellate proceedings.
4.4 In view of the above mentioned facts and circumstances, I am of the considered opinion that the Assessing Officer has rightly levied the penalty u/s 271(1)(C) of the IT Act and therefore, penalty levied of Rs. 1,77,473 is hereby upheld".
4. Ld. Counsel submitted that the addition was opening balance of the capital of assessee and filed the details of assets held by assessee at the beginning of the Block period as under:
I.T.A. No. 551/Hyd/2016 :- 5 -: K. Hemalatha S.No Date of Name of the Survey No. Area in Purchase Acquisition Asset Ac. Value Guntas 1 Before 99 Pooppalaguda 294(294/2) 5Ac 56,000.00 2 19-Jan-99 Vattingulpally 213 15 25,251.00 Guntas 3 03-Mar-99 Nanakram 95/AA/P 3 Ac 24 2,12,621.00 guda Guntas 4 16-Jun-99 Vattingulpally 225/P 10Ac 3,56,771.00 5 26-Jun-99 Nanakram 95/ 1 Ac 2,23,271.00 guda A/P 6 12-Nov-99 Yellareddygud 44 & 45 Flat 4,26,721.00 da 7 21-Jun-00 Vattingulpally 173 8 Ac 6 4,54,636.00 Guntas 8 25-Sep-00 Manikonda 124 14 39,471.00 Guntas 9 15-Mar-04 Vattingulpally 203 & 204 21 1,11,600.00 Guntas 10 29-Mar-04 Vattingulpally 213(part) 19 46,485.00 Guntas TOTAL 19,52,827.00 List of Current Assets S.No Date Name of the Amount (Rs) Remarks Asset 1 Cash in Hand 1,06,839.00 2 Bank Account 72,568.86 3 FD with P.O. 2,50,000.00 Date of (13447) deposit:
As at 31-03- 12.08.2003
4 2004 FD with P.O. 40,000.00 Date of
(13459) deposit:
12.08.2003
4.1. It was contended that the assets are acquired much earlier including the current assets and it was unfortunate that same amount got confirmed in appeal. He referred to the relief given by Ld. CIT(A) and ITAT and submitted that the addition in assessment does not lead to penalty as 'concealment of income'.
5. Ld. DR however, relied on the orders of AO and Ld. CIT(A) to contend that penalty u/s. 271(1)(c) is attracted on the facts of the case.
I.T.A. No. 551/Hyd/2016 :- 6 -: K. Hemalatha
6. We have considered the rival contentions and perused the orders including the appeals in quantum proceedings. There is no dispute that assessee has shown opening balance of Rs. 22,94,430/-, which is the value of various assets acquired much earlier. These include Fixed Assets of Rs. 19,52,827/- and balance Current Assets. Even though, AO made addition of entire amount, assessee got substantial relief and only Rs. 6,30,000/- confirmed by ITAT in appeal. However, the fact that these assets were acquired in earlier years were not noticed. Whatever may be the reason for confirming part of the amount in assessment, the same does not automatically lead of levy of penalty u/s. 271(1)(c). Assessee can question the addition itself in penalty proceedings so as to justify non-levy of penalty. Considering the fact that these assets are acquired much earlier and assessee has shown them as opening balance only, in our opinion the mere addition of part of the amount does not attract penalty for concealment. Considering these facts of the case the penalty u/s. 271(1)(c) is not warranted. Accordingly, the same is set aside.
7. In the result, appeal of assessee is allowed.
Order pronounced in the open Court on 05th October, 2016 Sd/- Sd/-
(P. MADHAVI DEVI) (B. RAMAKOTAIAH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 05th October, 2016
TNMM
I.T.A. No. 551/Hyd/2016
:- 7 -: K. Hemalatha
Copy to :
1. K. Hemalatha, Hyderabad. C/o. Prasad & Prasad Chartered Accountants, Flat No. 301, MJ Towers, 8-2-698, Road No. 12, Banjara Hills, Hyderabad.
2. Asst. Commissioner of Income Tax, Central Circle-2, Hyderabad.
3. CIT (Appeals)-9, Hyderabad.
4. The Pr.CIT-6, Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.