Income Tax Appellate Tribunal - Chandigarh
Sh. Tejveer Singh Walia, Nabha vs Assessee on 4 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'A, CHANDIGARH
BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER
AND Ms. SUSHMA CHOWLA, JUDICIAL MEMBER
ITA Nos.329 & 330 /Chd/2010
(Assessment Years : 1996-97 & 1997-98)
Sh.Tejveer Singh Walia, Vs. The Income Tax Officer,
Sagar Complex, Dulladdi Gate, Nabha.
Nabha.
PAN: AAJPW1736A
(Appellant) (Respondent)
Assessee by : Shri D.K. Goyal
Respondent by : Shri N.K.Saini, DR
Date of hearing : 04.11.2011
Date of Pronouncement : 24.11.2011
O R D E R
PER SUSHMA CHOWLA, J.M, :
The appeals filed by the assessee are against the order of the Commissioner of Income-tax(Appeals), Patiala dated 20.01.2010 relating to assessment years 1996-97 and 1997-98 against the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961.
2. Both the appeals were heard together and are being disposed off for the sake of convenience.
3. The common grounds raised by the assessee in both the appeals read as under :
"1. That ld.C.I.T.(A) has erred in holding that the levy of penalty for alleged concealment of income.
2. That both the ld.A.O. and CIT(A) failed to appreciate that the building was constructed with joint efforts of all the family members and hence, no charge of concealment could be made out against the assessee.
3. That without prejudice to above the ld.CIT(A) has failed to appreciate that the addition to the returned income was made on the basis of estimates of cost of construction which may differ from person to person."
4. The only issue raised in both the appeals is against the penalty levied u/s 271(1)(c) of the Income Tax Act.
5. The brief facts of the case are that during the period 1994-95 to 1996-97, the assessee had constructed a shopping complex. Reference was made to the Valuation Cell of the Income Tax Department during the assessment proceedings relating to assessment year 1995-96 in order to ascertain the cost of construction of the shopping complex namely Sagar Complex. As per the report of the Valuation Officer dated 23.1.1998, the cost of complex was determined at Rs.19,78,900/-. The investment made during different periods was determined as under :
Assessment year Investment Rs.8,89,303/- Rs.6,36,767/- Rs.4,26,130/- Total : Rs.19,78,900/-
6. Because of the aforesaid facts notice u/s 148 of the Act was issued to the assessee for the above said assessment years. In response to which the assessee stated that return of income originally filed may be treated as having been filed in response to notice u/s 148 of the Act. The assessee did not comply with the various notices issued u/s 143(2) of the Act and the assessment was completed by making an addition of Rs.6,63,767/- in assessment year 1996-97 and Rs.4,26,130/- in assessment year 1997-98. The appeal of the assessee was dismissed by the CIT (Appeals) in the absence of any specific objection to the departmental Value's report. The Tribunal in ITA Nos.449 & 450/CHD/2005 relating to assessment years 1996-97 and 1997-98 vide its order dated 21.8.2006 set aside the issue to the file of the Assessing Officer for fresh adjudication after affording reasonable opportunity of hearing to the assessee. In the second round of assessment proceedings, various notices were issued by the Assessing Officer u/s 143(2)/142(1) of the Act as enumerated in para 2.3 of the penalty order. All the above said notices issued to the assessee remained un-complied with and the assessment was re-completed after making additions originally made on account of unexplained investment in the construction of the complex.
7. In the appeal filed before the CIT (Appeals) against the re-assessment order passed u/s 144 of the Act, the CIT (Appeals) vide order dated 8.4.2008 directed the Assessing Officer to adopt the cost of construction at Rs.5,61,577/- for assessment year 1996-97 and Rs.3,60,646/- for assessment year 1997-98, as per the revised valuation report of departmental valuer, furnished by the assessee. The assessee also moved an application u/s 154 of the Act before the Assessing Officer claiming deduction of Rs.2,03,204/- (assessment year 1996-97) and Rs.70,000/- (assessment year 1997-98) on account of contributions made by his family members in the said investment. The application of the assessee was rejected. The CIT (Appeals) vide order dated 17.7.2008 gave relief to the expenditure of Rs.50,000/- and after appeal effect the income was finally assessed at Rs.5,64,967/- relating to assessment year 1996-97 and Rs. 3,74,046/- relating to assessment year 1997-98.
8. The assessee also filed appeal before the Tribunal against the order of CIT (Appeals) dated 8.4.2008. The Tribunal in ITA Nos.570 & 571/Chandi/2008 vide order dated 28.11.2008 dismissed the appeal of the assessee on both the grounds raised i.e. against the non-carrying out of the directions of the Tribunal and non-adjudication of the issue of investment made by the assessee and other family members. The Assessing Officer issued notice for levy of penalty u/s 271(1)(c) of the Act. The reply of the assessee is incorporated under para 2.7 at pages 3 to 5 of the penalty order. The assessee in his reply explained that his father was a Mazdoor Union Leader and died in road accident. Further plea of the assessee was that at the time of his 'Bhog' many of his fellow employees contributed liberally for the benefit of the family. With the amount so received and joint efforts of the members of the family the residential house was constructed. It is also pointed out that as per the proceedings for the assessment year 1995-96, it was apparent that the property belongs to various family members but the entire difference in cost of construction had been added to his hands.
9. The next plank of argument of the assessee was that as the addition was made purely on estimate basis, there was no justification for levy of penalty for concealment u/s 271(1)(c) of the Act. It was further pointed out that assessment of the value of property may not by itself be furnishing of accurate particulars. As the Assessing Officer had not recorded a finding that the explanation offered by the assessee was false and further it was not found as a fact that the assessee had not disclosed all the facts which were material to the computation of his income, Explanation-I to section 271 of the Act was not attracted. The Assessing Officer rejected the submissions of the assessee on account of following reasons:
"a) The contention of the assessee that the construction was made out of funds contributed by employees on the bhog of his father is a new contention which was never raised during the entire assessment, reassessment or appeal proceedings. Further the contention of the assessee is without any documentary evidence i.e. the date of death of his father, date of bhog, amount contributed by employees etc.
b) The contention of the assessee that additions were made on estimate basis and the guilt of the assessee has to be proved for imposing penalty is also not correct. The assessee has no where declared any amount being spent on construction during the year. The addition was made on the basis of expert opinion of department valuer. The question of difference of opinion do not arise as assessee himself had neither declared any investment on construction nor any opinion or report was filed along with return.
c) The facts of case laws cited by the assessee are altogether different from the facts of this case as discussed below :
i) Dilip N Shroff Vs. JCIT 291 ITR 519 (SC):- IN this case the assessee has declared all the relevant facts and copy of Registered valuers's report regarding Fair market valuer as on 01.04.1981 for computing capital gains.
ii) Hari Gopal Singh Vs. CIT 258 ITR 85 (P&H):- In this case the assessee has filed return on no account basis and additions were made by estimating the sales.
iii) CIT Vs. Jugal Kishore Hargopal Dass 243 ITR 220 (Kerala):- In this case the assessee had revised return showing additional income. The issue involved was whether the return was revised before detection of concealment by the department.
iv) CIT Vs. D.K.B & Co. 243 ITR 618:- In this case the assessee has offered additional income after search. The Hon'ble Court observed that in the penalty proceedings it is for the department to consider the explanation of the assessee on merits and record a finding whether such explanation is acceptable or not.
d) The contention of the assessee that penalty can not be levied where the assessee establishes that his failure to return the correct income was not on account of any fraud or any gross or willful neglect can not be accepted as the assessee never disclosed the amount spent on construction in his return filed u/s 139. Even the assessee had maintained status quo in the return filed in response to notice u/s 148 of the Income Tax Act."
10. In view thereof and applying the ratio laid down by the Hon'ble Punjab & Haryana High Court in CIT Vs. Fazilka Dabwali Tpt. Co. Ltd.[178 ITR 656 (P&H)] and the Hon'ble Supreme Court in K.P.Madhusudanan Vs. CIT [251 ITR 99 (SC)], the assessee was held to have concealed the particulars of income and accordingly penalty of Rs.1,97,309/- was levied for assessment year 1996-97. The CIT (Appeals) observed that it was on record that the plot on which the building was constructed belongs to the assessee and no evidence was led before the Assessing Officer that the contributions were made by the family members. The CIT (Appeals) further observed that "it is therefore, noticed that it is not a case of estimation but investment made in the building for which no sources were explained by the appellant". Placing reliance on the ratio laid down in CIT Vs. Fazilka Dabwali Tpt. Co.Ltd. (supra) the CIT (Appeals) held that the burden of proving that there was no concealment of income lies on the appellant and not on the Revenue. Dismissing the appeal of the assessee the penalty levied u/s 271(1)(c) of the Act was confirmed by the CIT (Appeals).
11. The assessee is in appeal against the order of the CIT (Appeals). The learned A.R. for the assessee pointed out that the Hon'ble Jurisdictional High Court has decided the issue in assessment year 1995-96 and as the sources have been explained in assessment year 1995-96, consequently, no penalty is leviable u/s 271(1)(c) of the Act.
12. The learned D.R. for the Revenue pointed out that the sources were not explained in assessment year 1995-96 and the Jurisdictional High Court has confirmed the addition on account of investment made by the assessee in the said property. It was pleaded by the learned D.R. for the Revenue that in the absence of any source in the investment of the said property, penalty u/s 271(1)(c) of the Act is leviable.
13. We have heard the rival contentions and perused the record. The assessee had constructed shopping complex namely Sagar Complex at Nabha. The Assessing Officer received information in respect of the investment made by the assessee in the aforesaid shopping complex and enquiries were made in order to ascertain the source of investment made in purchase of the plot and construction thereof. Thereafter proceedings u/s 147/148 of the Act were initiated for assessment years 1995-96 to 1997-98 i.e. the years during which the construction was being carried out by the assessee. In response to the said, the assessee claimed that its original return of income filed may be treated as filed u/s 148 of the Act. The Assessing Officer made a reference to the Valuation officer who vide its report dated 23.1.1998 estimated the cost of construction for the three assessment years as under :
Assessment year Investment Rs.8,89,303/- Rs.6,36,767/- Rs.4,26,130/- Total : Rs.19,78,900/-
14. In assessment year 1995-96, the assessee was asked to explain the source of investment for purchase of plot and also the part construction of the shopping complex. The assessee raised various contentions including the amount received on the death of his father out of his retiring benefit and also the amount contributed by the persons with whom he was employed. Another contention was raised by the assessee that the amount was contributed out of the contributions received on the occasion of 'Bhog' of his father who expired in a road accident. Further contention of the assessee was that it had received contributions from his family members who had their independent bank accounts. The contention of the assessee was rejected by the Assessing Officer as there was no explanation with the assessee as to where the amount was kept for several years. As the assessee failed to prove the availability and link of funds, the investment made in the purchase of plot and construction in assessment year 1995-96 was treated as unexplained. The Tribunal in ITA No.823/Chandi/1999 relating to assessment year 1995-96 vide order dated 2.12.2003 after considering the arguments of the assessee rejected the claim of investment made by the family members of the assessee. The assessee filed an appeal before the Hon'ble Punjab & Haryana High Court. The Hon'ble Court in ITA No.91 of 2004 vide order dated 6.10.2010 in respect of investment made in the construction of complex out of contributions made by the family members, dismissing the appeal of the assessee upheld the order of the Tribunal in this regard. The plea of the assessee is that similar issues are pending before the Hon'ble Court in assessment years 1996-97 and 1997-98.
15. The assessee is in appeal before us against the levy of penalty u/s 271(1)(c) of the Act on account of the aforesaid addition made being the investment in the construction of the property. Penalty u/s 271(1)(c) of the Act is leviable in all such cases where the assessee has concealed its income or furnished inaccurate particulars of income. Either of the two conditions are to be satisfied before the person is held exigible to levy of penalty u/s 271(1)(c) of the Act.
16. In the facts of the present case before us, the assessee was found to have made investment in the construction of the commercial complex and when confronted to explain the source of investment in the said complex, the submission of the assessee was found wanting. The assessee has changed its stand in respect of the aforesaid sources of investment in the said property. The assessee was unable to produce the evidence to support its contention. No effort was made by the assessee even to furnish supporting evidence during the penalty proceedings except to change its stand vis-à-vis the source of investment in the construction of the said property. Even before the Hon'ble Punjab & Haryana High Court in the appeal relating to assessment year 1995-96 where similar addition was made on account of the investment in construction of the property, the appeal of the assessee was dismissed. The Tribunal in assessee's own case relating to assessment years 1996-97 and 1997-98 vide order dated 21.8.2006 had remitted the issue back for proving its stand. In the second round of the proceedings also the assessee was unable to produce the evidence in respect of the source of investment and initially, additions with certain modication were confirmed in the hands of the assessee. The CIT (Appeals) also allowed the benefit of sources of investment to the extent of Rs.50,000/-. The Tribunal vide order dated 28.11.2008 has confirmed the order of the CIT (Appeals). In the totality of the facts and circumstances where the assessee has failed to explain and produce the sources of investment in the construction of the commercial complex at Nabha and plea of the assessee that the investment was made by his family members was found to be incorrect, it is established that the assessee had concealed the particulars of his income and under the circumstances the assessee is exigible to levy of penalty u/s 271(1)(c) of the Act. Upholding the order of the CIT (Appeals) we dismiss the grounds of appeal raised by the assessee.
17. The appeal of the assessee in ITA No.329/Chd/2010 relating to assessment year 1996-97 is dismissed.
18. The facts in ITA No.330/Chd/2010 relating to assessment year 1997-98 are mutatis mutandis to the facts in ITA No.329/Chd/2010 and following our ratio laid down in paras hereinabove, the appeal of the assessee in ITA No.330/Chd/2010 is thus dismissed.
19. In the result, both the appeals of the assessee are dismissed.
Order Pronounced in the Open Court on 24th day of November, 2011.
Sd/- Sd/-
(D.K. SRIVASTAVA) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 24th November, 2011
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
True Copy
By Order
Assistant Registrar, ITAT, Chandigarh
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