Income Tax Appellate Tribunal - Chennai
R.Geetha, , Coimbatore vs Assessee on 11 October, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH : CHENNAI
[BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER
AND SHRI V. DURGA RAO, JUDICIAL MEMBER]
I.T.A.Nos.724 to 728/Mds/2012
Assessment years : 2002-03, 2004-05 to 2007-08
Smt.R.Geetha vs The ACIT
A-7, Sri Vari Brindhavan Central Circle I
M.G.Road Coimbatore
Coimbatore 641 006
[PAN AHAPG 7234 K]
(Appellant) (Respondent)
Appellant by : Shri D. Anand, Advocate
Respondent by : Shri Das Gupta, Jt. CIT
Date of Hearing : 11-10-2012
Date of Pronouncement : 12-10-2012
ORDER
PER N.S. SAINI, ACCOUNTANT MEMBER
These are the appeals filed by the assessee against separate orders of the CIT(A) - II, Coimbatore, dated 30.1.2012.
2. The A.R of the assessee, at the time of hearing, submitted that the sole issue involved in all the present appeals is that the CIT(A) erred in confirming the levy of penalty u/s 271(1)(c) of the Act. He :- 2 -: I.T.A.No. 724 to 728/12 further submitted that as the facts and issue involved are similar, he is arguing the same together.
3. The facts of the case are that a search u/s 132 of the Act was carried out in the case of the assessee on 27.9.2005 at her residence and business premises resulting in seizure of books of account as per annexure VKM/B&D/S68 in respect of her residence at Peelamedu, Coimbatore and RJ/B&D/S 1 to 4 dated 27.9.2005 of Panchanama relating to the business premises of M/s Krishnaveni Carbon Products Pvt. Ltd. The assessee filed return of income on 22.3.2006 pursuant to the notice issued u/s 153A of the Act on 13.2.2006 admitting income of ` 63,000/- in assessment year 2002-03. In assessment year 2004-05, the assessee filed return of income on 22.3.2006 pursuant to the notice issued u/s 153A of the Act on 13.2.2006, admitting income of ` 92,533/-. In assessment year 2005- 06, pursuant to the notice issued u/s 153A of the Act on 13.2.2006, the assessee filed return of income on 22.3.2006 admitting income of ` 1,11,806/-. In 2006-07, the assessee filed return of income on 29.11.2006 admitting a total income of ` 1,90,920/-/-. In assessment year 2007-08, the assessee filed return of income on 31.10.2007 admitting income of ` 1,72,343/-. The Assessing Officer observed from the bank account No.6971 with Central Bank of India, :- 3 -: I.T.A.No. 724 to 728/12 Siddhapudur that the assessee had made deposits of ` 1,25,000/- on various dates from 8.6.2001 to 28.2.2002. The Assessing Officer recorded sworn statement on 20.12.2007 and vide Question No.21, asked the assessee to explain the source of deposits. It was also pointed out that these deposits were not reflected in the cash flow statement furnished on 04.12.2007 and 14.12.2007 through her Authorized Representative and what was the reason for omission. The assessee replied that she did not know. Therefore, the Assessing Officer treated the same as unexplained investment u/s 69 and added the same to the income of the assessee.
4. Similarly, in assessment year 2004-05, the Assessing Officer made addition of ` 3,68,700/- deposited in Central Bank of India, Siddhapudur, Coimbatore, SB Account No.6971 and addition of ` 35,000/- on account of deposit in Corporation Bank, Bodipatti, A/capital No.SB/01/005018, thereby making a total addition of ` 4,03,700/- u/s 69 of the Act.
5. In assessment year 2005-06, the Assessing Officer made similar addition of ` 22,500/- for deposits made in Central Bank of India, Siddhapudur, Account No.6971 and for ` 20,000/- for deposits in Corporation Bank, Bodipatti, Account No.SB/01/005018, thereby making a total addition of ` 42,500/- u/s 69 of the Act. :- 4 -: I.T.A.No. 724 to 728/12
6. Similarly, in assessment year 2006-07, the Assessing Officer made an addition of ` 3,00,000/- for deposits in Corporation Bank, Bodipatti, Account No.SB/01/005018, u/s 69 of the Act.
7. In assessment year 2007-08, the Assessing Officer made an addition of ` 1,30,000/- u/s 68 of the Act towards unexplained credit from Shri K.P.Srinivasan.
8. The above additions were confirmed in appeal by the Tribunal in the assessment years 2002-03, 2004-05, 2005-06 and 2006-07 and in assessment year 2007-08, the assessee admitted the addition and did not file appeal thereagainst before any appellate authorities. Thereafter, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act on account of concealment of income by the assessee. The penalty levied was ` 38,250/- in assessment year 2002-03, ` 1,14,800/- in assessment year 2004-05, ` 13,005/- in assessment year 2005-06, ` 85,774/- in assessment year 2006-07 and ` 31,234/- in assessment year 2007-08.
9. When the assessee filed appeal before the CIT(A), she relied on the decision of Hon'ble Supreme Court in the case of CIT vs Reliance Petro Products P. Ltd, 36 DTR 449[SC]. The assessee also submitted that reliance placed by the Assessing Officer on the decision :- 5 -: I.T.A.No. 724 to 728/12 of Hon'ble Supreme Court in the case of UOI vs Dharmendra Textile Processors & Others, 306 ITR 277, was not correct as the Hon'ble Supreme Court in the case of Hindustan Steel Ltd vs State of Orissa, 83 ITR 26 (SC) held that every addition does not lead to automatic levy of penalty. It was submitted that no specific recording of satisfaction on the part of the Assessing Officer was mentioned for initiation of penalty u/s 271(1)(c) of the Act which is a sine qua non. The CIT(A) confirmed the levy of penalty in respective years by observing as under:
A.Y 2002-03 "5. The rival submissions are considered. It is important to note that when the appellant went on appeal before the Hon'ble IT AT, 'C' Bench, Chennai on the issue of cash deposit amounting to Rs.1,25,000/- which was brought to tax u/s 69, the Hon'ble ITAT had justified the findings of the CIT(Appeals) and had disallowed the appeal of the appellant vide order in ITA No.193/Mds/08/(A.Y.2002-03)-Smt. R.Geetha. The following observations were made by the ITAT:
"After hearing both sides, we are also of the same view. There is no merit in assessee's explanation. She had stated that the source of deposit was from her mother's savings. but no proof thereof was given. Instead she changed her stance before the Id. CIT(A) otherwise than by way of producing additional evidence. In our opinion, the explanation tendered by the assessee is not wholehearted and, therefore, the addition deserves to be confirmed". .
6. From the above observation of the ITAT, it is clear that the assessee has concealed particulars of income as provided in 271 (1 )(c) of the IT. Act, 1961. The contention of the appellant during the penalty proceedings have been rebutted in detail by the Assessing Officer. Further, the judgement in the case of CIT vs. Reliance Petro Products (P) Ltd. reported in 36 DTR 449 [SC] will :- 6 -: I.T.A.No. 724 to 728/12 not come to the rescue of the appellant as the same was regarding penalty on disallowance of expenditure. I have no doubt that the deposit of RS.1,25,000/- in the SB Alc of the appellant which is not included in the cash flow statement and added to the total income represents a clear case of concealment of income .. Therefore, the penalty u/s 271(1 )(c) is confirmed in the hands of the appellant. "
A.Y 2004-05 "6. The rival submissions are considered. It is important to note that when the appellant went on appeal before the Hon'ble ITAT, 'C' Bench, Chennai on this issue, the Hon'ble ITAT had justified the findings of the CIT(Appeals) and had disallowed the appeal of the appellant vide order in ITA No.668/09/Mds/08/(A.Y.2004-05)- Smt. RGeetha. The following observations were made by the ITAT:
" As a result of search action in this Group, deposit found to the tune of Rs.3,68,700/- in the joint account in Central Bank of India, Siddapudur and an amount of Rs.35,000/- in Corporation Bank at Bodipatti. The assessee stated that these amounts were deposited by her mother. Later on, she shifted her explanation stating that it was joint account. Again, before the Assessing Officer, the assessee could not properly explain the source of this deposit and before the Id. CIT(A) changed the explanation that too without resorting to the rules of additional evidence. Hence, the Id. CIT(A) ignored the same and has confirmed both additions. Now, the assessee is in second appeal before us.
We have given our thoughtful consideration to the facts, evidences and other materials available on record. We do not find any merit in the submissions of the Id. AR. We are in agreement with the Id. DR that the assessee could not explain the source of this deposit and has changed her defence which is also devoid of any merit. According, we are in agreement with the finding of the Id. CIT(A) and confirm the impugned finding."
6. From the above observation of the ITAT, it is clear that the assessee has concealed particulars of income as provided in 271(1 )(c) of the I.T. Act, 1961. The contention of the appellant during the penalty proceedings have been rebutted in detail by the Assessing Officer. Further, the judgement in the case of CIT vs. Reliance Petro Products (P) Ltd. reported in 36 DTR 449 [SC] will not come to the rescue of the appellant as the same was regarding penalty on disallowance of expenditure. I have no doubt that the deposit of Rs4,03,700/- in the SB Alc of the appellant which is not included in the cash flow statement and :- 7 -: I.T.A.No. 724 to 728/12 added to the total income represents a clear case of concealment of income .. Therefore, the penalty u/s 271 (1 )(c) is confirmed in the hands of the appellant."
7. However, in the penalty order, the Assessing Officer has taken the entire amount of Rs 4,03,700/- as being confirmed by the CIT(Appeals). On perusal of the order, it indicates that the CIT(Appeals) has allowed an amount of Rs.1 ,50,000/- which has also been agreed in the order of the ITAT in ITA No.668/09(A.Yr.2004-05)- Smt. R.Geetha dated 20.11.2009 Therefore, penalty is leviable only on the unexplained cash deposit of Rs.2,53,700/- and the amount of penalty should be levied at Rs. 76,110/- instead of Rs.1 ,14,880/- in the penalty order u/s 271(1)(c) issued by the Assessing Officer. "
A.Y 2005-06 "5.2 After considering the assessment order, penalty order and the rival submission of the appellant, it is seen that the Assessing Officer has rebutted in detail the various claim again the penalty order. I am in full agreement with the Assessing Officer regarding the reasons cited, by him in the penalty order. Further, the judgement in the case of CIT vs. Reliance Petro Products (P) Ltd. reported in 36 DTR 449 [SC] will not come to the rescue of the appellant as the same was regarding penalty on disallowance of expenditure. It is clear that the assessee has concealed particulars of income as provided in 271(1)(c) of the I.T. Act, 1961. I have no doubt that the deposit of Rs.42,500/- in the SB A/c of the appellant which is not included in the cash flow statement and added to the total income represents a clear case of concealment of income .. Therefore, the penalty u/s 271 (1 )(c) is confirmed in the hands of the appellant."
A.Y 2006-07 "5.1 The rival submissions are considered. It is important to note that when the appellant went on appeal before the Hon'ble ITAT, 'C' Bench, Chennai on the issue of cash deposit amounting to Rs.3,00,000/- which was brought to tax u/s 69, the Hon'ble ITAT had justified the findings of the CIT(Appeals) and had disallowed the appeal of the appellant vide order in ITA o.669/Mds/(A.Y.2006-
07)-Smt. R.Geetha.
"The explanation of the assessee could be substantiated before us also. Therefore, we are of the considered opinion that the finding of the Id. CIT(A) is quite justified :- 8 -: I.T.A.No. 724 to 728/12 and no interference is warranted therein. Hence, we can not allow this appeal of the assessee.
In the result, appeal of the assessee in ITA No. 669/Mds/09 stands dismissed."
5.2. From the above observation of the ITAT, it is clear that the assessee has concealed particulars of income as provided in 271 (1 )(c) of the IT. Act, 1961. The contention of the appellant during the penalty proceedings have been rebutted in detail by the Assessing Officer. Further, the judgement in the case of CIT vs. Reliance Petro Products (P) Ltd. reported in 36 DTR 449 [SC] will not come to the rescue of the appellant as the same was regarding penalty on disallowance of expenditure. I have no' doubt that the deposit of Rs.3,OO,OOOI- in the SB A/c of the appellant which is not included in the cash flow statement and added to the total income represents a clear case of concealment of income .. Therefore, the penalty u/s 271(1 )(c) is confirmed in the hands of the appellant."
A.Y 2007-08 "5. The Assessing Officer had added Rs.1,30,000/- as unexplained cash credits u/s 68 of the I.T.Act. The Assessing Officer contends that even though the appellant was asked to explain the source, identity and capacity of the person who had given the above amount, the appellant was not able to explain the source of the above transaction for RS.1 ,30,000/-. This addition was accepted by the appellant and had not filed appeal before the CIT(Appeals) or ITAT. 5.1 The Assessing Officer has given detailed reasons in rejecting the submissions put forth by the appellant for not levying the penalty. I am in full agreement for the reasons cited by the Assessing officer for levy of penalty as it is evident that Rs.1,30,000/- added u/s 68 was clear concealment under the provisions of the I.T. Act. Further, the judgement in the case of CIT vs. Reliance Petro Products (P) Ltd. reported in 36 DTR 449 [SC] will not come to the rescue of the appellant as the same was regarding penalty on disallowance of expenditure. Therefore, the penalty levied at RS.31,234/- u/s 271 (1)(c) is confirmed in the hands of the appellant."
:- 9 -: I.T.A.No. 724 to 728/12
10. We have heard the rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case, penalty u/s 271(1)(c) of the Act was levied for assessment years 2002-03, 2004-05, 2005-06, 2006-07 and 2007-08. The penalty so levied relates to two sets of additions. Firstly, the addition u/s 69 of the Act on account of unexplained deposits in Central Bank of India, Siddapudur and Corporation Bank, Bodipatti. The second class of addition in respect of which penalty u/s 271(1)(c) of the Act was levied relates to addition of ` 1,30,000/- made u/s 69 of the Act. We find that the Assessing Officer levied penalty u/s 271(1)(c) of the Act on the ground that addition made in the assessment was confirmed in appeal or not contested in appeal and therefore, in view of the decision of the Hon'ble Supreme Court in the case of UOI vs Dharmendra Textiles Processors & Others [2008] 306 ITR 277(SC), penalty u/s 271(1)(c) of the Act is leviable.
11. On appeal, the CIT(A) confirmed the above action of the Assessing Officer.
12. Before us, the A.R. of the assessee submitted that it was explained to the Assessing Officer during the course of penalty proceedings that the bank account maintained with Central Bank of :- 10 -: I.T.A.No. 724 to 728/12 India, Siddapudur was situated at Coimbatore. The assessee, after marriage, shifted to Coimbatore in the year 1994. Thereafter, the deposit in the said bank account was made by the assessee's father from his income. The assessee has not made any deposit in the said account from her income. Further, in respect of bank account maintained with Corporation Bank, Bodipatti, was explained to the Assessing Officer that the said bank account is in the joint name of the assessee's husband, Shri Ramesh Chandra and the assessee in which the husband is the first name holder of the said account. The deposit in the said bank account was made by her husband out of his own income and the assessee never made any deposit in the said bank account. The A.R contended that the above explanation of the assessee was not found false by the Assessing Officer and it is not the case of the Revenue that the assessee was not able to substantiate the above explanation. According to him, the Assessing Officer was of the view that penalty is automatic on addition being made and confirmed in appeal. He contended that the above action of the Assessing Officer is clearly unsustainable in law. The CIT(A) was not justified in confirming such an action of the Assessing Officer.
13. On the other hand, the DR vehemently argued in support of the orders of the lower authorities.
:- 11 -: I.T.A.No. 724 to 728/12
14. We find that after the decision in the case of Dharmendra Textiles Processors and Others (supra), the Hon'ble Supreme Court in a series of decisions namely, in the case of Rajasthan Spinning & Weaving Mills 224 CTR (SC) Page 1, Atul Mohan Bindal, [2009]317 ITR 1(SC) and in the case of CIT vs Reliance Petro Products Pvt. Ltd,[2010] 322 ITR 158 (SC), the Hon'ble Supreme Court has held that penalty u/s 271(1)(c) of the Act is not an automatic consequence for addition to returned income. We further find that the assessee has offered a plausible explanation regarding the source of deposit in bank account with Central Bank of India, Siddapudur and Corporation Bank, Bodipatti, which was not found as false or unsubstantiated by the Revenue in penalty proceedings. It is not the case of the Revenue that the explanation offered by the assessee was found either false or unsubstantiated. We find that the Hon'ble jurisdictional High Court in the case of CIT vs R. Rajendran, 259 ITR 109, has held that when an explanation is offered by an assessee during the course of penalty proceedings, then a duty is cast upon the Assessing Officer to consider the said explanation. Without considering the explanation and arriving at the finding that the explanation offered is false, the Assessing Officer cannot proceed to hold that there has been concealment of income attracting penalty u/s 271(1)(c) of the Act. In the instant :- 12 -: I.T.A.No. 724 to 728/12 case, we find that the assessee has offered a plausible explanation during the course of penalty proceedings in respect of deposits in the two bank accounts and the Revenue has not recorded any finding to the effect that either the said explanation was found false or the assessee was not able to substantiate the said explanation. Therefore, in view of the above decision of the Hon'ble Jurisdictional High Court, in our considered view, the levy of penalty u/s 271(1)(c) of the Act with respect to deposits in Central Bank of India, Siddapudur and Corporation Bank, Bodipatti, is unsustainable. We, therefore, delete the penalty as levied u/s 271(1)(c) of the Act with respect to deposits in the two bank accounts, in assessment years under appeal.
15. In respect of addition made u/s 68 of the Act of ` 1,30,000/- in assessment year 2007-08, we find that the assessee has not offered explanation before the lower authorities and no submissions were also made before us. Therefore,, we confirm the penalty levied u/s 271(1)(c) of the Act with respect to the said addition.
16. In the result, the appeals of the assessee for assessment years 2002-03, 2004-05, 2005-06 and 2006-07 are allowed whereas appeal for assessment year 2007-08 is dismissed.
:- 13 -: I.T.A.No. 724 to 728/12
Order pronounced on Friday, the 12th of October, 2012, at
Chennai.
Sd/- Sd/-
(V. DURGA RAO) (N.S.SAINI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 12th October, 2012
RD
Copy to: Appellant/Respondent/CIT(A)/CIT/DR