Income Tax Appellate Tribunal - Ahmedabad
Natubhai Naranbhai Virani, Surat vs Assessee on 3 August, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH " D"
Before Shri T.K.SHARMA, JUDICIAL MEMBER and
Shri N.S. SAINI, ACCOUNTANT MEMBER
Date of hearing:03-08-2009 Drafted on:03-08-2009
ITA No.1433/AHD/09
Assessment Year:2003-04
Shri Natubhai Vs. The I.T.O. Ward-9(1),
Naranbhai Virani Surat.
PAN/GIR No.:AAOPV 6537 B
(APPELLANT) .. (RESPONDENT)
Appellant by : None (Written Submission)
Respondent by: M.C. Pandit, D.R.
ORDER
PER N.S.SAINI , ACCOUNTANT MEMBER :-
1. This is an appeal filed by the assessee against the order of ld. CIT(Appeals)-V, dated 17-03-2009 on the sole ground that the ld. CIT(Appeals) has erred in confirming the levy of penalty under section 271(1)(c) of Rs. 31,500/-.
2. The brief facts are that the assessee filed return of income on 17-11-2003, declaring total income of Rs. 1,49,585/-. The assessee also disclosed agriculture income of Rs. 3,00,000/-. The assessment was completed under section 143(3) of the Act on 20-02-2006 at an income of Rs. 7,98,160/- by treating Rs. 2,82,000/- out of the agriculture income of Rs. 3,00,000/- shown by the assessee as income from other sources. In appeal, the Learned CIT(Appeals) restricted the disallowance from out ITA No.1433/Ahd/2009 Shri. Natubhai Naranbhai Virani Asst.Year -2003-04 -2- of agriculture income at Rs. 1,00,000/-. Thereafter, the Assessing Officer levied penalty of Rs. 31,500/- under section 271(1)(c) of the Act for concealment of income by the assessee. This was also confirmed in appeal by the Learned CIT (Appeals) following the decision of the Honorable Supreme Court in the case of UOI vs. Dharmendra Textile Processors 306 ITR 277 (SC) observing that it was a civil liability and that willful concealment is not and essential ingredient for attracting civil liability.
3. The Ld. Authorized Representative of the assessee has filed written submission, wherein, it is stated that a decision of Hon'ble Supreme Court in the case of Dharmendra Textile Processors (supra) has been distinguished by the Hon'ble Punjab and Hariyana High Court in the case of CIT vs. Haryana Warehousing (P&H) and by the Tribunal in the case of Kanbay Software vs. DCIT (ITAT Pune), and in the case of M/s. VIP industries vs. ACIT (ITAT Mumbai). In all the above cases, it has been held that in order to levy penalty under section 271(1)(c), it is essential to show that there was a willful act on the part of the assessee to file inaccurate particulars of income or to conceal its income. It is stated that in the instant case the assessee has shown agriculture income at Rs. 3,00,000/- and has furnished copy of 7/12 and 8/A in respect of ownership of land, copies of agricultural bills in respect of agriculture income earned as well as details of income/expenditure account. The Assessing Officer has ignored these evidences filed before him and has relied on the report made by Directorate of Agriculture, Gujarat State ITA No.1433/Ahd/2009 Shri. Natubhai Naranbhai Virani Asst.Year -2003-04 -3- and thereby concluded that agriculture income could be only Rs. 18000/- and not Rs. 3,00,000/- and made addition of Rs. 2,82,000/- under the head "other source" of income. On appeal, the ld. CIT(Appeals) has restricted the same to Rs. 1,00,000/-. Thus, there is no finding to the effect that the assessee has concealed his income or has filed inaccurate particulars of his income. Further, the Assessing Officer has estimated the agriculture income of the assessee at Rs. 18,000/- and the ld. CIT(Appeals) estimated at Rs. 2,00,000/-. Thus, addition was made on the basis of estimation only and therefore, the levy of penalty is not justified.
4. The Ld. Departmental Representative supported the order of the ld. CIT(Appeals).
5. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, in the return of income filed the assessee disclosed agriculture income of Rs. 3,00,000/- which was estimated at Rs. 18,000/- by the Assessing Officer following the report of Directorate of Agriculture, Gujarat State and thus, made addition of Rs. 2,82,000/- to the income of the assessee under the head 'Income for Other Sources'. In appeal, the ld. CIT(Appeals) restricted the addition to Rs. 1,00,000/- by estimating agriculture income at Rs.2,00,000/-. Thereafter, the Assessing Officer levied penalty of Rs. 31,500/- by invoking section 271(1)(c) on account of concealment of income by the assessee, which was also confirmed in ITA No.1433/Ahd/2009 Shri. Natubhai Naranbhai Virani Asst.Year -2003-04 -4- appeal by the ld. CIT(Appeals). The CIT(A) has confirmed the penalty by observing that it is a civil liability and it is not necessary to show that the assessee willfully concealed his income following the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (supra). We find that, the Ahmedabad 'A'-Bench of the Tribunal in the case of ITO Vs. Sunrise Fincap Ltd. in ITA No. 542/Ahd/2009, Assessment Year 2003-04, order dated 24-07-2009 has held as under:
Having considered the facts and circumstances of the case, we find that the learned CIT(A) has passed a very reasoned order which we make part of our order. The learned DR argued before us that even if the set- off of capital loss against business profits was by negligence or mistake, the fact remains that the particulars of income furnished were not correct and willful concealment not being an essential requirement for levy of penalty u/s 271(1)( c) as held by the Supreme Court in UOI vs. Dharmendra Textile Processors 306 ITR 277, penalty could not be deleted. We find that similar argument was made by the Revenue in the case of CIT vs. M/s Sidhartha Enterprises and Hon'ble Punjab & Haryana High Court rejecting the plea held :
"The judgment in Dharmendra Textile cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. What has been laid down is that qualitative difference between criminal liability u/s 276C and penalty u/s 271(1) ( c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, the concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. In view of the finding that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, penalty was not leviable."
(Emphasis supplied) In view of the above, and considering the facts and circumstances of the case, since there is no concealment of income or submission of inaccurate particulars of income, the learned CIT(A) has rightly cancelled the penalty levied u/s.271(1)(c) of the Act. We uphold the same and dismiss the appeal of the Revenue.
ITA No.1433/Ahd/2009Shri. Natubhai Naranbhai Virani Asst.Year -2003-04 -5-
6. In the instant case also we find that the assessee has shown agriculture income of Rs. 3,00,000/- which was estimated at Rs. 18,000/- by the Assessing Officer and at Rs. 2,00,000/- by the ld. CIT(Appeals). The ld.
CIT(Appeals) while estimating the agriculture income at Rs.2,00,000/- in appeal No. CAS-V/9/2006-07, order dated 01-11-2006 held as under :-
"6.7 I have perused the facts of the case as discussed by the Assessing Officer and the various case laws relied upon by him and also carefully went though the detailed submission as made by the Ld. Authorised Representative and the judicial decision taken into consideration by him in support of his contentions. After analyzing the facts, it is found that the report of the Directorate of Agriculture, Gujarat State was with regard to the forecast of production of various crops in the Gujarat State and the same cannot be taken as a final parameter for finding out the yield per hector with respect to a particular crop in a particular district of the State. In this regard, the submission as made by the Ld. Authorised Representative of the assessee that the production/yield in the case of a particular crop may vary from place to place depending upon the nature of seeds and fertilizers used, irrigation facilities available and the nature of soil etc. and in the case of the appellant all these facilities were available and further the soil was quite fertile which cumulatively resulted into a bumper crop, appears to be acceptable. It is also found that the Panchas, whose statements were recorded by the Assessing Officer have tacitly confirmed the fact that during the year net agricultural income of the appellant ranged between Rs. 3,40,000/- to Rs. 3,55,000/- and the same cannot be treated as baseless because they were the people who were thoroughly aware of the nature of the agricultural activities carried out by the appellant and the crops grown by him. It ITA No.1433/Ahd/2009 Shri. Natubhai Naranbhai Virani Asst.Year -2003-04 -6- is also seen that the appellant was holding 4.94 hectors of land and in this way, the size of the land holding is found quite big and on that basis, it can be presumed that the agricultural yield in the form of cotton crop would have been quite impressive. As is seen in the case of the appellant, while disallowing the agricultural income amounting to Rs. 2,82,000/- and treating the same as income from other sources, the Assessing Officer, except depending upon the above crop forecasting report of the Directorate of Agriculture, did not bring any evidence on record to prove that the yield of cotton crop as shown by the appellant was not correct and the same was inflated one. I, therefore, keeping in view the above referred facts, hold that it would be fair to accept the net agricultural income of the appellant at Rs.2,00,000/- keeping in view the size of his land holding and the statements as made by the Panchas of the native village of the appellant and other details as submitted by the A.R. during the course of appellate proceedings. In the result, the addition as made by the Assessing Officer under this head is restricted to Rs. 1,00,000/-. Accordingly, this ground of appeal is partly allowed."
7. From the above, it is observed that addition of Rs. 1,00,000/- was made merely on estimate and the revenue could not bring any material on record to show that agriculture income of Rs. 3,00,000/- disclosed by the assessee was actually and inflated one. In absence of any such material brought on record by the revenue, in our considered opinion merely because of difference due to estimate penalty under section 271(1)(c) cannot be levied. Hence, we set aside the orders of the lower ITA No.1433/Ahd/2009 Shri. Natubhai Naranbhai Virani Asst.Year -2003-04 -7- authorities and delete the penalty of Rs. 31,500/- and allow the ground of appeal of the assessee.
8. In the result, the appeal of the assessee is allowed.
Order signed, dated and pronounced in the Court on 7th August, 2009.
Sd/- Sd/-
( T.K. SHARMA ) ( N.S. SAINI )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated:07/08/2009
Ankit
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. The CIT Concerned
4. The ld. CIT(Appeals)-V
5. The DR, Ahmedabad Bench
6. The Guard File.
BY ORDER,
स×याǒपत ूित //True Copy//
(Dy./Asstt.Registrar), ITAT, Ahmedabad