Income Tax Appellate Tribunal - Jodhpur
Samaj Ram Soni vs Assistant Commissioner Of Income Tax on 17 February, 2004
Equivalent citations: (2004)84TTJ(JODH)27
ORDER
Hari Om Maratha, J.M.
1.This appeal, which arises out of a penalty levied under Section 271(1)(c) of the IT Act, 1961, hereinafter referred to as the Act for short, has been filed by the assessee and pertains to asst. yr. 1992-93.
2. The brief facts leading to this appeal are that a search was conducted on 21st Jan., 1992 at the residential premises of the assessee. Original return was filed on 27th Aug., 1992 wherein an income of Rs. 1,93,273 was declared. Subsequently, a revised return was filed on 1st Nov., 1993 in which the income was declared at Rs. 14,93,687. The AO completed the assessment on 7th June, 1996 on a total income of Rs. 33,81,466. In the first round of appeals, the CIT(A) while dealing with Appeal No. 357/1993-94 vide his order dt. 29th March, 1994 allowed a relief of Rs. 8,83,040 and also set aside the assessment. In accordance with the directions of the CIT(A), the assessment was reframed under Section 143(3)/250 on 26th Aug., 1994 on a total income of Rs. 24,98,430. When the appeal again came before the CIT(A) in Appeal No. 207/1994-95, he again set aside the assessment vide order dt. 9th Jan., 1995. Again, following the direction of the CIT(A), the assessment was reframed on 7th June, 1996 on a total income of Rs. 24,98,430. When the assessee again came in appeal before the CIT(A), he enhanced the assessment by Rs. 77,30,955 vide order dt. 20th Oct., 1996. The AO while giving effect to the CIT(A)'s order revised the assessment to the extent of Rs. 32,29,390. On the basis of this order, the AO imposed a penalty under Section 271(1)(c) of the Act on the assessee.
3. The Tribunal vide its order dt. 12th April, 2002 reduced the total income so enhanced and assessed by the Department from Rs. 32,29,390 to Rs. 19,15,400 by reducing the undisclosed income under the head unexplained investment in gold and silver, unexplained cash, unexplained investment in debtors, interest on investment in money lending business, enhancement by the CIT(A) on account of gold and jewellery. While giving effect to the Tribunal's order, the AO revised the assessment order deleting the unexplained investment in debtors and interest on investment in money lending business totalling to Rs. 2,31,740 vide order dt. 31st March, 2003. The GIT(A), while dealing with the penalty appeal, after considering the submissions of both the sides, came to the conclusion that in view of the Tribunal's finding in the quantum appeal, penalty in respect of investment in gold and silver amounting to Rs. 4,21,750 and unexplained cash of Rs. 6,70,000 has been confirmed as unexplained income, which was detected as a result of search, so the AO was having sufficient reason to believe that the appellant had concealed income in respect of these items but he reduced the amount of penalty in view of the finding of the Tribunal.
4. Now, the assessee is in appeal before us against the confirmed penalty and has raised the plea that the CIT(A) has grossly erred in directing the AO to recalculate the penalty on the basis of the additions sustained by the Tribunal. The reasons for the assailment of the CIT(A)'s finding has been put forth by the assessee that the CIT(A) has not disposed of the appeal in a judicious manner because in the given facts and circumstances of this case, the penalty should have been deleted by quashing the penalty order itself.
5. This is an undisputed fact that initially a penalty of Rs. 9,75,000 was imposed under Section 271(1)(c) of the Act vide order dt. 8th April, 1997. At the time of passing of the penalty order, the appeal of the assessee was pending before the Tribunal against the additions made by the AO. The assessee preferred an appeal before the CIT(A), Jodhpur against the penalty order. The CIT(A) deleted some amount of penalty basing his findings on the Tribunal's order in the quantum appeal, i.e., where the Tribunal deleted the additions, the penalty was also deleted. A penalty was sustained pertaining to three items : (i) an amount of Rs. 2,06,983 based on income representing unexplained investment in gold ornaments; (ii) an amount of Rs. 29,196 based on income representing silver articles of three ladies, i.e., appellant's mother, wife and daughter-in-law, and (iii) cash found at the time of the search amounting to Rs. 37,520.
6. With regard to the gold ornaments, it has been submitted by the learned Authorised Representative, Shri Mahaveer Jain, that the appellant's father Shri Narayan Dass Soni was a goldsmith. He had two sons by name Shri Ramji Soni and Shri Sama] Ram Soni, who were married with Smt. Bai Chandia and Smt. Ganga Devi, respectively. It is the case of the assessee that the AO has accepted the gold ornaments weighing 1735.020 gms. belonging to Smt. Ganga Devi, who is appellant's wife. From this, the learned Authorised Representative has picked the thread and tried to tie the complete knot by submitting that from the above fact it can be inferred that the appellant's father must have given more or less equal quantity of gold ornaments to his other daughter-in-law. He also gave sufficient gold ornaments to his wife, namely, Smt. Devki Soni. According to the learned Authorised Representative, the gold ornaments belonging to Smt. Devki Soni was kept in the possession of the appellant though these ornaments have become the properties of families of both the brothers. So, according to the learned Authorised Representative, even if the Department did not consider the fact that gold ornaments weighing 1574.640 gms. did not belong to Smt. Devki Soni, although it was explained by the assessee, a penalty cannot be levied on this account even if the additions have been sustained by the Tribunal. The reasons put forth by the learned Authorised Representative are that penalty proceedings are entirely different in nature from those of the regular assessments wherein additions are made and sustained on various reasons.
7. After perusing the Tribunal's order and other evidence on record, we are convinced that, although the explanation tendered by the assessee with regard to ownership of the gold seized and found during the search operations, yet a penalty cannot be levied on this count. In the order of the Tribunal, the Tribunal has accepted 500 gms. of gold belonging to late Smt. Devki Soni and the remaining 1074.640 gms. has been sustained as representing the appellant's undisclosed income. The learned Authorised Representative is correct in submitting that when the Tribunal has accepted a certain amount of gold out of the total added by the Department, a natural corollary can be drawn that certain amount of gold ornaments has been accepted to belong to said Smt. Devki Soni, although the assessee claimed that the gold ornaments weighing 1574.640 gms. belonged to her. We are of the opinion that when certain amount of total gold added in respect of Smt. Devki Soni has been accepted by the Tribunal to belong to her, the remaining gold is not treated as fully explained and in that eventuality, when the explanation tendered by the assessee has not been fully treated as explained, penalty cannot be levied.
8. So far as the other two items on which additions have been sustained are concerned, again same is the position, i.e., the additions have been sustained on doubtful estimations. The learned Authorised Representative has relied on the order of the Tribunal which was rendered by the Jaipur Bench in ITA No. 524/Jp/1990 for the asst, yr. 1984-85, reported in Kanhaiya Lal Doshi v. Asstt. CIT (1996) 56 TTJ (Jp) 207, in which it has been held that in the absence of any positive evidence that the gold and gold ornaments and silver bullion recovered during search did, in fact, belong to assessee. While getting successive reliefs an every stage, major portion of gold and bullion held to be belonging to other member of assessee's family and finally addition of gold weighing 522.340 gms. and silver bullion weighing 4.865 gms. sustained in the hands of assessee cannot be, under the facts and circumstances of that case, held to belong to the assessee and penalty levied under Section 271(1)(c) in respect thereof cannot be sustained.
9. So far as the cash found at the time of search amounting to Rs. 67,000 is concerned, the Tribunal has observed in its order that the assessee has tendered an explanation and the same is reproduced at pp. 7 and 8 of the assessment order. The explanation tendered by the assessee is that he realised a loan amount advanced to Shri Harishankar Trivedi on 5th June, 1985 against pledge of title deed of house, which was returned on realisation of loan. He is stated to have withdrawn an amount of Rs. 11,000 from saving bank account No. 2364, SBBJ, Jodhpur before the date of search.
10. At the time of search, a total cash of Rs. 1,65,000 was seized from the possession of the assessee. Regarding this, the assessee tendered an explanation and the AO finally concluded that out of the seized cash, an amount of Rs. 1,87,500 should have been available with the assessee as per his explanation and the balance cash found to the tune of Rs. 78,000 remains unexplained in the hands of the assessee. But before the Tribunal, the assessee has further tried to explain the cash amounting to Rs. 25,000 and Rs. 11,000 totalling to Rs. 36,000, which according to the assessee, should have been reduced from the balance of Rs. 78,000 on which penalty was levied. The Tribunal did not believe this explanation of the assessee in the absence of any documentary evidence having been produced.
11. In view of the fact, as mentioned above, penalty levied in respect of gold and silver ornaments is hereby deleted but a penalty on the cash found at the time of the search can be levied after deducting an amount of Rs. 36,000, which can be considered for the levy of penalty as an explanation which was not accepted by the Tribunal.
12. So far as silver ornaments are concerned, the penalty is deleted in this regard on the basis of the same reasons as has been given in respect of the gold ornaments since the explanation tendered by the assessee has not been accepted by the Department as well as the Tribunal and the same may not be a reason which calls for levy of penalty under Section 271(1)(c) of the Act. Accordingly, the penalty levied in respect of silver ornaments is also deleted.
13. In the result, the appeal is partly allowed.