Income Tax Appellate Tribunal - Ahmedabad
Nilesh R.Gupta, Bhavnagar vs Income Tax Officer, Wrd-1(3),, ... on 23 November, 2016
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ, अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
आयकर अपील सं./ ITA.No.282/Ahd/2012
नधा रण वष /Asstt. Year: 2000-2001
Shri Nilesh R. Gupta ITO, Ward-1(3)
Radhakrishna Vs Bhavnagar.
12/A, Anjeshwar Park
Tilaknagar
Bhavnagar 364 001.
PAN : ABSPG 8546 L
अपीलाथ!/ (Appellant) "#यथ!/ (Respondent)
Assessee by : Shri Dhiren Shah, AR
Revenue by : Shri Antony Pariath, Sr.DR
ु वाई क तार ख/ Date
सन of Hearing : 16/10/2016
घोषणा क तार ख / Date of Pronouncement: 23/11/2016
आदे श/O RDER
Assessee is in appeal against order of the ld.CIT(A)-XX, Ahmedabad dated 15.11.2011 passed for the Astt.Year 2000-01.
2. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming the penalty of Rs.45,285/- under section 271(1)(c) of the Income Tax Act, 1961.
3. Assessee at the relevant time was employed as an inspector in the Department of Custom and Central Excise, Govt. of India at Bhavnagar. He has filed his return of income on 26.6.2000 declaring total income at Rs.99,597/-. This return was processed under section 143(1) of the Income Tax Act, 1961 on 1.1.2002. It emerges out that two months prior to 3.11.2011 ITA No.282/Ahd/2012 2 two trucks of one firm of Arvindbhai Kantilal Angadia came from Ahmedabad loaded with goods of businessmen reached Rajkot Morbi Ocroi Naka. The assessee alongwith other official examined these trucks, and thereafter intimidated the truck owners and other Angadia that if they would pay a sum of Rs.2 lakhs then custom department will not interfere in their work. It emerges out from the record that Angadia have made complaint to Anti-Corruption Bureau and ultimately a search was carried out at the residence of the assessee as well as a trap was laid to catch the assessee red- handed for accepting a sum of Rs.80,000/-. Criminal case bearing ACB No.13/2003 was instituted against the assessee and charge-sheet was framed. It appears that in consequence of the search by ACB at the residence of the assessee, the AO has got information and assessment of the assessee was reopened by issuance of notice under section 148 of the Income Tax Act on 12.5.2004. In the re-assessment order, the ld.AO has made two additions i.e. a sum of Rs.36,500/- which was found to be deposited in the bank account of the assessee on 30.4.1999. The AO also made an addition of Rs.1,15,000/- on account of unexplained investment in the land. It emerge out from the record that during the course of search by ACB an unregistered sale deed was found exhibiting the fact that a piece of land comprising at survey no. 392/3 Jamnagar Rajkot Ahmedabad high-way was proposed to be purchased in the name of assessee's wife Smt.Nilaben Trivedi. This deed was not materialized and ultimately cancelled. On the basis of this document, it was harboured by the AO that the assessee had made payment of Rs.1,15,000/- out of unexplained source, and therefore, an addition equivalent to this amount deserves to be made in the income of the assessee. Both these additions were upheld by the CIT(A) as well as by the ITAT.
ITA No.282/Ahd/2012 33. The ld.AO has initiated penalty proceedings under section 271(1)(c) of the Income Tax Act. He ultimately imposed a penalty of Rs.45,285/-. Appeal to the CIT(A) did not bring any relief to the assessee.
4. The ld.counsel for the assessee has contended that the assessee has been acquitted from charges under the Prevention of Corruption Act. He placed on record copy of decision rendered by the Special Judge of Jamnagar at Jamnagar. This judgment has been passed on 25.7.2011 i.e. after the decision of the ITAT in the quantum appeal. The Tribunal has decided the appeal of the assessee bearing ITA No.2182/Ahd/2006 on 23.4.2010. This judgment was challenged by State Government in Criminal Appeal No.1391 of 2011. The Hon'ble Gujarat High Court has rejected the appeal of the State Government and upheld the acquittal of the assessee vide order dated 7.3.2012. The judgment of the Hon'ble High Court was challenged before the Hon'ble Supreme Court in CRLMP No.24543/2014. The Hon'ble Supreme Court has dismissed the SLP of the State Government vide order dated 18.12.2014. Copy of the Hon'ble Supreme Court's order has also been placed on record. On the strength of these documents, it has been contended that no disproportionate assets alleged to be procured by the assessee, was upheld. The Prosecution has failed prove that the assessee has demanded any bribe or has accepted a sum of Rs.80,000/- from the complainant.
5. The ld.counsel for the assessee further contended that explanation of the assessee with regard to deposit of Rs.36,000/- was that these amounts were received on second birth-day of his son from his relatives as gift and the assessee has made deposits. Similarly, with regard to the investment in land, the case of the assessee is that no such investment was ever made. It was an unregistered sale deed, which was cancelled in the month of March, 2000 i.e. which prior to the action taken by the ACB. Had it been not cancelled, then ITA No.282/Ahd/2012 4 ACB would have filed charge sheet against the assessee on accumulation of disproportionate assets. No such plea has been raised against the assessee. He prayed that penalty imposed by theld.AO and confirmed by the ld.CIT(A) be deleted.
5. On the other hand, the ld.DR contended that addition has been confirmed by the ITAT by looking into peripheral circumstances. Thus, it has been held that the assessee has made unexplained investment. He deserves to be visited with penalty.
6. I have considered rival contentions and gone through the record carefully. Section 271(1)(c) of the Act has a direct bearing on the controversy which reads as under:
"271. Failure to furnish returns, comply with notices, concealment of income, etc.-- (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the of course of any proceedings under this Act, is satisfied that any person
(a) and (b) ** ** **
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty.
(i)and (Income-tax Officer,)** ** **
(iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits:
Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or ITA No.282/Ahd/2012 5 (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income or such person as a result thereof shall, for the purposes of Clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed."
7. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important feature of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation-1 to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by the Assessing Officer or Learned CIT(Appeal); and, (b) where in respect of any fact, material to the computation of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income.
ITA No.282/Ahd/2012 6Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished.
8. In the light of the above, if we examine the facts of the present, then it would reveal that when quantum was decided, ITAT was not having the benefit of judgment rendered by the Special Judge, Jamnagar dealing with the Special Case No.ACB No.13/2003 instituted against the assessee by the ACB. The explanation of the assessee is that sum of Rs.36,000/- was deposited out of the gifts received on the birth-day of his son. Such gifts were received from relatives. As far as second addition is concerned, it is based on a document which was found during the course of search at the residence of the assessee. This document is unregistered sale deed. An unregistered sale deed does not confer any title. There is nothing on record which can conclusively say that title of this land vested with the assessee, more so, it was cancelled. Section 17 of the Registration Act contemplates that any immovable property ITA No.282/Ahd/2012 7 having value of more than Rs.100/- cannot be transferred unless it is registered. Then, what would be evidentiary value of such document. It appears that authorities have been influenced in the quantum proceedings by the pendency of criminal proceedings for prosecution of the assessee on account of corruption. Allegation against the assessee was that he was accepting Rs.80,000/- as bribe. This appears to be main reasons for making addition on the basis of circumstantial evidence. To my mind, the AO failed to prove that explanation of the assessee was false. There is no concrete positive evidence against the assessee exhibiting unexplained investment, except unregistered sale deed, which does not confer any title. Addition might have been confirmed, but this type of evidence would not be sufficient to visit the assessee with penalty, therefore, I allow the appeal of the assessee and delete penalty.
9. In the result, appeal of the assessee is allowed.
Order pronounced in the Court on 23rd November, 2016 at Ahmedabad.
Sd/-
(RAJPAL YADAV)
JUDICIAL MEMBER
Ahmedabad; Dated 23/11/2016
आदे श क& " त(ल)प अ*े)षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त(अपील) / The CIT(A)
5. $वभागीय 'त'न ध, आयकर अपील य अ धकरण / DR, ITAT,
6. गाड* फाईल / Guard file.
आदे शानस/ ु ार BY ORDER, उप/सहायक पंजीकार ( Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad