Income Tax Appellate Tribunal - Chandigarh
Sh. Ashwani Kumar, Bhadson vs Ito, Nabha on 17 November, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH 'A', CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.58/Chd/2017
(Assessment Year : 2009-10)
Shri Ashwani Kumar Vs. The Income Tax Officer,
C/O Sai Plant Protectors, Nabha.
Thana Road, Bhadson.
PAN: AAZPK6954A
(Appellant) (Respondent)
Appellant by : Shri K.P. Bajaj, Advocate
Respondent by : Shri Pawan Kumar Sharma, ACI DR
Date of hearing : 26.09.2017
Date of Pronouncement : 17.11.2017
O RDE R
PER ANNAPURNA GUPTA, A.M.:
Th i s a p p e a l f i l e d b y t h e a s s e s se e h a s b e e n p r ef e r r e d a g a i n s t t h e or d e r p a s s e d b y th e Ld . C o m m i s s i o n er o f I n co m e Ta x ( A p p e a l s ) , Patiala ( h e r ei na f t e r r e f e r re d to as ' CI T( A p p e a l s ) ' ) d a t e d 1 8 . 11 . 2 0 16 , r e l a t i n g t o as s e s s m e n t y e a r 2 0 0 9 - 10 , co n f i r m i n g l e v y of p e n a l t y u / s 27 1 ( 1 ) ( c ) of t h e I n c o me Ta x Ac t , 1 9 6 1 ( i n s ho rt ' t h e A ct ' .
2. B r i e f l y s t a te d , a s s e s s m e nt i n t h e p r e s e n t c a s e w a s made u/s 143(3) making a dd i t i o n on a c c o unt of ca s h deposits of Rs . 7 0 , 4 1 , 00 0 / - , treating the same as u n e x p l a i ne d . Th e said addition was c o n f i rme d by th e L d . CI T( A p p e a l s ) a n d a l s o b y t h e Tr i b u n a l . Th e r e a f t e r t h e A s s e s s i n g O f f i c er i n i t i a t e d p e n a l t y p r o c e e d i ng s u / s 2 7 1 ( 1 ) ( c ) of the Act, on the addition so made. Th e a s s e s s ee requested the Assessing O f fi ce r to keep t he penalty 2 p r o c e e d i ng s i n ab e y a n c e p l e a d i ng t h a t h e w as go i n g t o f i l e a n a p p e al i n t h e H i g h C o ur t a ga i ns t t h e o r d e r p a s se d b y t he I . T. A . T. Th e A ss e s s i n g O f f i c er d i d n o t a c c e p ted t h e p l e a a n d l e v i ed p e n a l t y u / s 2 7 1( 1 ) ( c) @ 3 0 0 % o f t h e ta x s o u g h t t o b e e v a d ed a mo u n t i n g t o R s . 6 9, 7 2 , 6 7 1 / -. Th e m a t t e r w a s c a r r i e d i n a p p e al b e f o r e th e L d .C I T( A p p e al s ) w ho c o n f i r med t h e l e v y o f p e na l t y .
3. A g g r i e v e d b y t he s a m e , t he a s se s s e e h a s co m e u p i n a p p e a l b ef o r e us , r a i s i n g f o l l o w i ng g r o u n d s:
"1. That on facts and circumstances of the case the order passed by the CIT(A) is bad in law and against the facts of the case.
2. That in the facts and circumstances of the case the ld. CIT(A) was not dismissing the appeal and upholding the penalty levied at 300% of the tax alleged to have been concealed.
3. That without prejudice the Id. CIT(A) did not adjudicate on the alternative plea set forth before him for explanation of deposits in bank account to the tune of Rs.70,41,000/-
4. That the quantum of penalty levied and upheld is rightly excessive."
4. A t t h i s s t a g e , t he r e l e v a n t f a c t s l e a d i n g t o t h e a dd i t i o n made on ac c ou n t of u ne x p l a i n e d c a sh d ep o s i t s of R s . 7 0 , 4 1 ,0 0 0 / - i n t h e b a n k acc o u n t o f t h e a ss e s s e e ar e b e i n g b r o u gh t ou t . D u r i n g a sse s s m e n t p r oc e e di n g s w h e n t h e a s s e s s e e wa s a s k e d t o e xp l a i n t h e s o u r ce o f t h e s e deposits, he s ta t e d t ha t t he same w er e on account of f o r f e i t ur e o f a d va n c e s r e c e i ve d f ro m t w o p e r s o n s fo r t h e s a l e o f h i s i m m o v ab l e p r o p e rt i e s , s i n c e t h e o t h e r p ar t y d i d n o t a p p e a r o n t h e da t e o f r e g i s t r at i o n o f t h e s a l e de e d . Th e a s s e s s e e c o n t end e d t h at t h e f i rs t a g r ee m e n t wa s e n t er e d 3 i n t o w i t h o ne S hr i M a n d e e p Si n gh S / o S h r i S i nga r a S i n g h , R / o V i l l a g e C h i l l a n Te h s i l & D i s t r i c t M o h a l i f o r sa l e o f h i s i m m o v a b l e pr o p er t y f o r a c o n si d er a t i o n o f R s. 7 0 l a c s . Th e a g r e e m e n t t o s e l l w a s e n t e re d i nt o , a s p e r t h e a ss e s s e e , o n 19.6.2008 while the date of r e g i s t r a ti o n was fixed for 2 7 . 6 . 2 0 0 8. A n a d v a n c e of R s . 35 l a c s w as s t a te d t o h a ve b e e n r e c ei v e d fro m t h e s ai d S h r i M a n d e e p Si n g h w h i c h w a s f o r f e i t ed / c o n f i s ca t e d w h e n h e d i d n o t a p p e a r o n t h e d a t e o f r e g i s t r a ti o n of the sale deed. Th e r e a f t e r the assessee c o n t e n d e d, t ha t a n o t h e r a g r e em en t t o s e l l w a s e nt e r e d i n t o w i t h o n e S hr i D h a n n a S i ng h S / o S h r i D al i p S i n g h S / o S a r a i n S i n g h R /o K a b u l p ur , Te h s i l R a j p ur a , Di s tr i c t P a ti a l a o n 2 4 . 6 . 2 0 0 8 fo r a c o n s i d e ra ti o n o f R s . 6 0 l ac s a g a i n st w h i c h a dv a n c e of R s . 3 0 l a c s w a s r e c e i v ed o n th e s a m e d a y a n d t h e da t e o f r e g i s t r at i o n fi xe d w a s 2 7. 6 . 2 00 8 , w h i c h again was f o rf e i t e d / c on f i s c at ed on account of non a p p e a r a n ce o f t h e p a r t y o n t h e d a t e o f r e g i s t r at i o n o f t h e sale deed. P ho to c o p i e s o f bo t h t h e a g r e e m en t s w e r e f i l e d b e f o r e th e A ss e ss i n g O f fi c e r . Th u s t h e a s s e s se e a t t r i b u t ed t h e c a s h d ep o s i t e d i n t h e ba nk a s b e i n g on a c c o u n t o f a d v a n c e s re c e i v ed f r o m t h e af o re s a i d t w o pe r s on s a g a i n s t agreement to se l l l a n d, which were fo r f e i te d by h i m. Further i nv e s t i ga t i o n s d u ri n g th e course of as s e s s m e n t p r o c e e d i ng s to establish the g e n u i n e n e ss of the said t r a n s a c t i o n w e r e c a r r i e d o u t b y th e A s s e s s i n g O ff i c e r a s k i n g t h e a s s e s s ee t o p r o d u c e t h e sa i d p e r s o n s , i ss u i ng s u m m o n s t o t h e m a n d m ak i n g f u r t h er e n qu i r i e s a l l of w h i c h y i e l d e d no result. Th e a s s e s s e e c o u l d n ot p r o d u c e t h e s ai d p e r s o n , 4 n o n e a p p e a r e d i n r e s p o n s e t o th e s u m m o n s i s su e d b y t h e A s s e s s i n g O f f i c er a n d e nq u i r y co n d u c t e d b y t he A s s e s s i n g O f f i c e r r e v ea l e d t h a t o n e o f t h e p e r s o n s S h r i M a nd e e p S i n g h f r o m w h o m t h e a d v a n c e o f R s . 35 l a c s w a s r e c e i v e d w a s n o t a r e s i d e nt o f vi l l a g e C h i l l a n w h i ch w a s t h e a d d r es s g i v e n i n t h e a g re e m e n t . S i m i l ar l y , t h e o t h e r pe r s o n S hr i D h a nn a Singh from w ho m Rs.30 lacs was stated to have been r e c e i v e d b y w a y o f a d v a nc e w as f o u n d i n t h e c o u r s e of e n q u i r y t o ha v e l e f t t h e v i l l a g e a f e w y e a r s b a ck b y s e l l i n g o f f h i s p ro p e r t i es . I n t h i s b a c kd r o p t h e As s e s s i n g O f f i c er h e l d t h a t th e as s e s s e e h ad n o t b e e n a b l e t o e x p l a i n t h e s o u r c e o f th e c as h d e p o s i ts a n d a c c o r d i n gl y a d d i t i o n o f t h e s a m e w a s m a d e t o t h e i n c o m e o f t h e a ss e s s e e w h i c h w a s u p h e l d b y b o t h th e a p p e l l a t e a uth o r i t i e s.
5. Before us, du r i n g the c o u r se of h e a r i n g, the Ld. c o u n s e l f o r a s s es s e e p l e a d ed t h at t h o u g h t h e as se s s e e h a d n o t b e e n ab l e to c a t e g o ri c a l l y p r o v e t h e s o u r ce o f t h e se d e p o s i t s b y w a y o f a d v a n ce r e c ei v e d a s e x p l a i n ed b y h i m t o t h e l o w er a u t h ori t i e s b ut t h e s a i d d e p o s i ts w e r e o t h e r w i s e e x p l a i n a bl e w i t h t h e b o o k s o f a c c o u n t m a i n ta i ne d i n t h e r e g u l a r c o u rs e of b u s i n e s s . Th e L d . c o u n s e l f o r a s s e s s e e s u b m i t t e d t h a t th e e n t i r e d e p o s i t s w e r e a tt r i b u ta b l e t o t he c a s h w i t hd r a w n f r o m h i s b a n k ac c o u n t s . Th e L d . c o u n s el f o r a s s e ss e e s t at e d t h a t an e x p l a n a t i o n to t h i s e f f e c t w as filed b e fo r e t he L d . CI T( A p p e a l s) also by way of w r i t te n s u b m i s s i on s r epr o d u c e d a t p a ges 1 9 t o 2 0 of t h e P a p er B o o k a l o n g w i t h a c h a r t s h o w i n g m o v e m e n t o f d ep o s i t s a nd 5 w i t h d r a w al s i n v a r i o u s b an k ac c o u n t m a i n t a i ne d b y t he a s s e s s e e f o r e xp l a i n i n g t h e s ou r c e o f t h e d e po s i t i n t he O r i e n t a l B a n k o f C o m m e rc e o f t he a s s e ss e e . C o p i e s o f b a nk a c c o u n t o f th e as s e s s e e w er e a l so s t a t e d t o h av e b e e n f i l e d b e f o r e t h e CI T( A) . Th e L d . c o u n s e l f o r a s s e s se e c o n t e n d e d that the L d . CI T( A p p e a l s ) had without considering this a l t e r n a t e e x p l ana t i o n o f t h e a s se s s e e , u ph e l d th e p e n a l t y l e v i e d m e re l y o n a c c o u n t o f th e f ac t t h a t e a r l i e r e xp l a n a t i o n o f t h e so u r c e o f d e p o s i t w a s r e j e ct e d r i g ht u p by th e I . T. A . T. Th e Ld. c o u n se l for a s s e s see p l e a d ed t h at penalty p r o c e e d i ng s w e re s e p a r a t e p r o ce e d i n g s a nd t h e a s s e s s ee was entitled to take up fresh contentions in p e n a l ty p r o c e e d i ng s t o sa v e i t s el f f r om t he l e v y of p e n a l t y .
6. Th e L d . D R , o n t h e o t h e r h a n d, c o n t e n d e d t h at t h e a s s e s s e e c o ul d no t c o m e u p w i t h n e w e x p l a n a ti o n i n p e n a l t y p r o c e e d i ng s a nd t h e ea r l i e r e x p l a n a t i o n h a v i n g b e e n f o un d t o b e u n s u b st a nt i a t e d , p e n a l t y ha d b e e n r i gh t l y l e v i e d an d c o n f i r m e d b y t he L d . CI T( A p p e a l s) .
7. W e h a v e he a r d th e c o n t e nt i o n s of b o t h t he p a r ti es .
8. W e f i n d m e r i t i n t h e co n t e n ti o n s o f t he L d .C o u n se l f or t h e a s s e ss e e . Pen a l t y i n t h e p re se n t c a s e h a s b een l e v i e d o n t h e a d d i t i o n m ad e o n a c c o u n t o f u n e x p l a i n e d c a sh d e p o s i ts i n B a n k , w h i c h h a s b e e n c o n f i rm e d b y th e CI T( A ) h o l d i n g t h a t t h e e x p l a na t i o n g i ve n b y t h e a s s e ss e e f or t h e c a s h d e p o s i t s r e m a i ned u n s u b s ta n t i a t ed i n q u a nt u m p ro c e e d i n g s r i g h t u pt o t he I . T. A . T. . B u t a t th e s a m e t i m e , un d e n i a b l y t h e a s s e s s e e ha d g i v e n a n a l t e r n at e e x p l a n a ti o n f or t h e s a i d 6 d e p o s i t s d ur i n g a p p e l l a t e pr o c e ed i n g s b e f o re t h e C I T( A ) o n t h e l e v y o f p e n al t y , a t tr i b u t i n g th e m t o t h e r o t a ti o n o f c a s h i n t h e v a r i o u s ba n k a c c o u n t s ma i n t a i n e d b y h i m. C o p i e s o f t h e B a nk a c co u nt s a n d a c as h fl o w s t a t em e n t w a s a l s o f i l e d t o s u b s t a n ti a t e t h e e x p l a n at i o n . B u t s u r p r i s i n g l y , w e f i n d , t h a t t h e CI T( A ) d i d n o t e v e n c on s i d e r t h e s a m e a t a l l a n d f o r n o a pp a r e n t re a s o n .
9. I t i s t ri t e l a w t ha t p e n a l t y p r o cee d i n g s a r e d i s ti nc t a n d s e p a r a t e f r o m q ua n t u m p ro c e e d i ng s . Th e s ta n d a rd o f pr o o f f o r i m p o si t i o n of p e n a l t y i s d i ffe r e n t f r om t h a t o n w h i ch q u a n t u m o f an a d d i t i o n of i n c om e c a n b e s u st ai n e d . Th e findings given in a s s e ss m e n t order are relevant a nd admissible m a te r i a l in penalty p r o c e e d i n gs but these f i n d i n g s ca n n o t o p e r a t e a s re s ju d i c a t a s i n c e c on s i d e r a t i o n t h a t a r i s e s i n pe n a l t y pr o c e e di ng s a r e d i f f e re n t f r o m t h os e i n a s s e s s me n t p ro c e e d i n g s. I n t he c a s e o f CI T V s . G o k u l d as H a r i v a l l a b h d a s 34 I TR 9 8 , t h e Ho n ' b l e B om b a y H i g h C o u rt h e l d t ha t as s e ss m e n t pr o c e e di ng s a r e t a x i n g pr o c e e d i n gs while penalty p r o c e e d i ng s are criminal p ro c ee d i n g s by nature and a decision given in a s s e s s m en t p r o c e e d i ng c a n n o t p o s si b l y b e b i n d i n g o n th e a u t h o r i t y w ho t r i e s t h e a s s e s s e e fo r a n o f f e n c e . Th i s v i e w w a s c o nf i r m ed b y t he a p e x c o ur t i n An w a r A l i ' s c as e 7 6 I TR 6 9 6 wh er e i n i t w a s h e l d t h a t f i n d i ngs g i v e n i n a s s e s sm e n t p r o c ee d i n gs w e r e n o t c o n c l u s i ve t h o u gh i t w a s a g o o d pi e c e o f e v i d en c e . F o l l o w i n g t h e a f o r e s a i d t wo d e c i s i o n s , th e H o n ' b l e B o m ba y H i g h C o u rt in t h e c a s e o f J a i n a r a y an B a bu l a l v s CI T r e p or t e d a t 69 7 C TR 2 0 1 , w h i l e d e a l i n g w i t h a n i d e n t i c a l i s s u e o f l e v y o f p e n a l t y o n u n e xp l a i n e d c as h c r ed i t s f o r wh i c h so m e o t h er c o n t e n t i on s w e r e r a i s e d i n p e na l t y p r o c e e d i ng s , he l d t h a t i t w a s o p e n t o t he I TO t o c o n s i d e r h i s e a r l i e r f i n d i n g i n q u a n t u m p r oc e ed i n g s b u t w as no t b o u n d b y i t a n d i f a n y o t h e r e v i d e n c e wa s p r o d u ce d i n p e n a l t y pr o c e e di n g s i t w as o p e n f o r h i m t o c o m e t o a d i f f e r en t c o n c l u si o n . Th e r e l e v a nt f i n d i n g s o f t h e Ho n ' b l e H i g h C o urt a r e a s u n d e r :
"In Gokuldas Harivallabhdas' case (supra), Chagla C.J., speaking for the Bench, observed that "the proceedings under s. 28(1)(c), in their very nature, are penal proceedings and the elementary principles of criminal jurisprudence must apply to these proceedings, and nothing is more elementary, at least in this country in criminal jurisprudence, than the principle that the burden of proving that the accused is guilty is always upon the prosecution..." Assessment proceedings are taxing proceedings and penalty proceedings are criminal proceedings in their very nature. A decision given in an assessment proceeding cannot possibly be binding upon the authority who tries the assessee for an offence. Therefore, it was open to the ITO in the penalty proceedings to consider his earlier finding that a particular receipt constituted income for a particular assessment year, but he was not bound by that finding. If any other evidence was produced in penalty proceedings, it was open to the ITO to come to a different conclusion."
10. U n d o u b t e dl y , in the present ca s e the e x p l ana t i o n o f f e r e d b y t h e as s e s s e e i n q u a nt u m p r o c e e d i ng s c o u l d n o t b e a d e q u a t el y su b s t a n t i at e d b y h i m b u t t h i s f a c t a l o n e w o u l d n o t a u t o ma t i c a l l y l e a d t o th e l e v y o f p e n a l t y . Penalty p r o c e e d i ng s be i n g s e p ar a t e a n d d i s t i nc t fr o m as s e s s m e n t p r o c e e d i ng s t h e a s s e s s e e i s e nt i t l e d t o g i v e al l p o s s i b l e e x p l a n a t i o n s i n s u p p o r t o f hi s c o n t e n ti o n s . As o b s e r ve d e a r l i e r by u s , t he f i n d i n gs i n q ua n t u m p r o ce e d i ng s w i l l n ot o p e r a t e a s r e s ju d i c a t a . Th e a s s e s s e e c a n n ot b e s t o p p e d f r o m r a i s i ng n e w c o n t e n t i o ns wh i c h h e h a d n o t r a i s e d i n q u a n t u m p r oc e ed i n g s . Th e L d .C I T( A p p e al s ) , t he r e f o r e , i n 8 t h e p r e s e n t c a se , w e h o l d , o u gh t t o h a v e c o n si d e r e d t h e a l t e r n a t e e x p l ana t i o n g i ve n b y th e a s s e s se e r e ga r d i n g t he s o u r c e o f c a s h de p o s i t e d i n h i s b a n k , b e f o r e a dj ud i c a t i n g o n t h e l e v y o f pe n a l t y . W e , t h e re f o re , c o n s i d er i t f i t t o r e s t o re the matter b a ck to the file of the L d . CI T( Ap p e a l s ) to consider the e x p l a n a t i on o f fe re d by the as se s s e e a nd t h e r e a f t er d e c i d e t h e i s s u e i n a cco r d a n c e w i t h l a w. We may a d d t h a t t h e as se s s e e b e g i v e n du e o p p o r tu n i t y of h e a r i ng in this regard.
11. I n t h e r es u l t , th e a p p e a l o f t h e a s s e s s e e s t a n ds a l l o w e d f o r s ta t i s t i c a l p ur p o s e s O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 17 t h November, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)s
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh