Narayanbhai S. Patel, , Ahmedabad vs Assessee

These are the Miscellaneous Applications filed by the assessee against the consolidated order of the Tribunal dated 30-6-2014 passed in I.T.A.No.1272 & 1273/Ahd/2011 for the A.Y. 1991-92 AND 1992-93.

MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

2 2. The grievance projected in the Miscellaneous Petition filed by the assessee reads as under:-

"1. The applicant above-named has downloaded on 8-8-2014 with the order passed by the Appellate Tribunal Bench -C, Ahmedabad for A.Y. 1991-92 in ITA No.1272/Ahd/11 whereby the appeal of the Applicant has been dismissed. It is noticed that in so far as the ground relating to the levy of penalty in respect of the peak credit is concerned, the Hon'ble Appellate Tribunal has for the reasons stated in para 11 of the order held that (i) the source of deposit in bank accounts was not explained, (ii) the decisions relied upon by AR were distinguishable on facts. It is also noticed that Hon'ble Tribunal has relied upon the decision in the case of Bechardas Parmar (341 ITR-499) (Guj.) and further held that the Dept had detected other five bank accounts.

2. In the humble submission of the applicant, the apparent error is as under:-

2.1. The applicant submits with utmost respect that the finding given by Hon'ble Tribunal that the source of deposit in said bank accounts was not explained by the assessee-applicant is not factually correct in as much as it would be noticed from the assessment order itself that while explaining the modus operandi it was pointed out as under:-

"With initial capital contribution of several persons named above I have made investment in shares and securities of funds initially contributed in cash is employed by way of cash deposits in different bank accounts particulars whereof are disclosed with the return..."

2.2. The next finding given by Hon'ble Tribunal that five bank accounts were detected by Dept. And in view of transfer entries the disclosure cannot be said to be voluntary is also not factually correct in as much as the perusal of reasons recorded for reopening clearly shows that the assessee- applicant by letter dated 1-12-1995 brought to the notice of ADIT(INV) about the existence of further bank accounts. Had the Dept. Knowledge about the same,. They would have been referred to earlier by ADIT (INV) while recording applicant's statement. Even the disclosure made by the applicant before ADIT (INV) did not pertained to the peak MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

3 credit for this year under consideration. This year was reopened as a result of assessment made for A.Y. 1993-94 wherein peak credit for this year was pointed.

2.3. The next reason advanced by Hon'ble Tribunal is that the case laws relied upon b y AR was distinguishable on facts. The applicant submits with utmost respect that the perusal of the decision in case of Shri Murarilal R. Agrawal there was a search wherein a bank account was found and the assessee had admitted it as his benami and the addition in respect of peak credit was made. Similarly in case of Shri Ojas Mehta an addition of Rs.22,72,788/- was made on the basis of peak of undisclosed bank account...

The applicant submits with utmost respect that the facts of the present case are similar to those cases in the sense that the addition of peak credit of bank accounts found out was made and the penalty levied thereon was deleted. The applicant's case is on much stronger footing that it is not the case of search and other bank accounts were disclosed by the present applicant to Dept.

2.4. The applicant submits with utmost respect that the reliance placed by Hon'ble Tribunal on the decision of Shri Bechardas Parmar is wholly misplaced on facts and in law both. It was a case of search and seizure with asstt under special Chapter XVI i.e. 158BC and penalty u/s. 158BFA (2) are not applicable as held in the said decision itself.

2.5. In view of above fact and circumstances of the case, the applicant submits with utmost respect that the conclusion reached by Hon'ble Tribunal is contrary to the facts of the case and the judicial pronouncements of said two decisions.

2.6. It is therefore, prayed that the inadvertent factual errors as pointed out hereinabove may please be rectified and the ultimate order of the Hon'ble Tribunal may please be modified in light of the correct facts as well as position in law."

3. Order of the Tribunal reads as under:-

"1. These are the appeals filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-XX, Ahmedabad dated 04.02.20111.

MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

4 2. The sole ground taken in both the appeals by the assessee is that the ld. Commissioner of Income Tax (Appeals) erred in facts and in law in confirming the penalty of Rs 1,33,400/- for Assessment Year 1991-92 and Rs 3,88,700/- for Assessment Year 1992-93 levied by Assessing Officer u/s. 271(1)(c) of the Act.

3. We heard the rival submissions and perused the orders of lower authorities and material available on record. In the instant case, the assessee filed its return of income disclosing income of Rs 31,880/- in Assessment Year 1991- 92 and Rs 36,880/- in Assessment Year 1992-93. Thereafter, it was found on investigation by the Department that the assessee was having certain bank accounts which were not disclosed to the Department. Accordingly, the peak balance in the undisclosed bank accounts were treated as income of the assessee.

4. The Assessing Officer completed the assessment by determining assessee's total income at Rs 3,19,480/- in the Assessment Year 1991-92 and at Rs 5,77,070/- in Assessment Year 1992-93.

5. On appeal, the said total income was reduced to Rs 2,90,380/- for the Assessment Year 1991-92 and increased to Rs 7,38,900/- for Assessment Year 1992-93 because of certain mistake in arithmetical calculation of the Assessing Officer.

6. Thereafter, penalty u/s. 271(1)(c) was levied of Rs 1,33,400/- for Assessment Year 1991-92 and Rs 3,88,700/- for Assessment Year 1992- 93.

7. On appeal, the Commissioner of Income Tax (Appeals) confirmed the levy of penalty.

8. Before us, the Authorized Representative of the assessee submitted that as the addition was made of the peak amount of the respective assessment years, the addition was on estimate basis and therefore penalty u/s. 271(1)(c) cannot be levied. He, in support of the above contention, relied upon the decision of this Bench of the Tribunal in the case of Murarilal Ratanlal Agarwal Vs. ACIT in IT(SS)A No. 573 & 615/Ahd/2012 Assessment Year 2004- 05 order dated 05.07.2013 and in the case of Shri Ojas Ashokbhai Mehta Vs. ITO in ITA No. 296 & 297/Ahd/2013 Assessment Year 2008-09 order dated 23.08.2013.

MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

5 9. In the alternative, the Authorized Representative of the assessee also contended that only one undisclosed bank account was found by the investigation wing of the Department and the assessee himself disclosed the other five bank accounts and the addition was made on the basis of all the six bank accounts out of which five bank accounts were voluntarily disclosed by the assessee and therefore, penalty u/s. 271(1)(c) should not have been levied in respect of income assessed on the basis of those five bank accounts.

10. The Departmental Representative supported the orders of lower authorities.

11. We find that it is not in dispute that the six bank accounts with reference to which addition was made by the Assessing Officer were not disclosed by the assessee in its return of income. The source of deposit in the said bank accounts could not be explained by the assessee. In the above circumstances, the addition of peak balance in the said bank accounts cannot be held as an addition made merely on estimate basis without relevant materials. The two decisions relied upon by the Authorized Representative of the assessee are found to be distinguishable on facts in as much as in those cases penalty was levied only on difference between the peak balance declared by the assessee and the peak balance estimated by the Department whereas in the instant case, the addition was made on actual peak balance in the bank account for which no plausible explanation about the source of the same could be given by the assessee. Therefore, such decisions are found to be not applicable in the instant case.

12. Further, in this connection we would like to quote the decision of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Becharbhai P. Parmar (2012) 341 ITR 0499 (Guj.) wherein the Hon'ble High Court has held as under:

"Penalty corresponding to the addition of Rs 17.22 lakhs was deleted on the ground that the assessee had demonstrated that there was estimation of additions and that, therefore, no penalty could be levied. Here again, we are of the opinion that the Tribunal interfered with the penalty on the ground which was not permissible. Additions made on the basis of estimation may be one of the grounds on which discretion not to impose penalty may be exercised. However, in the absence of any requirement to prove the MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

6 concealment or furnishing of inaccurate particulars found in section 271(1)(c) of the Act cannot form the sole basis to delete penalty imposed by the Assessing Officer and confirmed by the Commissioner (Appeals)."

13. Further, we also do not find merit in the alternative argument of the assessee because the other five bank accounts which were also not disclosed in the return had transfer entries to the one undisclosed bank account which was already detected by the Department. Thus, the disclosure of the other five undisclosed bank accounts by the assessee cannot be held as voluntary disclosure by the assessee on the facts of the instant case. The disclosure came up because the Department already detected one undisclosed bank account which contained transfer entries of the remaining five undisclosed bank accounts. In the above circumstances, we do not find any good reason to interfere with the orders of the lower authorities. Therefore, both the appeals of the assessee are dismissed."

4. We have heard the rival submissions, perused the material available on record. According to the Authorised Represetative of the assessee the assessee explained the source of deposit in its 6 undisclosed bank account and the same is evidenced by the following finding in the assessment order.

"With initial capital contribution of several persons named above I have made investment in shares and securities of funds initially contributed in cash is employed by way of cash deposits in different bank accounts particulars whereof are disclosed with the return..."

5. We find that no such observation is stated in either of the assessment orders for the two years which are under consideration. Thus we do not find any error in the order of the Tribunal in this respect.

MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

7 6. Further the next contention of the assessee is that finding of the Tribunal that in view of transfer entries in the undisclosed bank account detected by the department to other 5 undisclosed bank account the disclosure of the 5 bank account by the assessee was not voluntary is not actually correct because in the reasons recorded for reopening of the assessment of the years under consideration, the reasons recorded shows that the assessee vide its letter dated 1-12-1995 brought to the notice of the ADIT about the existence of the further bank account.

7. We find that it is not in dispute that the undisclosed bank account which was detected by the department contains transfer entries to other 5 undisclosed bank accounts maintained by the assessee. In view of this fact the Tribunal concluded that the subsequent disclosure of the assessee of existence of the said 5 bank accounts cannot be held as voluntary. We do not find any error much less an apparent error in the above finding of the Tribunal.

8. Further, the assessee contends that the decision in the case of Murarilal Ratanlal Agarwal vs. ACIT and Shri Ojas Ashokbhai Mehta are not distinguishable on facts from the fact of the instant case. We find that the Tribunal in its order observed that the fact in those cases were that penalty was levied in respect of difference in peak deposit as disclosed by the assessee and peak deposit as estimated by the department in undisclosed bank account and in the instant case no penalty was levied in the difference between the peak deposit as disclosed by the assessee and peak deposit as estimated by the department.

9. We find that in those cases it was not at issue that whether penalty u/s. 271(1)(c) is leviable in respect of the income which has been added to the total income of the assessee on the basis of actual MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

8 peak balance in undisclosed bank account which is the issue in the instant case before the Tribunal. In the instant case it was not the issue that there was difference in the peak balance as disclosed by the assessee and the peak balance as estimated by the Department and only in respect of the difference the penalty was levied by the Department under Sec. 271(1)(c) of the Act. Thus, we find no error in the finding of the Tribunal in this respect.

10. Lastly, the assessee contended that the decision of the Hon'ble Gujarat High Court in the case of Shri Becharbhai P. Parmar (supra) is not applicable in the instant case because in that case a search was conducted by the Department and the penalty was levied u/s. 158BFA of the Act, whereas in the instant case the penalty levied was under

sec. 271(1)(c) of the Act.

11. We find that the Tribunal has quoted the following Principle of law enunciated by the Hon'ble Gujarat High Court:-

" Penalty corresponding to the addition of Rs.17.22 lakhs was deleted on the ground that the assessee had demonstrated that there was estimation of additions and that, therefore, no penalty could be levied. Here again, we are of the opinion that the Tribunal interfered with the penalty on he ground which was not permissible. Additions made on the basis of estimation may be one of the grounds on which discretion not to impose penalty may be exercised. However, in the absence of any requirement to prove the concealment or furnishing of inaccurate particulars found in section 271(1)(c) of the Act cannot form the sole basis to delete penalty imposed by the Assessing Officer and confirmed by the Commissioner (Appeals.)"

12. The Tribunal placed reliance on the above principle of law enunciated by the Hon'ble High Court. While laying down the above principle, the Hon'ble High Court has expressly stated about the provisions of Section 271(1)(c) of the Act. Thus the said decision squarely covers the case where penalty under section 271(1)(c) is MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

9 levied. We therefore, do not find any error much less an apparent error in the order of the Tribunal in this respect.

13. We therefore, do not find any merit in these Miscellaneous Applications of the assessee, accordingly the same are dismissed.

Order pronounced in the Court on Friday, the 19th day of June,2015 at Ahmedabad.

Sd/- Sd/- (RAJPAL YADAV) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER

19-6-2015. Patki

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), Ahmedabad

5. *वभागीय $-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड0 फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील)य अ*धकरण, अहमदाबाद / ITAT, Ahmedabad MA Nos.144 & 145/Ahd/2014 In ITA Nos.1272 & 1273/Ahd/2011 Asstt. Years 1991-92 & 1992-93.

10 1. Date of dictation- 11-6-2015 & 17-6-2015

2. Date on which the typed draft is placed before the Dictating Member :17-6-2015

3. Date on which the approved draft comes to the Sr.P.S./P.S. 17-6-2015

4. Date on which the fair order is placed before the Dictating Member for Pronouncement 19-6-2015.

5. Date on which the file goes to the Bench Clerk 19-6-2015

6. Date on which the file goes to the Head Clerk..................................

7. The date on which the file goes to the Assistant Registrar for signature on the order..........................

8. Date of Despatch of the Order..................