Kushal H. Dharod v. The Asst. Commissioner of Income Tax, CC-34, Mumbai
[Citation -2016-LL-1020-32]

Citation 2016-LL-1020-32
Appellant Name Kushal H. Dharod
Respondent Name The Asst. Commissioner of Income Tax, CC-34, Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 20/10/2016
Assessment Year 2003-04
Judgment View Judgment
Keyword Tags initiation of penalty proceedings • search and seizure operation • concealment of income • undisclosed income • additional income • cash deposited • wrong claim
Bot Summary: During the course of search, the assessee admitted undisclosed income of Rs.22.50 lacs u/s 132(4) of the Act for the relevant assessment year and declared the same in the return of income filed in response to notice u/s 147 read with section 148 of the Act for the assessment year 2003-04. A) The additional income offered was at Rs.22,50,000/- b) On perusal of our submission dated 16.12.2010 filed before your office during the course of assessment proceeding, your good self will appreciate that i) The offered of income is for the cash deposits in the bank accounts of third party and not in the account of the assessee. The assessee has deliberately indulged in furnishing inaccurate particulars of income and thereby concealed the income. Admittedly, the assessee declared total income u/s 132(4) of the Act and included the same in the return of income for the relevant assessment year 2003-04. The assessee has also disclosed income in the return of income after the search. Now before us the issue is whether the assessee officer can levy penalty in the section 271 of the Act on the charge of concealment of income whereas the penalty was initiated for the charge of furnishing of inaccurate particulars of income. Even otherwise the assessee has concealed the income and not the other way round that he has concealed the particulars of income as charged by the AO. According to us, charge must be precise, and imposition only on that footing.


IN INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI RAMIT KOCHAR, AM ITA No.7263/Mum/2012 (A.Y:2003-04) Shri Kushal H. Dharod, 63, Goyal Vs. Asst. Commissioner of Shoppig Centre, S.V.Road, Borivali Income Tax, CC -34, Aayakar (W), Mumbai 400 092 Bhavan, M. K. Road, PAN: AABPD 8991J Mumbai 400 020 Appellant .. Respondent Appellant by .. Shri V. G. Ginde, AR Respondent by .. Shri A. K. Dhondial, DR Date of hearing .. 20-10-2016 Date of pronouncement .. 20- 10- 2016 ORDER PER MAHAVIR SINGH, JM: This appeal by assessee is arising out of order of CIT-(A)-41, Mumbai in appeal No.CIT(A)-41/DCCC-34/IT-310/11-12 dated 11-10-2012. Assessment was framed by ACIT, Central Circle-34, Mumbai for assessment year 2002-03 vide his order dated 16-12-2010 u/s 143(3) read with section 147 of Income Tax Act, 1961 (hereinafter Act ). Subsequently, penalty u/s 271 (1) (c) of Act was levied by ACIT, CC-34, Mumbai vide his order dated 30-06-2011. 2. only issue in this appeal of assessee is against order of CIT (A) confirming levy of penalty u/s 271 (1) of Act. 3. Briefly stated facts are that assessee is proprietor of M/s Benzer Matching Centre engaged in business of dealing in cloths. search and seizure operation u/s 132 of Act was carried out on Gangadhar S. Sethi Group cases on 20-08-2009 and assessee s residence was also covered u/s 132 of Act. During course of search, assessee admitted undisclosed income of Rs.22.50 lacs u/s 132(4) of Act for relevant assessment year and declared same in return of income filed in response to notice u/s 147 read with section 148 of Act for assessment year 2003-04. assessee filed working of additional income declared u/s 132(4) of Act on 16-12-2010 during course of assessment proceedings. AO considered 2 ITA No.7263/Mum/2012 submissions of assessee and accepted additional income declared for relevant assessment year at Rs.22.50 lacs u/s 132(4) of Act. AO initiated penalty proceedings u/s 271 (1) (c) of Act but on what charge whether for concealment of income or for furnishing of inaccurate particulars of income, nothing is mentioned while initiating penalty proceedings. AO subsequently levied penalty u/s 271 (1) (c) of Act on additional income offered u/s 132(4) of Act amounting to Rs.22.50 lacs. assessee before AO in response to notice u/s 274 read with section 271 (1) (c) of Act contested initiation of penalty proceedings and filed reply vide letter dated 08-06-2011 as under:- .. a) additional income offered was at Rs.22,50,000/- b) On perusal of our submission dated 16.12.2010 filed before your office during course of assessment proceeding, your good self will appreciate that i) offered of income is for cash deposits in bank accounts of third party and not in account of assessee. assessee has offered additional income to avoid further multiple litigations and to buy peace of mind. said additional income was in form of cash deposited in bank a/c. of M/s. Samrat Investment (firm) where assessee is not partner. Further cash deposited in bank a/c of M/s. Samrat investment, as share sub broker, could not proved by assessee or M/s. Samrat investment since same were collected from old debtors who had not repaid their outstanding to firm aroused out of share transactions carried out during share market crash in period 2000-2002 and after sever follow up man debtors paid of their dues in cash subsequently since most of its client and firm have incurred huge loses and arranged fund from sources known to them. ii) Further, there was adhoc lump sum declaration of income for period 1.4.2002 to 20.08.2009. There was no specific finding or specific working of income by income tax department so as to prove that assessee had concealed particulars of income or furnished inaccurate particulars of income in impugned assessment year. c) assessee has never stated that offer is on account of his concealed income. AO was not convinced with reply of assessee and levied penalty for furnishing of inaccurate particulars of income. AO also observed that assessee has concealed particulars of his income by not furnishing his true 3 ITA No.7263/Mum/2012 and correct accounts, thereby concealing income to that effect. Hence, penalty u/s. 271 (1) (c) is very well attracted in assessee s case. Further, AO observed that assessee has not preferred any appeal before CIT (A) and that return of income filed by assessee cannot be said as return voluntarily / suo moto filed. return of income was filed only after survey has been conducted and it should be appreciated that had it not been surveyed assessee s wrong claim would have remained undetected. Hence, assessee has deliberately indulged in furnishing inaccurate particulars of income and thereby concealed income. Hence, assessee is liable to be penalized u/s 271 (1) (c). Aggrieved, assessee preferred appeal before CIT (A), who also confirmed action of AO on similar reasoning. Aggrieved, assessee came in second appeal before Tribunal. 4. Before us, learned Counsel for assessee raised additional ground vide ground No.2 regarding specific charge for levy of penalty. relevant additional ground No.2 reads as under:- Additional Ground No.2: On facts and in circumstances of case, and in law, impugned penalty order is bad in law inasmuch as Ld. Assessing Officer finally imposed penalty for furnishing of inaccurate particulars of income whereas charge stated in body of impugned order was concealment of income. appellant, therefore, prays that impugned penalty order be quashed. Admittedly, assessee declared total income u/s 132(4) of Act and included same in return of income for relevant assessment year 2003-04. assessee also explained manner of income earned by assessee and paid taxes accordingly. assessee has also disclosed income in return of income after search. Now before us issue is whether assessee officer can levy penalty in section 271 (1) (c) of Act on charge of concealment of income whereas penalty was initiated for charge of furnishing of inaccurate particulars of income. Even otherwise assessee has concealed income and not other way round that he has concealed particulars of income as charged by AO. According to us, charge must be precise, and imposition only on that footing. We are of view that before penalty is 4 ITA No.7263/Mum/2012 imposed on assessee, AO must apprise assessee of precise charge brought against him. He must be told distinctly whether he is held guilty of having concealed particulars of his income or of having furnished inaccurate particulars thereof. Section 271 (1) (c) read with section 274 (1) of Act provides for reasonable opportunity to be given to assessee so that he can meet charge. Where penalty proceedings under section 271(1) (c) of Act are commenced against assessee on particular footing, viz., of concealment of particulars of income but final conclusion of levying penalty is based on different footing altogether, viz., on footing of furnishing inaccurate particulars of his income, it cannot be said that in such circumstances assessee had been given reasonable opportunity of being heard before order imposing penalty was passed. In such case penalty imposed is not justified. Accordingly, we delete penalty levied by AO and confirmed by CIT (A) on additional ground raised by assessee on assumption of jurisdiction. This appeal of assessee is allowed. 5. In result, appeal of assessee is allowed. Order pronounced in open court on 20-10-2016. Sd/ Sd/ (RAMIT KOCHAR) (MAHAVIR SINGH) ACCONTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 20-10-2016 Lakshmikanta Deka/Sr.PS Copy of Order forwarded to: 1. Appellant 2. Respondent. 3. CIT (A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER, Assistant Registrar ITAT, MUMBAI Kushal H. Dharod v. Asst. Commissioner of Income Tax, CC-34, Mumbai
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