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Shri Mehul J. Patel, Smt. Shreya Mehul Patel Versus The DCIT

2015 (3) TMI 835 - ITAT AHMEDABAD

Penalty levied under section 271(1)(a) - Unexplained bank deposit / credits, Unexplained LIC premium payments u/s 69, benefit of telescoping of additions of deposits in bank and payment of LIC premium denied, agricultural income of ₹ 9,85,000/- declared by appellant is not substantiated, estimated addition of house hold expenses of ₹ 3,00,000/- Revenue submitted that the details were not submitted before the Assessing Officer though sufficient opportunity was granted to the assessee. .....

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he aforesaid submissions were not considered by ld. CIT(A) and it was considered as additional evidences to be not admissible.

Procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure, a hand maiden to justice, should never be made a tool to deny justice or perpetuate injustice by any oppressive or punitive use. Considering the totality of the facts and relying of the aforesaid decision of CIT vs. Scien .....

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PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: These six appeals filed by two different Assessees are against separate orders of the Commissioner of Income Tax (Appeals)-IV, Baroda for Assessment Years 2007-08, 2008-09 and 2009-10. 2. Before us, at the outset, the ld. Authorized Representative submitted that though the appeals are of different assessees & different assessment years but the facts & circumstances in all the appeals are identical except for the assessment years and amount involved .....

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94/Ahd/2013. 3. The brief facts of the case, as culled out from the records for Assessment Year 2007-08 in the case of Shri Mehul J Patel in ITA No.2894/Ahd/2013, are as under:- 4. The assessee is an individual stated to be deriving income from salary. In this case, the assessee originally filed Return of Income for Assessment Year 2007-08 on 22.06.2007 declaring total income at ₹ 4,81,200/-. Subsequently, the revised return was filed on 06.07.2009 declaring the total income at ₹ 4,8 .....

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sing Officer, the assessee carried the matter before the ld. CIT(A) who vide order dated 30.09.2013 dismissed the appeal of the assessee. Aggrieved by the aforesaid order of the ld. CIT(A), the assessee is now in appeal before us and has raised the following grounds:- 1. That on facts, and in law, the learned CIT(A) has grievously erred in not admitting the additional evidence filed in terms of Rule 46A of I.T. Rules. 2. That in interest of justice, the additional evidence be admitted alternativ .....

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ns of deposits in bank and payment of LIC premium ought to have been granted to appellant. 6. That on facts, and in law, the learned CIT(A) has grievously erred in holding that the agricultural income of ₹ 9,85,000/- declared by appellant is not substantiated. 7. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the estimated addition of house hold expenses of ₹ 3,00,000/-. 8. That, alternative, the benefit of telescoping of addition of perquisites made .....

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ficer noted that initially the assessee had submitted that he was not maintaining any books of accounts, but subsequently, the assessee furnished the cash book. The Assessing Officer was, therefore, of the view that furnishing copy of cash book was nothing but the managed affairs and afterthought. He also noticed that in the cash book there was opening balance of ₹ 4,67,150/- which the assessee could not justify with evidences and previous years books of accounts. He further noted that no .....

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ced that the size of the land to be small and the assessee to be one of the joint owners. He, therefore, concluded that the assessee has failed to prove the agriculture income and the other deposits in the bank. He, therefore, considered the aggregate credit of ₹ 18,60,736/- as unexplained income and added u/s 69 of the Act. The Assessing Officer also noticed that the assessee had made insurance premium payments of LIC of ₹ 11,82,360/-, the details of which are listed at page nos. 3 .....

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,000/- per month. The Assessing Officer noted that the assessee has failed to furnish the details of household expenses with supporting evidence. He, therefore, estimated the assessee s annual household expenses to be at ₹ 3,00,000/- and added the same to the income. Aggrieved by the aforesaid order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A) who vide order dated 30.09.2013, with respect to the addition of unexplained credits, upheld the order of the Ass .....

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idences. In response to this, the appellant had filed a copy of the cash book. Regarding deposits in the bank, no satisfactory and relevant evidence or confirmation was furnished except salary. Thus, the appellant had been given sufficient opportunities by the AO to explain the sources of deposits made in the bank account, but the appellant failed to provide such details/explanations to the AO during the assessment proceedings. Owing to this, the AO has made the additions of the creditors for wh .....

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d. Under such circumstances, such additional evidences are not admissible. 5.3.1. For this purpose, reliance is placed upon the decision of Hon'ble Gujarat High Court in the case of Fairdeal Filaments Ltd, 302 ITR 173 (Guj.). In this case the Assessing Officer made an addition on account of unexplained share capital to the tune of ₹ 18,40,200, disallowed the consultation fees of ₹ 75,000, and disallowed the claim under section 80-1 of the Act. The assessee carried the matter in a .....

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e first notice calling for this information is found to have been issued by the Assessing Officer on March 2, 1993, and another notice calling for the same information was issued on March 19, 1993, but the appellant cared not to comply with these notices. Therefore, whatever be the merits of the appellant's case, I am of the view that its case is not covered by rule 46A of the Income-tax Rules. Accordingly, this ground of appeal is rejected." 5.3.2. The assessee carried the matter in se .....

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ons and perused the facts on record. A perusal of the assessment order reveals that the Assessing Officer gave adequate opportunity from time to time and asked the assessee to furnish the details/evidence in respect of the share capital as also the names, addresses and shareholdings of the holders but the assessee took it very lightly and made no compliance. The assessee thus showed no respect for law. It is an admitted fact that the evidence in respect of the share capital as detailed supra was .....

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dictated to the Assessing Officer to take up assessment proceedings at their convenience as it was not getting time-barred. The fact of the matter is that the Assessing Officer gave a number of opportunities to the assessee and the assessee not only not availed of these opportunities but showed great disrespect to the process of law. Under the circumstances, the Commissioner of Income-tax (Appeals) was justified in not admitting the evidence furnished before him for the first time when it was no .....

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rtunity to any party to cover up lacunae, laches and lapses. Taking into consideration the facts and circumstances of the case we do not consider the case of the assessee as fit for invoking rule 29 of the Income-tax (Appellate Tribunal) Rules." 5.3.3. On further appeal to Hon'ble Gujarat High Court, the Court held as follows: "The facts narrated hereinbefore go to show that before the Tribunal the limited question that was raised was whether the Commissioner (Appeals) had rightly .....

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o the Tribunal, the Commissioner (Appeals) had rightly come to the conclusion that sufficient opportunities had been granted to the assessee by the . Assessing Officer. In fact the finding of the Tribunal on this ground is that the assessee took the entire matter very lightly and asked the Assessing Officer to take up the assessment proceedings at the } convenience of the assessee (or may be the chartered accountant of the assessee) as pleaded, because the assessment was not getting timebarred. .....

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co-operative and recalcitrant; and the Tribunal is not required to give another chance or opportunity to a person to cover up its own lapses. Even on this ground it is not possible to hold that the Tribunal has committed any error in law so as to call for intervention. The position in law as regards admission of additional evidence, both in relation to rule 46A of the Income-tax Rules and rule 29 of the Income-tax (Appellate Tribunal) Rules is similar. No person is entitled to seek admission of .....

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been validly exercised in the facts and circumstances of the case, in other words, is supported by reasons and is not capricious or arbitrary in any manner. Applying the aforesaid test to the facts of the case it becomes apparent that the Tribunal has approached the matter correctly and once the Tribunal has exercised discretion legally in accordance with law it is not possible to come to the conclusion that in the facts and circumstances of the case, such exercise of discretion is either colour .....

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ses of cases it permits production of additional evidence : (1) when the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders ; (2) when the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed for any other substantial cause ; or (3) when the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence eith .....

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ting to Order 41, rule 27(l)(b) CPC in order to appreciate the nature and ambit of the power conferred under rule 29 upon the Tribunal in so far as the first two categories of cases are concerned." In so far as the said decision is concerned the court was not called upon to consider whether the case fell within the third category of exception, viz., when the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence. Therefore, the .....

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opportunity was not given to the assessee to bring on record material to show that no addition/disallowance was warranted; that despite the assessee having asked for adjournment, the Assessing Officer proceeded to complete the assessment without dealing with the adjournment application. In this regard suffice it to state that both the appellate authorities have recorded that sufficient opportunities were granted to the assessee. Whether sufficient opportunities were granted or not is basically .....

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on record, ignore the finding of fact recorded by the Tribunal in exercise of reference jurisdiction. Letter dated March 28, 1983, on which reliance is placed on behalf of the assessee is nowhere referred to in the order of the Tribunal and the court cannot go into the same as the said letter has also not been annexed to the statement of the case. In the aforesaid fact situation, the decisions cited on behalf of the asses-see cannot carry the case of the assessee any further, because admittedly .....

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the assessee. 5.3.4. The facts of the present case are identical to the fact of the above mentioned decision in the case of Fairdeal Filaments Ltd. Accordingly, the additional evidences and explanation submitted by the appellant are not admitted and the additions made by the AO are upheld. Accordingly this, ground of appeal is dismissed. 6. With respect to the addition on account of agriculture income and LIC premium payments, the action of the Assessing Officer was confirmed by the ld. CIT(A) .....

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ls were submitted by the appellant. During the course of appellate proceedings also, the appellant has failed to submit these details. Hence, the action of the AO of treating the agricultural income as not genuine is correct. 6.3.3 So far as investments in LIC policies are concerned, the appellant had filed a cash book before the AO which he was unable to substantiate with supporting evidences. No evidences regarding opening balance could be furnished either during the assessment proceedings or .....

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es as unexplained investments as per Section 69 of the IT Act is correct and is accordingly, upheld. 7. With respect to the addition on account of household expenses, the ld. CIT(A) confirmed the action of the Assessing Officer by holding as under:- 8.3.1 In response to this, the appellant had only mentioned the income earned by him in different assessment years vide his reply dated 08.10.2012. Besides, he had submitted that he is residing with his father, his wife and 2 children. Further, submi .....

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appellant has not given the details of drawings made by him for such purposes. He has only provided his ledger in the books of Anupam Industries to show some indirect expenses made on his behalf. The AO has already taken into account this ledger. I have also gone through this ledger copy in which no personal expenses could be detected. When the appellant had not furnished any details of the household expenditure, the drawings made by him for this purpose and the contribution made by other famil .....

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neither any effort had been made to disprove the expenditure estimated by the AO except for relying upon some legal pronouncements. The estimation of household expenses is a question of fact and a question of law comes to pay in this regard only when the assessee furnishes the details of household expenses and the sources thereof and then the AO this disregards such details and makes the estimation without any basis. Hence, the appellant s contentions are not acceptable. The estimation made by .....

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the reasons stated in his order. The ld. Authorized Representative pointed to the written submissions made before the ld. CIT(A) and pointed to the copy of submissions which were placed at page Nos. 39 and 40 of the paper-book. From the chart, he pointed out that the assessee had submitted various evidences and supporting which have been ignored by the ld. CIT(A). He, therefore, submitted that the matter may be remitted back to ld. CIT(A) for consideration of the submissions made by the assessee .....

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fully justified in making the additions. He, thus, supported the order of the Assessing Officer and the CIT(A). 10. We have heard the rival submissions and perused the material on record. We find that the addition has been made by the Assessing Officer on account of unexplained cash credit in the bank account, LIC premium payments, household expenses and agriculture income. We find that the assessee submitted the details before the ld. CIT(A) which is also placed on record at page Nos. 39 and 4 .....

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the case of Tin Box Co. Vs. CIT, (2001) 249 ITR 216 (SC) at para 10 and 11 has noted as under:- As held by the apex court in the case of Tin Box Co. [2001] 249 ITR 216 once the Tribunal found that the Income-tax Officer had not given to the assessee proper opportunity of being heard, whether the assessee could have placed the evidence before the appellate authority or before the Tribunal, was really of no consequence for it was the assessment order that, counted: that order had to be made after .....

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;he may direct that such person shall pay by way of penalty" namely, the Income-tax Officer may direct or may not direct levy of penalty considering the fact that he is required to be satisfied whether any person has committed the stipulated default without reasonable cause. Such a satisfaction can be recorded only if proper and adequate opportunity is accorded to the assessee. Therefore, before the authority can exercise discretion vested in it, it is imperative for the authority to grant .....

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ignored or omitted from the zone of consideration before the order is made, it would definitely violate the principles of natural justice. The order would be vitiated by exercise of arbitrariness in the decision-making process and the discretion cannot be stated to have been exercised judicially. There is one more aspect of the matter. When an authority is vested with discretionary powers and omits to take into consideration the explanation tendered, which has admittedly been filed in response .....

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pecified set of circumstances, it is imperative upon him to exercise the authority in a manner appropriate to the facts and circumstances of the case when a party interested and having a right takes appropriate steps in that regard and circumstances for exercise of authority with the discretion are shown to exist. The exercise of discretion has to be in a judicial manner, namely, fairly and reasonably. Applying the aforesaid principles to the facts of the case, it is apparent that the assessee h .....

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d in law and could not be sustained. 11. We further find that Hon ble Apex Court in the case of Haryana State Co-op. Supply & Marketing Federation Ltd Vs. Jayam Textiles & Anr (SLP (Crim) No. 7700 of 2007) order dated 07.04.2014 has held that procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure, a hand maiden to justice, should never be made a tool to deny justice or perpetuate injustice by any oppress .....

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