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2015 (11) TMI 532 - ITAT CHENNAI

2015 (11) TMI 532 - ITAT CHENNAI - TMI - Penalty under section 271(1)(c) on addition of rental income - assessment orders for the above assessment years were completed under 153C r.w.s. 153A - Held that:- In the instant case, the assessee has furnished inaccurate particulars with regard to rental income and the claim of the assessee was not supported by any evidence for all the assessment years under consideration. Another contention of the assessee is that the assessee has paid huge tax, but, t .....

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the Assessing Officer has simply levied the penalty by clubbing all the additions. The penalty proceedings are different from assessment proceedings. The Assessing Officer has initiated penalty proceedings on estimated basis. There is no wilful concealment of income and the assessee has also offered huge amount of income for taxation in the assessment year under consideration. The assessee has also relied on the decision in the case of CIT v. S. Sankaran 241 ITR 825, wherein the Hon’ble Jurisdic .....

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ven in the assessment order are not conclusive. Accordingly, mere addition of amount as income is not the criteria to levy penalty. - Decided in favour of assessee.

Unexplained silver articles - Held that:- Since receipt of silver articles received by the assessee as Sreedhanam and gift has been accepted by the Tribunal during quantum appeal proceedings, and confirming the addition to the extent of 50% of the total value of silver articles as undisclosed investment, mere confirmation .....

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xplain the sources for the advance of Rs. .25 lakhs paid to Shri K.P. Karupusamy and Shri S. Dhanushkodi on 23.01.2001, the Assessing Officer added the said amount to the returned income. After considering the different submissions made by the AR of the assessee, the ld. CIT(A) passed a detailed speaking order, which is reproduced hereinabove, wherein the ld. CIT(A) has observed that the assessee has not able to explain the source of advance for Thiruvanmiyur property, the ld. CIT(A) has confirm .....

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.S. Purushotham, C.A. For The Respondent : Shri A.V. Sreekanth, JCIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: These six appeals filed by the same assessee is directed against the consolidated order of the ld. Commissioner of Income Tax (Appeals) II, Chennai, dated 22.04.2013 relevant to the assessment years 2000-01, 2001-02, 2002-03, 2004-05 and 2005-06 passed under section 271(1)(c) of the Income Tax Act, 1961 [ Act in short] . For the assessment year 2002-03, the assessee has also filed an .....

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separate affidavits to condone the delay in filling the appeals and submitted that the delay in filing the appeals was neither wilful nor deliberate but due to compelling bonafide circumstances. The impugned order got mixed up with other papers and the assessee could able to retrieve the order only in June, 2013. Thereafter, after taking the advice of the Chartered Accountant, the appeal papers were prepared and filed. Therefore, the ld. Counsel for the assessee has submitted that there was no w .....

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in filing the above appeals and admit the appeals for hearing. 4. First common ground raised in the above appeals of the assessee is with regard to levy of penalty on addition of rental income for the assessment years 2000-01, 2001-02, 2002-03, 2004-05 and 2005-06. 5. Brief facts of the case leading to levy of penalty are that there was a search action under section 132 of the Act in the cases of SRM group of educational institutions and persons controlling the group on 12.08.2004. Shri T.R.Pac .....

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sessment year 2002-03, Rs. .35,40,780/- and agricultural income of Rs. .1,15,358/- for the assessment year 2004-05 and Rs. .15,35,412/- and agricultural income of Rs. .1,45,687/- for the assessment year 2005-06. The assessment orders for the above assessment years were completed under 153C r.w.s. 153A of the Act by making various additions and penalty proceedings u/s 271(1)(c) were also initiated. 6. The assessee filed appeals before the ld. CIT(A) against the additions made by the Assessing Off .....

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made on account of rental income, the Tribunal has set aside the issue to the file of the Assessing Officer for fresh consideration. In pursuance of the directions of the ITAT, the Assessing Officer, after hearing the assessee, passed the assessment order by repeating the addition of Rs. .90,000/- on account of rental income for all the assessment years. 7. Subsequently, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act on the addition made on account of ren .....

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essee preferred appeals before the ld. CIT(A) for all the assessment years. After considering the re-assessment order, penalty order and submissions of the assessee, the ld. CIT(A) has observed as under: 4.5 The first issue pertains to levy of penalty on addition of rental income of ₹ 90,000/-. While framing the original assessment order, the AO noticed that the assessee has shown ₹ 90,000/- as rental receipt from the property at Blossom Infotech Building in the A.Y.2003- 04. However .....

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I, Chennai in ITA No.190/06-07 dated 05.03.2008 confirmed the addition made by the AO. The Id. CITCA) found that annual rent of ₹ 90,000/- was paid by Dr.5hivakumar (HUF) as a tenant to the appellant. Hence, he held that the AO was well within his right to assess the said sum as house property income. On further appeal, the Hon'ble ITAT vide its common order in ITA Nos.1271 to 1276/Mds/Z008 and ITA Nos.1432 to 1438/Mds/2008 dated 22.05.2009 set-aside the issue back to the file of the A .....

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ating that the assessee did not produce any evidence during the said proceedings. In the penalty order, the AO had stated that the assessee could not produce any evidence regarding settlement of the property to her sons. Hence, he held that the assessee has concealed income of ₹ 90,000/- towards rental income. I find that the appellant has been taking contrary stands in different proceedings. At one stage, she has claimed that the property was vacant and she did not receive any rent. Subse .....

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not produced any evidence to conclusively prove that her two sons are the actual owners of the impugned property. Hence, there is concealment of particulars regarding receipt of rental income from the property Blossom Infotech Building'. The AO has, therefore, rightly levied the penalty u/s 271(1)(c) of the Act for concealment of rental income of ₹ 90,000/-. The same is confirmed and the ground is dismissed. 9. For the assessment years 2001-02, 2002-03, 2004-05 and 2005-06, the ld. CI .....

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y. 11. On the other hand, the ld. DR has submitted that it is a clear case of concealment of income, because, the rental income has not been admitted either by the assessee or by her sons. Moreover, the assessee has not produced any evidence to prove that her two sons are the actual owners of the said property since the assessee has admitted during original assessment proceedings that the said property was given through a settlement deed to her two sons. All the facts go to prove that the assess .....

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itting income of Rs. .38,65,780/-. After the search operation under section 132 of the Act in the cases of SRM group concerns, the assessee has filed return under section 153C revealing the income of Rs. .28,85,624/- and agricultural income of Rs. .1,98,200/-. However, the assessee has not declared any agricultural income in the original return filed on 29.10.2001. This is the situation in all assessment years under consideration. The Assessing Officer completed the assessment by making various .....

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e property i.e, Blossom Infotech Building, the assessee has submitted that the property in question was settled by the assessee in the names of her two sons during the previous year under consideration by way of a settlement deed. However, the assessee has not filed any documentary evidence before the Assessing Officer or ld. CIT(A) or even before the Tribunal in the first round of litigation. The Tribunal has remitted the matter back to the Assessing Officer with a direction to dispose the matt .....

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ief for rental receipts. Thereafter, the Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act. During the penalty proceedings also, the assessee has not produced any evidence with regard to settlement of the said property to her sons. Since the assessee has not offered the rental incomes in her return and concealed the particulars of income, the Assessing Officer levied penalty under section 271(1)(c) of the Act. On appeal, the ld. CIT(A) confirmed the penalty levie .....

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Explanation 1 to section 271(1)(c) of the Act automatically comes into operation when in respect of any facts material to the computation of total income, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or an explanation is offered which is not substantiated. In such a case, the amount added in computing the total income is deemed to represent the income in respect of which particulars have been concealed. 15. The reliance .....

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anation, has been discharged by him, the onus shifts to the Department to show that the amount in question constituted income and not otherwise. The question whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income has to be considered. 16. In the instant case, the assessee has furnished inaccurate particulars with regard to rental income and the claim of the assessee was not supported by any evidence for all the ass .....

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by the assessee is dismissed. I.T.A. No. 1656/Mds/2013 [A.Y. 2002-03] 17. In this appeal, the first issue is with regard to rental income has already been decided hereinabove with other assessment years and the next issue pertains to penalty levied for the addition towards unexplained sundry loan. In the assessment order, the Assessing Officer has observed that the assessee has shown sundry loans of Rs. .28,41,000/-. Since the assessee has not furnished evidence during the assessment proceeding .....

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f the ld. CIT(A), whereby addition to the extent of Rs. .25 lakhs was deleted and the balance addition of Rs. .3,41,000/- was further confirmed. 18. The Assessing Officer has initiated penalty proceedings under section 271(1)(c) of the Act with regard to the addition of Rs. .3,41,000/- confirmed by both the ld. CIT(A) and the Tribunal. In the penalty proceedings, since the assessee has not explained satisfactorily with regard to the sundry loan creditors, the Assessing Officer has levied the pen .....

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n levying penalty is further burdening the assessee and prayed that the penalty may kindly be deleted. The ld. Counsel for the assessee has also relied on the decision in the case of CIT v. S. Sankaran 241 ITR 825 (Mad). 20. On the other hand, the ld. DR had strongly supported the order passed by the authorities below. 21. After hearing both sides, we find that penalty under section 271(1)(c) of the Act was levied in the present case on the ground that the assessee has not able to explain proper .....

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extent of Rs. .3,41,000/-. On further appeal before the Tribunal, the Tribunal also confirmed the order of the ld. CIT(A). From the above facts, it is very clear that the assessee has disclosed the particulars but could not able to satisfactorily explain the genuineness of the sundry loan to the extent of Rs. .3,41,000/- out of Rs. .28,41,000/-. On perusal of the penalty order, the Assessing Officer has simply levied the penalty by clubbing all the additions. The penalty proceedings are differen .....

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concealment of income or the levy of penalty. Mere addition of income agreed to by it itself is not the proof of concealment. The lower authorities are not correct in initiating penalty proceedings. After considering the above facts and circumstances, the well settled principles namely that the assessment proceedings and penalty proceedings are quite distinct and the findings given in the assessment order are not conclusive. Accordingly, mere addition of amount of Rs. .3,41,000/- as income is no .....

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assessment years and the next issue pertains to penalty levied for the addition towards the value of unexplained silver articles. During the search action under section 132 of the Act on 12.08.2004, it was found that the assessee owned 33578.10 grams of silver. Since the assessee had not furnished any satisfactory explanation regarding the silver found in her room, the value of silver was treated as undisclosed income of the assessee. The ld.CIT(A) in ITA No.195/06-07 dated 05.03.2008 held that .....

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I.T.A. Nos.1432 to 1438/Mds/2008 dated 22.05.2009 held that it would be proper and appropriate if a reasonable quantity of silver articles found is treated as Sreedhanam and gifts received by the assessee. Accordingly, the ITAT directed to treat 50% of the total value as Sreedhanam and gifts received by the assessee and remaining 50% shall be treated as undisclosed investment. The Assessing Officer in the penalty order has concluded that, the assessee has concealed silver articles to the extent .....

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nd observed that the onus is on the assessee to prove the nature and source of acquisition of the entire silver articles found during the search. Since the assessee has failed to prove the acquisition of the remaining silver articles worth Rs. .1,34,262/- by supporting evidences and confirmation from the donors, the ld. CIT(A) confirmed the penalty levied by the Assessing Officer. 23. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has contende .....

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d investment, directed the Assessing Officer to treat 50% of the total value of silver articles as Sreedhanam and gifts received by the assessee. Against 50% of the addition confirmed by the Tribunal, the Assessing Officer has initiated penalty proceedings. The ld. Counsel for the assessee has contended that the silver articles received by the assessee as Sreedhanam and gifts has not been ruled out by the final facts finding authority and gave relief to the extent of 50% of the total value of si .....

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r articles as undisclosed investment, mere confirmation of any addition agreed to by itself is not the proof of concealment. The authorities are not correct in invoking section 271(1)(c) of the Act and levying penalty on this issue. Accordingly, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act. I.T.A. No. 1655/Mds/2013 [A.Y. 2002-03] 26. This appeal filed by the assessee is directed against the order of the ld. CIT(A) dated 08.02.2013. In view of th .....

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.12.2006. 27. Thereafter, the ld. CIT, while exercising power under section 263 of the Act, after verifying the assessment, found that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue and observed that the Assessing Officer has omitted receipt of advance of Rs. .25 lakhs paid for Thiruvanmiyur property and directed the Assessing Officer to redo the assessment. Accordingly, the Assessing Officer passed the assessment order under section 153C r.w.s. .....

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of 84 cents (1/4th share in 84 cents together with 12000 sq.ft. uncompleted building). The assessee has paid Rs. .25 lakhs as advance to the vendor s power agent and the receipt of which the power I.T.A. 18 Nos.1653-1658/M/13 agent admitted and acknowledged. Based on the above payment of Rs. .25 lakhs, show cause notice was issued to the assessee. Since the assessee has not explained the sources for the said advance of Rs. .25 lakhs, the Assessing Officer added the said amount to the returned i .....

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nsistent with each other. In the first submission it was stated that since the sundry loan and advances received to the extent of Rs. .25 lakhs has been accepted as genuine by the CIT(A), the advance of Rs. .25,00,000/- made for purchase of land stands explained. In other words, the appellant has stated that the advance was made out of the sundry loans and advances received during the year. In the second submission, however, a completely different stand has been taken. It has been stated that th .....

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of the appellant appears convincing at the first look, a detailed analysis proves the fallacy of such submission. The fact discussed in the assessment order is regarding payment of advance of Rs. .25,00,000/- for the SALE AGREEMENT dated 23.01.2002 and not the SALE DEED dated 30.05.2003. It is common knowledge that in many cases, the agreement for sale is entered before the actual registration of the property. In this case also, the agreement was entered into on I.T.A. 19 Nos.1653-1658/M/13 23.0 .....

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t that time Rs. .16,00,000/- each were paid to Shri K.P. Karupusamy and Shri S. Dhanushkodi, vendors. These payments are different from the advance payment of Rs. .25,00,000/- as per the Sale Agreement . Therefore, the assessee has to explain the advance paid at that time of Sale Agreement dated 23.01.2002. It is entirely a different matter that Smt. Padmapriya is also required to explain the source of acquisition in her case in the A.Y. 2004-05, since the actual purchase was made on 30.05.2003. .....

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Repco Bank. The appellant has shown payment of Rs. .18,32,180/- towards land. But, that was towards property at Krishna Nagar and not an advance for land at Thiruvanmiyur. Hence, it is established that the appellant has not explained the source of advance for Thiruvanmiyur property. The Receipt and Payment account also does not come to the rescue of the appellant because all receipts amount to Rs. .1,30,96,949/- have already been paid for various purposes as stated in the said account, the tota .....

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