Commissioner of Income Tax vs Dr. Giriraj Agarwal Giri

Narendra Kumar Jain-I, J.—Heard the learned counsel for the appellant. The Revenue has preferred this appeal u/s 260A of the income tax Act 1961 (for short "the Act"), against the order dated July 27, 2007, passed by the income tax Appellate Tribunal, Jaipur Bench "B", Jaipur, dismissing the appeal of the Revenue and affirming the order of the Commissioner of income tax (Appeals)-III, Jaipur, dated March 22, 2006, deleting the imposition of penalty of Rs. 2,89,217, by the Assessing Officer u/s 158BFA(2) of the Act.

The facts of the appeal, in brief, are that a notice was issued to the asses-see-respondent by the Assessing Officer on September 12, 2005, to show cause as to why penalty u/s 158BFA(2) of the Act may not be imposed for concealing the income of Rs. 4,82,028 in the following heads :

Rs.

(i) IUI test

44,000

(ii) Plying of car

15,000

(iii) Household expenses

4,23,028

4,82,028

The assessee filed his reply dated September 19, 2005, and submitted that the alleged undisclosed income of Rs. 4,82,028 is purely on the basis of estimation and no such documents or evidence to this effect was found during the course of search. The Assessing Officer was not satisfied with the reply, filed by the assessee and, vide his order dated September 23, 2005, imposed a penalty of Rs. 2,89,217 u/s 158BFA(2) of the Act.

Being aggrieved with the aforesaid penalty order, the assessee preferred an appeal, which was allowed by the Commissioner of income tax (Appeals)-III, Jaipur, vide his order dated March 22, 2006, holding that penalty imposed by the Assessing Officer is not justified and the same is deleted. The appellate authority considered all the three items of so- called concealed income, in detail, in paragraphs 5 and 6 of its order, which are reproduced as under :

I have carefully gone through the order under appeal wherein, vide paragraph 5, paragraph 6 and paragraph 7, the Assessing Officer has not accepted the plea of the assessee that the additions as sustained by the hon''ble income tax Appellate Tribunal on estimate basis and he has, therefore, held that the assessee has concealed his income to the extent of Rs. 4,82,028 and is liable to penalty u/s 158BFA(2) of the income tax Act. I have respectfully perused the order in ITSSA No. 7/JP/2003, dated July 23, 2004, of the hon''ble income tax Appellate Tribunal, Jaipur Bench, Jaipur. The hon''ble income tax Appellate Tribunal in paragraph 6 of the above order with regard to income from IUI test has held as under :

We have heard the rival submissions. We have also perused the record. We find that 70 slips of tests had been found and the amount was written only on four slips. The contention of the learned authorised representative that these tests had been carried on experimental basis cannot be accepted as a whole truth. Therefore, having regard to the facts of the case, we consider it reasonable to sustain this addition at Rs. 50,000 only and the order of the Commissioner of income tax (Appeals) is modified to this extent

Further, in paragraph 10, the hon''ble income tax Appellate Tribunal with regard to the addition on account of plying of car has held as under :

Having regard to the facts of the case and material before us, we are also of the opinion that this is a case, of pure estimation of income from plying of car. We consider it is reasonable to estimate the income from plying of car at Rs. 25,000. The order of the learned Commissioner of income tax (Appeals) stands modified to this extent.''

In paragraph 23, the income tax Appellate Tribunal has recorded its findings stating that :

After perusal of the record, we find that the Assessing Officer has made estimation of expenditure inclusive of the expenses incurred on the education of two daughters. We also find that no seized material was found suggesting undisclosed expenditure for meeting household expenses.

In view of the above, it is clear that whatever the additions are sustained by the hon''ble income tax Appellate Tribunal are based on estimation only and as such the decision of the hon''ble income tax Appellate Tribunal, Jaipur Bench, Jaipur, in the case of Asst. CIT v. B. P. Khandelwal is applicable reported in Tax World, Volume XXXV, Part 1, Page 30 wherein the hon''ble Member of the income tax Appellate Tribunal has held as under :

It is also not the case of the Department that the assessee had furnished any false explanation or explanation furnished by the assessee could be found false but the explanation or claim of the assessee was not acceptable to the Assessing Officer and, accordingly, additions were made and reduced by the appellate authorities on estimate basis. These circumstances give a scope of debate and argument that the assessee may be at fault or may not be at fault. Under these circumstances, we do not find reason to interfere with the first appellate order, as the learned Commissioner of income tax (Appeals), on the basis of the ratio laid down in different decisions on the issue of penalty levied u/s 271(1)(c) of the Act that the penal provisions cannot be attracted to cases where income of an assessee is assessed on estimate basis and the additions were made therein on estimate basis, has rightly deleted the penalty.

In view of the above facts of the case as well as the court decisions, I am of the considered view that the penalty as imposed by the Assessing Officer u/s 158BFA(2) of the income tax Act, 1961, is not justified and the same is hereby deleted.

Being aggrieved with the aforesaid order of the appellate authority, Revenue preferred an appeal before the income tax Appellate Tribunal, Jaipur Bench "B", Jaipur, but the same was dismissed, vide order dated July 27, 2007. Being aggrieved with the same, the Revenue has preferred the instant appeal before this court.

The submission of the learned counsel for appellant is that the present case was a case of search and seizure, therefore, penalty u/s 158BFA(2) of the Act was attracted and it was rightly imposed by the Assessing Officer, which has wrongly been set aside by the Commissioner of income tax (Appeals) as well as the income tax Appellate Tribunal. In support of his submissions, he referred the judgment of the hon''ble apex court in Union of India (UOI) and Others Vs. Dharamendra Textile Processors and Others,

We have considered the submissions of the learned counsel for the appellant and examined the impugned order and other documents, placed on record.

So far as the case law referred to by the learned counsel for the appellant is concerned, it is sufficient to mention that the hon''ble apex court in Union of India (UOI) and Others Vs. Dharamendra Textile Processors and Others, was dealing with the provisions of the Central Excise Act, 1944, and the learned counsel for the appellant is unable to point out that the provisions of section 11AC of the Central Excise Act, 1944, and section 158BFA(2) of the income tax Act are in parimateria. That apart, it is also relevant to mention that imposition of penalty depends on the facts and circumstances of each case. In the present case, the Assessing Officer imposed the penalty on so-called three items of so-called concealed income. Each item was examined, thoroughly and in detail, by the Commissioner of income tax (Appeals) as well as the income tax Appellate Tribunal and by a reasoned order, both came to a conclusion that additions are based on estimation only. A fact or allegation based on estimation, cannot be said to be correct only, it can be incorrect also. Therefore, in the facts and circumstances of the case, penalty was wrongly imposed by the Assessing Officer. In these circumstances, we find that the judgment of the hon''ble apex court, referred to by the learned counsel for the appellant, is not applicable, in the facts and circumstances of the present case.

An income tax appeal can be admitted only on substantial questions of law, but, in our view, no substantial question of law is involved in the present appeal, so as to entertain it. The appellate authority as well as the Appellate Tribunal both have recorded a concurrent finding of fact that additions in the present case are based on estimation only. In these circumstances, we are of the view that no substantial question of law is involved in this appeal and the same is, accordingly, dismissed in limine.