The Principal Commissioner Of Income Tax v. Shitalben Saurabh Vora

C/TAXAP/282/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 282 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX VersusSHITALBEN SAURABH VORA ========================================================== Appearance:MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATHand HONOURABLE MR. JUSTICE J.B.PARDIWALA Date : 05/10/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961”) is at theinstance of the Revenue and is directed against theorder passed by the Income Tax Appellate Tribunal,Rajkot Bench, Rajkot dated 20.09.2020 in ITA No. 652/RJT/2014 for A.Y. 2003-04. 2. The Revenue has proposed the following question forthe consideration of this Court:-the consideration of this Court:- “Whether on facts and in the circumstances of the case, the Appellate Tribunal was justified inreducing the penalty of Rs. 2,44,90,900 leviedunder section 271(1)(c) of the Act to the extentof Rs. 4,89,818/- by holding the unexplainedcredits as turnover of the assessee andaccordingly proportionately reducing the incomeand penalty? “ 3. We have heard Mr. M.R. Bhatt, the learned SeniorCounsel assisted by Ms. Mauna M. Bhatt, the learnedSenior Standing Counsel appearing for the Revenue.Counsel assisted by Ms. Mauna M. Bhatt, the learnedSenior Standing Counsel appearing for the Revenue. 4. It appears that huge amount of cash credits wasfound in the bank account of the assessee. In suchcircumstances, the notice under Section 148 of theAct, 1961 was issued with a request to furnish thereturn of income for the A.Y. 2003-04. Thereafter, thenotice under Section 143(1) of the Act, 1961 wasissued. However, the assessee neither filed anyreturn of income nor complied with the notice. Insuch circumstances, a show cause notice dated04.12.2009 came to be issued, whereby the assesseewas asked to explain the source of cash deposits offound in the bank account of the assessee. In suchcircumstances, the notice under Section 148 of theAct, 1961 was issued with a request to furnish thereturn of income for the A.Y. 2003-04. Thereafter, thenotice under Section 143(1) of the Act, 1961 wasissued. However, the assessee neither filed anyreturn of income nor complied with the notice. Insuch circumstances, a show cause notice dated04.12.2009 came to be issued, whereby the assesseewas asked to explain the source of cash deposits of Rs.2,72,89,000/- in his current bank account No.3575 of Riddhi Impex maintained with NawanagarCo-operative Bank Ltd, Udyognagar, Jamnagar. 5. Ultimately, the Assessing Officer framed theassessment under Section 143(3) read with Section147 of the Act, 1961 on 15.12.2009 determining thetotal income of Rs.7,78,35,500/- under Sections 68and 69A respectively of the Act, 1961 for the hugecash deposits in the saving bank accounts.Subsequently, penalty proceedings came to beinitiated on the ground of concealment of income andthe Assessing Officer levied penalty ofRs.2,44,90,900/-.assessment under Section 143(3) read with Section147 of the Act, 1961 on 15.12.2009 determining thetotal income of Rs.7,78,35,500/- under Sections 68and 69A respectively of the Act, 1961 for the hugecash deposits in the saving bank accounts.Subsequently, penalty proceedings came to beinitiated on the ground of concealment of income andthe Assessing Officer levied penalty ofRs.2,44,90,900/-. 6. The assessee being dissatisfied with the assessmentorder preferred appeal before the Commissioner ofIncome Tax (A) (for short “CIT(A)”). The CIT (A)restricted the penalty to the extent of the tax onincome determined at the income computed at 8% ofthe turnover.order preferred appeal before the Commissioner ofIncome Tax (A) (for short “CIT(A)”). The CIT (A)restricted the penalty to the extent of the tax onincome determined at the income computed at 8% ofthe turnover. 7. The Revenue being dissatisfied with the order passedby the CIT(A) preferred appeal before the AppellateTribunal. The assessee preferred cross objectionsbefore the Appellate Tribunal. The Appellate Tribunaldismissed the appeal of the Revenue and allowed thecross objectionS preferred by the assessee. TheAppellate Tribunal held that the assessee hadconcealed THE particulars of income. The Tribunalfurther held that once the income is reduced, thepenalty would also reduce proportionately.Accordingly, the Appellate Tribunal restricted thepenalty to Rs.4,89,818/-. by the CIT(A) preferred appeal before the AppellateTribunal. The assessee preferred cross objectionsbefore the Appellate Tribunal. The Appellate Tribunaldismissed the appeal of the Revenue and allowed thecross objectionS preferred by the assessee. TheAppellate Tribunal held that the assessee hadconcealed THE particulars of income. The Tribunalfurther held that once the income is reduced, thepenalty would also reduce proportionately.Accordingly, the Appellate Tribunal restricted thepenalty to Rs.4,89,818/-. 8. The Tribunal recorded the following findings in itsorder:order: “15.1We also note that the income in the caseon hand was worked out on estimated basis asdiscussed in detail in the quantum proceedings.Thus the next question arises whether there canbe penalty in the event the income is determinedbased on estimation. In this regard, we note thatthe assessee has not maintained her books ofaccounts, filed her return of income. Thus therewas no option available to the learned CIT(A)on hand was worked out on estimated basis asdiscussed in detail in the quantum proceedings.Thus the next question arises whether there canbe penalty in the event the income is determinedbased on estimation. In this regard, we note thatthe assessee has not maintained her books ofaccounts, filed her return of income. Thus therewas no option available to the learned CIT(A) except to estimate the income based on thematerials available on record. Therefore, per se itcannot be concluded that the income has beendetermined on estimated basis after finding outthe defect in the books of accounts,expenses/income claimed/shown in the return ofincomer, lower gross profit etc. But the incomeescaped from the assessment has been computedin different manner. Thus, in our considered viewthe assessee is guilty of concealing the particularof income. Therefore, the assessee is liable to bevisited with the penalty for 100% of the amount oftax sought to be evaded. Regarding the Revenueappeal restricting the penalty to the extent of thetax to be computed @ of 8% of the turnover, wenote that the penalty has to be computed withreference to the income. Once the income hasreduced then the penalty will also reduceproportionately. Hence the ground of appeal of theRevenue is dismissed and CO filed by the assesseepartly allowed.” 9. Thus, the Tribunal held that once the income isreduced, the penalty would also get reducedproportionately and thereby the Tribunal restrictedthe penalty to Rs. 4,89,818/-. If such is the view ofthe Tribunal, then, in our opinion, we should not disturb the same. 10.The question as proposed by the Revenue in the aforesaid set of circumstances cannot be termed as asubstantial question of law. 11.In the result, this appeal fails and is herebydismissed. (VIKRAM NATH, CJ) A. B. VAGHELA/A.M.PIRZADA (J. B. PARDIWALA, J)