Vishnu Kumar Bhargava, D v. The Income Tax Officer, Ward 7 (3) Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 246/2018 Vishnu Kumar Bhargava, D-16, Meera Marg, Bani Park Jaipur ----Appellant Versus The Income Tax Officer, Ward 7 (3) Jaipur ----Respondent For Appellant(s) : Shri Anant Kasliwal For Respondent(s): HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE GOVERDHAN BARDHAR 22/10/2018 Judgment (PER HON’BLE MOHAMMAD RAFIQ. J.) This appeal has been preferred by assessee against thejudgement of the Income Tax Appellate Tribunal dated 19.3.2018,which has upheld the levy of penalty under Section 271(1)(c) ofthe Income Tax Act. The facts of the case are that the proceeding for assessmentwas carried out by the respondent-assessing authority against theappellant under Section 142(1) of the Act. The case of theappellant has been that he received notice u/s.142(1) on 3.8.2007even though the time prescribed for initiation of assessmentproceedings came to an end on 31.7.2007. Thereafter, anothernotice dated 21.5.2008 was received through registered postfixing the date of hearing for 28.8.2008. On that date, theauthorised representative of the appellant appeared before theassessing authority. He was handed over the query sheet. The appellant filed a letter pointing out specifically that the noticeu/s.142(1) was received by him on 3.8.2007, which notice wasbeyond the time prescribed for initiation of the proceedings. Hencethe proceedings were void ab initio and the same ought to bedropped. Even when the assessing authority summoned theappellant u/s.131 to record his statement, he reiterated the sameobjection about the proceedings having lapsed. The AssessingOfficer, however, proceeded to carry out assessment proceedingsby invoking Section 144 of the Act and framed ex-parte orderdated 30.12.2008. The appellant filed appeal before the CIT(A).The appellant by his letter dated 9.8.2010 took a stand that hefailed to collect confirmations from the lenders but upon framingof the order, he had collected the same, which may be taken onrecord by way of additional evidence in terms of Rule 46A. CIT(A)however issued a direction to present the relevant evidence beforethe AO, who was directed to, in turn, prepare a remand reportafter granting the appellant a fair opportunity and submit suchremand report after granting the appellant a fair opportunity andsubmit such remand report to the CIT(A). The appellant-assessee then took the matter to the IncomeTax Appellate Tribunal by way of second appeal. The Tribunal hasdismissed the appeal vide order dated 13.2.2015. Based on theassessment order dated 20.11.2011, the Income Tax Officer videnotice dated 30.12.2008, initiated proceedings for levy of penaltyu/s.271(1)(c). In the course of proceedings for levy of penalty, theAssessing Officer recorded that the assessee has depositedvarious cash amounts in his own bank account totalling toRs.15,25,000, but he failed to furnish the explanation of thesources for such cash amount. This unexplained amount has been The appellant-assessee then took the matter to the IncomeTax Appellate Tribunal by way of second appeal. The Tribunal hasdismissed the appeal vide order dated 13.2.2015. Based on theassessment order dated 20.11.2011, the Income Tax Officer videnotice dated 30.12.2008, initiated proceedings for levy of penaltyu/s.271(1)(c). In the course of proceedings for levy of penalty, theAssessing Officer recorded that the assessee has depositedvarious cash amounts in his own bank account totalling toRs.15,25,000, but he failed to furnish the explanation of thesources for such cash amount. This unexplained amount has been treated as assessee’s undisclosed income. The stand of theappellant-assessee, however, was that as per the documentssought to be placed on record by way of application under Rule46A of the Rules, the cash deposits represent advances receivedon sale of land and therefore did not fall within the ambit ofincome prior to the execution and registration of respective saledeeds, which sale deeds have not been executed and/or registeredduring the financial year under consideration. As such, theassessee did not indulge in either furnishing any inaccurateparticulars or of concealment of any income, as no income hadaccrued during the year. Thus, it was merely a case of failure toexplain the entries. The appellant-assessee unsuccessfullychallenged the order of Assessing Officer before the CIT(A) andIncome Tax Appellate Tribunal, who have both dismissed theappeal respectively dated 1.3.2013 and 19.3.2018. It may be at the outset noted that the appellant in thepresent appeal has questioned the correctness of the penalty ofRs.4,99,321 levied by the Assessing Officer and confirmed byCIT(A) and Income Tax Appellate Tribunal under Section 271(1)(c)of the Act. The appellant before the Tribunal has relied on numberof judgements of various High Courts and the Supreme Courts insupport of his contention that disallowance of any claim cannotbecome the basis for levy of penalty u/s.271(1)(c) of the Act. TheTribunal however held that the aforementioned judgements havebeen rendered in the specific facts of each case and have nosimilarity to the facts of the assessee. In the case of assessee, theaddition was made on account of deposits in the bank account andthe assessee failed to explain the source of such deposits andtherefore when the assessee has failed to explain the source, the said addition was confirmed even upto the stage of the Tribunal.In the penalty proceedings, the only defence available to theassessee would be that though the explanation of the assesseewas not accepted by the Assessing Officer, however, the same isbonafide. The Tribunal however noted that the assessee has notfurnished any explanation either before the Assessing Officer inthe penalty proceedings or before the CIT(A) in the appellateproceedings. The Tribunal further noted that the assessee has notuttered even a single sentence about the source of the depositmade in the bank account and therefore when no explanation atall was furnished by the assessee then the question of the samebeing bonafide does not arise. We may at the outset take note of the fact that the order ofthe Tribunal dated 13.2.2015, against the order of CIT(A)31.3.2011 and original assessment order of Assessing Officerdated 30.12.2008 was challenged before this Court by assessee inD.B. Income Tax Appeal No.103/2015. The coordinate bench ofthis Court dismissed the appeal vide order dated 25.4.2016 byholding that the finding arrived at by the Tribunal is just andproper based on the material on record and no substantialquestion of law can be said to emerge out of the impugned order. We may at the outset take note of the fact that the order ofthe Tribunal dated 13.2.2015, against the order of CIT(A)31.3.2011 and original assessment order of Assessing Officerdated 30.12.2008 was challenged before this Court by assessee inD.B. Income Tax Appeal No.103/2015. The coordinate bench ofthis Court dismissed the appeal vide order dated 25.4.2016 byholding that the finding arrived at by the Tribunal is just andproper based on the material on record and no substantialquestion of law can be said to emerge out of the impugned order. Argument of the learned counsel for the appellant is thatpenalty u/s.271(1)(c) could not levied in case of mere rejection ofexplanation offered by the assessee. The Tribunal has seriouslyerred in having not considered the view taken by the KarnatakaHigh Court in CIT vs. Filterex Technologies Pvt. Ltd.-(2016) 380ITR 222 (Kar.), wherein it was held that penalty proceedings arequite different from assessment proceedings. Learned counsel sought to raise the similar arguments, whichhe had advanced in the earlier appeal no.103/2015. He arguedthat the view taken by this Court in earlier judgement of assesseewas not a correct view, being contrary to the law laid down by theDelhi High Court in Principal Commissioner of Income Tax vs.Paramount Biotech Industries Ltd., ITA Nos.887/2017 and888/2017 dated 24.10.2017. Learned counsel also relied on thejudgement of coordinate bench of this Court in Commissioner ofIncome Tax vs. Krishi Tyre Retreading & Rubber Industries, ITANo.542/2008 decided on 19.9.2013. Learned counsel again argued that this Court has notcorrectly appreciated the fact that the notice dated 24.7.2007 wasserved on the appellant on 3.8.2007 and according to Section142(1), the notice was required to be served on or before31.7.2007 and since it was served on 31.7.2007, the proceedingsbecame time barred and thus the action of the Assessing Officerwas incompetent. Coordinate bench of this Court in the earlierjudgement dated 25.4.2016 has rejected the aforesaid argumentby relying on judgements of various High Courts and the SupremeCourt. We cannot while examining the correctness of the judgementpassed against the same assessee, albeit in respect of levy ofpenalty under Section 271(1)(c), go into the correctness of theaforesaid judgement of the coordinate bench of this Court. TheTribunal in our considered view has rightly held that the assesseefailed to furnish any explanation about the source of deposit madein the bank account and when no explanation whatsoever hasbeen furnished by the assessee, the question of explanation beingbonafide did not arise. No question of law much less any substantial question of law, arises in this appeal. The impugnedorder in our considered view does not suffer from any infirmity. The appeal, which lacks merit, is hereby dismissed. (GOVERDHAN BARDHAR),J (MOHAMMAD RAFIQ),J RS/13