Shri Satishchandra B. Shah, Ahmedabad V. The Income tax Offier, Ward-9(1), Ahmedabad

ITA 1011/AHD/2009

• Counselvise Citation: 101120514 RSA 2009
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 03-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M MATHIVANAN
• Assessee Lawyers: URVASHI SHODHAN
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !'# !'# !'# !'#, , , , $ $ $ $ %&' ( ) %&' ( ) %&' ( ) %&' ( ) , , , , &* + &* + &* + &* + & # & # & # & # BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND BIJENDRA PAUL JAIN, ACCOUNTANT MEMBER) ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 [ASSTT.YEAR : 2004-2005] SHRI SATISCHANDRA BUDHALAL SHAH 28, NUTAN SOCIETY MAHALAXMI ROAD AHMEDABAD. PAN : AIIPS 7428 N /VS. ITO, WARD-9(1) AHMEDABAD. ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 12 3 4 &/ ASSESSEE BY : MS.URVASHI SHODHAN + 3 4 &/ REVENUE BY : SHRI M. MATHIVANAN 6 3 27*/ DATE OF HEARING : 15 TH DECEMBER, 2011 89: 3 27*/ DATE OF PRONOUNCEMENT : 30 TH DECEMBER, 2011 &; / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THESE TWO APPEALS BY THE ASSESSEE FOR THE ASSTT.YEAR 2004-2005 ARE DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), AHMEDABAD. THEY ARE BEING DISPOSED OF WITH THIS CONSOLIDATED O RDER. ITA NO.1011/AHD/2009 (QUANTUM APPEAL) ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 -2- 2. THE GROUND NO.1 OF THIS APPEAL OF THE ASSESSEE I S GENERAL IN NATURE AND NEEDS NO ADJUDICATION. THE GROUND NO.2 OF THE APPEAL READS AS UNDER: 2. THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS.8,00,000/- U/S.68 OF THE IT ACT, 1961. THE A PPELLANT HAD FILED CONFIRMATIONS OF THE PERSONS BEFORE THE AO ST ATING THAT THE PERSONS HAD GIVEN AMOUNTS BY CHEQUES AND APPELL ANT WAS NOT REQUIRED TO GIVE SOURCE TO A SOURCE OF THESE AM OUNTS AND SO THE ADDITION WAS NOT JUSTIFIED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS DISCHARGED ITS ONUS OF PROVING THE IDE NTITY OF THE CREDITORS, THEIR CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTION BY FILING THEIR CONFIRMATIONS BEFORE THE AO. SHE SUBMITTED THAT THE ALL THE TRANSACTIONS WERE MADE THROUGH ACCOUNT PAYE E CHEQUES FROM THE CREDITORS BANK ACCOUNTS. SHE SUBMITTED THAT M ERELY BECAUSE THE ASSESSEE COULD NOT SHOW THE INCOME-TAX STATUS OF TH REE CREDITORS OR THEIR FURTHER DETAILS, IT COULD NOT BE SAID THAT TH E LOAN TRANSACTIONS WERE NOT GENUINE. THE LEARNED DR HAS OPPOSED THE S UBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE COULD NOT FILE ANY EVIDENCE IN SUPPORT OF ITS CASE OF CREDIT-WORTHINESS OF THE DEPOSITORS AND THE GENUINENESS OF THE TRANSA CTION. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY A ND HAVE PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FI ND THAT THERE WERE CREDIT ENTRIES IN THE ACCOUNT OF SHRI PRAVINCH ANDRA B. SHAH OF RS.2,00,000/-, SMT. ASHINI P. SHAH OF RS.4,00,000 A ND SHRI NIMESH B. SHAH OF RS.2,00,000/- DURING THE RELEVANT PERIOD . THE ASSESSEE ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 -3- HAS FILED CONFIRMATION LETTERS FROM THESE PERSONS T O THE AO AND THE LOANS WERE GIVEN TO THE ASSESSEE BY THESE PERSONS P ER CHEQUE FROM THEIR BANK ACCOUNT. HOWEVER, THE ASSESSEE COULD NO T FILE THEIR PAN OR SOME EVIDENCE REGARDING THEIR INCOME TAX STATUS. THE DEPARTMENT ISSUED LETTERS TO THREE CREDITORS, OUT OF WHICH THE LETTERS ADDRESSED TO SHRI PRAVINCHANDRA B. SHAH WAS RETURNED BY THE POST AL AUTHORITY WITH THE COMMENT NOT KNOWN. IN THE CASE OF OTHER TWO CREDITORS THE LETTERS WERE SERVED ON THEM BUT THEY DID NOT RE SPOND TO THE LETTERS OF THE DEPARTMENT. IN THESE FACTS, IT WAS HELD BY THE AO THAT THE CREDIT-WORTHINESS OF THE DEPOSITORS WERE NOT PROVED AND MERELY BECAUSE THE LOANS WERE RECEIVED THROUGH CHEQUE, DOE S NOT PROVE THAT THESE WERE GENUINE LOANS. THE CIT(A) HAS CONFIRMED THE ORDER OF THE AO BY OBSERVING THAT THE ASSESSEE DID NOT FURTH ER JUSTIFY OR SUBSTANTIATE THE CASH CREDITS THOUGH OPPORTUNITIES GIVEN TO THE ASSESSEE. WE FIND THAT ONUS IS ON THE ASSESSEE TO PROVE THE CREDIT- WORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION OF THE LOANS AND IN THIS CASE THE ASSESSEE COULD NOT D ISCHARGE ITS ONUS. THE ASSESSEE COULD NOT PRODUCE ANY CORROBORATIVE EV IDENCE BEFORE THE AO OR CIT(A) TO PROVE THE CREDIT WORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION OF THE LOAN. IN THESE CIRCUMSTANCES, WE COULD NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE, WHICH IS ACCORDI NGLY CONFIRMED AND THE GROUND NO.2 OF THE ASSESSEES APPEAL IS DIS MISSED. 5. THE GROUND NOS.3 AND 5 OF THE ASSESSEES APPEAL READ AS UNDER: ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 -4- 3. THE LD.CIT(A) HAS ERRED IN UPHOLDING ADDITION O F RS.75,551/- BEING UNEXPLAINED CASH CREDIT IN BANK A CCOUNT OF THE PROPRIETORY CONCERN AND TAKING THE PEAK AT RS.7 5551/- FOR MAKING ADDITION TO THE INCOME OF THE APPELLANT. 5. THE LD.CIT(A) ERRED IN CONSIDERING THAT THE APPE LLANT HAD NOT PRESSED THE GROUND FOR DEDUCTION OF RS.7,95 ,642/- WHICH WAS SUBJECT TO THE DISALLOWANCE TO BE CONFIRM ED IN PREVIOUS ASSESSMENT YEAR PENDING THE APPEAL BEFORE ITAT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PRE SSED THESE GROUNDS OF THE APPEAL BEFORE US AND ACCORDINGLY, TH E GROUND NO.3 AND 5 ARE DISMISSED. 7. OTHER GROUNDS OF THE APPEAL RAISED BY THE ASSESS EE ARE GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDICATION. ITA NO.1599/AHD/2011 (PENALTY UNDER SECTION 271(1)( C) OF THE ACT. 8. THE ONLY EFFECTIVE GROUND IN THIS APPEAL OF THE ASSESSEE READS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN CONFIRMING LEVY OF RS.3,21,305/- AS PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSMENT AND PENALTY PROCEEDINGS ARE INDEPENDENT TO EACH OTHER AND THEREFORE THE CIT(A) HAS ERRED IN NOT CONSIDERI NG THE REPRESENTATION AND SUBMISSIONS OF THE ASSESSEE MADE IN THIS BEHALF BEFORE HIM. SHE SUBMITTED THAT THE ASSESSEE HAS FILED CONFIRMATIONS ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 -5- FROM THREE CREDITORS AND THE CREDITORS HAVE GIVEN T HE LOAN AMOUNT TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUE FROM THEIR BAN K ACCOUNTS. SHE SUBMITTED THAT MERELY BECAUSE THE CREDITORS PAN OR THEIR INCOME TAX DETAILS COULD NOT BE FURNISHED BY THE ASSESSEE, SHOULD NOT LEAD TO A CONCLUSION THAT THE ASSESSEE WAS LIABLE TO PENALT Y UNDER SECTION 271(1)(C) OF THE ACT. SHE SUBMITTED THAT THE COND UCT OF THE ASSESSEE WAS BONA FIDE AND THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE EXPLANATION FILED BY THE ASSESSEE WAS FALSE AND NOT BONA FIDE . THE LEARNED DR, ON THE OTHER HAND, HAS OPPOSED THE SUBM ISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THA T THE ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSA CTION OF THE LOANS AND THE CREDIT-WORTHINESS OF THE CREDITORS. THE AS SESSEE HAS FAILED TO CHARGE ITS ONUS CAST UPON THE ASSESSEE UNDER SECTIO N 68 OF THE ACT AND ACCORDINGLY THE CIT(A) HAS RIGHTLY OBSERVED THA T HE HAD NO ALTERNATIVE BUT TO CONFIRM THE PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. HE RELIED ON THE O RDERS OF THE AO AND THE CIT(A). 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT PENALTY PRO CEEDINGS ARE INDEPENDENT TO THE ASSESSMENT PROCEEDINGS OF THE AS SESSEE. IN PENALTY PROCEEDINGS THE ASSESSEE IS AT LIBERTY TO S HOW THAT IT WAS NOT GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. THE SUBMISSIONS OF THE ASSE SSEE WERE NOT CONSIDERED IN THIS CASE BY THE CIT(A). THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THREE CREDITORS FROM WHOM THE ASSES SEE HAS CLAIMED TO ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 -6- HAVE RECEIVED THE LOAN AMOUNTS. WE FIND THAT THE A SSESSEE HAS FILED CONFIRMATIONS FROM THE CREDITORS BEFORE THE AO DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. THE AMOUNTS OF LOANS WERE RECEIVED BY THE ASSESSEE PER ACCOUNT PAYEE CHEQUES AND THE CHEQUES WERE DRAWN BY THE CREDITORS ON THEIR BANK ACCOUNTS. THESE FACTS COULD NOT BE CONTROVERTED BEFORE US BY THE REVENUE. WE FIND THA T MERELY BECAUSE THE ASSESSEE COULD NOT FILE THE PAN OR THE INCOME T AX DETAILS OF THE CREDITORS SHALL NOT LEAD TO AUTOMATIC CONCLUSION TH AT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR FILING OF INACCU RATE PARTICULARS OF ITS INCOME. NO FURTHER EVIDENCE COULD BE PRODUCED ON BEHALF OF THE REVENUE TO SUGGEST THAT THE CONDUCT OF THE ASSESSEE WAS NOT BONA FIDE . WE FIND THAT THE ASSESSEE HAS FILED A DETAILED E XPLANATION BEFORE THE AO, COPY OF WHICH HAS BEEN SUBMITTED BEF ORE US. THE COPY OF THE BANK STATEMENT OF ONE CREDITOR SHRI NIM ESH B. SHAH WAS ALSO FILED BEFORE THE AO. WE FIND THAT THE AO HAS ISSUED LETTERS TO THREE CREDITORS AND OUT OF THEM, THE LETTER WRITTEN TO SHRI PRAVINCHANDRA SHAH WAS RECEIVED BACK BY THE DEPARTM ENT WITH THE COMMENT OF THE POSTAL AUTHORITY NOT KNOWN. WE FI ND THAT THE DEPARTMENT HAS NOT TAKEN ANY FURTHER STEP IN THIS R EGARD. WITH REGARD TO OTHER CREDITORS VIZ. SMT.ASHINI P. SHAH AND SHRI NIMESH B. SHAH, THE LETTERS SENT BY THE AO WERE SERVED ON THEM BUT THEY DID NOT RESPOND. THIS SHOWS THAT THEIR IDENTITY IS PROVED BEYOND DOUBT AS LETTERS SENT PER POST WERE SERVED ON THEM. WE FIND THAT THE ASSESSEE HAS SUBMITTED BEFORE THE CIT(A) IN ITS WRITTEN SUBM ISSIONS THAT SHRI PRAVINCHANDRA B. SHAH AND SHRI NIMESH B. SHAH, AGED 57 YEARS AND ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 -7- 48 YEARS RESPECTIVELY WERE IN THE CONSTRUCTION BUSI NESS EARLIER AND HAD THEIR OWN CAPITAL. SMT. ASHINI P. SHAH AGED 28 YEARS IS MARRIED AND HAS HER OWN CAPITAL AND HAD GIVEN MONEY FROM HE R OWN INVESTMENT SOURCES. THE ASSESSEE HAS FURTHER PLEAD ED BEFORE THE CIT(A) THESE AMOUNTS WERE RECEIVED FROM THE RESPECT IVE PERSONS OUT OF THEIR DEPOSITS LYING WITH OTHERS. WE FIND TH AT THE ASSESSEE IN THIS CASE HAS FILED EXPLANATION AND THERE IS NOTHIN G ON RECORD TO SUGGEST THAT THE EXPLANATION FILED BY THE ASSESSEE IS NOT BONA FIDE . THE FACTS AND CIRCUMSTANCES OF THE CASE MAY JUSTIFY THE CONFIRMATION OF THE ADDITION UNDER SECTION 68 OF THE ACT, BUT AR E NOT SUFFICIENT TO VISIT THE ASSESSEE WITH THE PENALTY PROVISION OF SE CTION 271(1)(C) OF THE ACT. THE PARAMETERS FOR JUDGING VALIDITY OF AD DITION AND THE IMPOSITION OF PENALTY, PARTICULARLY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. WE ARE UNABLE TO SUSTAIN THE ORDER OF THE CIT(A) IN OBSERV ING THAT THE ASSESSEE FAILED TO PROVE GENUINENESS OF THE CASH CR EDITS IN THE QUANTUM CASE AS WELL AS IN THE PENALTY PROCEEDINGS, I HAVE NO ALTERNATIVE BUT TO CONFIRM THE PENALTY UNDER SECTIO N 271(1)(C) FOR CONCEALMENT. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE DEPARTMENT COULD NOT MAKE OUT A CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THIS CASE AND ACCORDINGLY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS CANCE LLED AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. ITA NO.1011/AHD/2009 AND ITA NO. 1599/AHD/2011 -8- 11. IN THE RESULT, QUANTUM APPEAL OF THE ASSESSEE I N ITA NO.1011/AHD/2009 IS DISMISSED AND PENALTY APPEAL IN ITA NO.1599/AHD/2011 IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&' ( ) %&' ( ) %&' ( ) %&' ( ) /B.P. JAIN &* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD