Neer Extrusion Pvt. Ltd., Dist. Baroda V. The ACIT., Circle-4, Baroda

ITA 1021/AHD/2006

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2333 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-01-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 27-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KAUR
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Depreciation
• Section: 271(1)(c); 68; 144

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH, JM AND D.C.AGRAWAL, AM NEER EXTRUSION (P) LTD., PLOT NO.109/110, GIDC, POR. RAMANGAMDI, DIST. VADODARA VS. ASSTT. CIT, CIR.4, VADODARA (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI M. K. PATEL, AR RESPONDENT BY:- SMT. SUMIT KAUR, DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS APPEAL FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT(A) WHEREIN HE HAS CONFIRMED THE LEVY OF PENALTY UNDER SECTION 271(1)(C). THE ASSESSEE HAS RAISED FOLLOWING GROUNDS :- (1) THE LD. AO HAS ERRED IN LEVYING PENALTY U/S 271(1)( C) ON THE CASH CREDITS WHICH COULD NOT BE EXPLAINED BECAUSE O F THE CIRCUMSTANCES BEYOND THE REACH OF MANAGEMENT. THE L D. AO HAS FAILED TO PROVE THAT THE CASH CREDIT AND DISALLOWAN CES HAVE HAD ANY RELATION TO THE CONCEALED INCOME OF THE APPELLA NT. THE LD. CIT(A) HAS WRONGLY UPHELD THE DECISION OF AO. (2) MERE DISALLOWANCE OF CLAIM OF DEPRECIATION OR ADDIT ION U/S 68 DO NOT WARRANT AN ACTION U/S 271(1)(C) WITHOUT EVAL UATING THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1021/AHD/2006 ASST. YEAR 1996-97 ITA NO.1021/AHD/2006 ASST. YEAR 1996-97 2 2. THE FACTS OF THE CASE ARE THAT ASSESSMENT U/S 14 4 OF THE ACT WAS COMPLETED ON 10.3.1999 DETERMINING TOTAL INCOME AT RS.68,90,940/-. SUBSEQUENTLY IN THE REASSESSMENT MADE UNDER SECTION 143(3)/148 TOTAL INCOME WAS DETERMINED AT RS.11.16,330/-. IN THIS OR DER FOLLOWING ADDITIONS WERE MADE :- I) ADDITION FOR UNEXPLAINED CREDITORS RS.14,84,99 9/- II) DEPRECIATION ON THE ASSETS FOR WHICH BILLS WERE NOT PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS - 1) BUILDING RS.6,71,092/- @ 5% RS. 33,555/- 2) PLANT & MACHINERY 8,67,695 @ 12.5% RS.1,08,461/- R S.1,42,016/- ------------- ------- TOTAL AMOUNT FOR WHICH INACCURATE PARTICULARS OF INCOME FURNISHED RS.16,27,015/- THE LD. CIT(A) CONFIRMED THE ADDITION OF UNEXPLAINE D CREDIT AT RS.14,84,999/-. THE AO REVISED THE DISALLOWANCE OF DEPRECIATION AT RS.1,39,612/-. THE AO INITIATED PENALTY PROCEEDINGS IN RESPONSE TO WHICH EXPLANATION WITH RESPECT TO CASH CREDITS WERE SUBMI TTED. IT WAS EXPLAINED THAT LOANS WERE OBTAINED FROM FOLLOWING PARTIES:- SL.NO. DESCRIPTION AMOUNT REMARKS 01 SHARE CAPITAL 1,99,366 CHANDRAKANT M. SHAH 02 UNSECURED LOAN 1,46,054 -DO- 03 UNSECURED LOAND 7,64,499 RECEIVED FROM VARIOUS PERSONS THROUGH CHANDRAKANT M. SHAH 04 UNSECURED DEPOSITS 2,00,000 G.D. ENTERPRISE A PARTY KNOWN TO C.M. SHAH ONLY. 05 UNSECURED DEPOSITS 1,75,000 BASANTILLA JAIN ITA NO.1021/AHD/2006 ASST. YEAR 1996-97 3 EXCEPT THE LOANS AMOUNT BEING UNSECURED DEPOSITS TH ROUGH BASANTILLA JAIN OTHER AMOUNTS WERE RECEIVED THROUGH SHRI CHANDRAKAN T M. SHAH AND ROHIT SHAH THE OTHER PARTNER OF THE GROUP WHO PARTE D AWAY FROM THE GROUP AND AVOIDED TO FURNISH ANY INFORMATION. SINCE THE TWO PERSONS WHO WERE EARLIER THE PROMOTERS OF THE COMPANY FAILED TO FURNISH ANY INFORMATION ASSESSEE WAS UNABLE TO PROVE THE LOANS AND HENCE ADDITIONS WERE MADE. THE AO DID NOT ACCEPT THE EXPLANATION AN D LEVIED PENALTY. 3. THE LD. CIT(A) HELD THAT NO PENALTY WOULD BE LEV IABLE IN RESPECT OF SOME OF RS.1,99,366 AND RS.1,46,054/- WHICH WAS THE SHARE CAPITAL IN THE NAME OF SHRI CHANDRAKANT SHAH. HOWEVER, HE CONFIRME D THE PENALTY IN RESPECT OF OTHER ADDITIONS. 4. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT ENTIRE MONEY HAS COME THROUGH SHRI CHANDRAKANT SHAH AND IF THE L D. CIT(A) COULD DELETE THE ADDITION IN RESPECT OF SHARE CAPITAL WHI CH HAD ALSO COME THROUGH SHRI CHANDRAKANT SHAH THEN THERE IS NO REAS ON TO LEVY PENALTY IN RESPECT OF OTHER AMOUNTS WHICH HAD ALSO COME THROUG H SHRI CHAHDRAKANT SHAH. IN ANY CASE NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE TO ALLOW CROSS-EXAMINATION OF SHRI CHANDRAKANT SHAH EITHER W HILE MAKING THE ADDITION OR BEFORE MAKING THE LEVY OF PENALTY. 5. THE LD. DR ON THE OTHER HAND, SUPPORTED THE ORDE R OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE EXPLANATION FURN ISHED BY THE ASSESSEE SHOULD BE EXAMINED AS TO WHETHER IT WAS BONA FIDE O R NOT. ONCE HE SAYS THAT MONEY HAD COME THROUGH SHRI CHANDRAKANT SHAH W HO IS NO LONGER WORKING IN THE COMPANY AND HE IS REFUSING TO PROVID E DETAILS THEN IT BECOMES NECESSARY FOR THE AO TO SUMMON SHRI CHANDRA KANT SHAH AND ITA NO.1021/AHD/2006 ASST. YEAR 1996-97 4 VERIFY THE TRUTHFULNESS OF THE EXPLANATION FURNISHE D BY THE ASSESSEE BEFORE LEVYING OF PENALTY. ACCORDINGLY, WE RESTORE THE MAT TER TO THE FILE OF AO FOR EXAMINING THE BONA FIDE OF EXPLANATION FURNISHE D BY THE ASSESSEE. AS A RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 13/1/11. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEM BER AHMEDABAD, DATED : 13.1.11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ITA NO.1021/AHD/2006 ASST. YEAR 1996-97 5 1.DATE OF DICTATION 4/1/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 10/1/ 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER ..