Sh. Balbir Singh, Ropar V. ITO, Ropar

ITA 1026/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86179 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 24-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 1026/CHD/2014 ASSESSMENT YEAR: 2010-11 SHRI BALBIR SINGH, VS THE ITO, WARD 2(2), PROP M/S BELA JEWELLERY HOUSE, ROPAR ROPAR PAN NO. ACBPS1423L & ITA NO. 1027/CHD/2014 ASSESSMENT YEAR: 2010-11 SHRI MUNISH VERMA, VS THE ITO, WARD 2(2), PROP M/S MUNISH JEWELLERS, ROPAR ROPAR PAN NO. ABMPV7067R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI S.K. MITTAL DATE OF HEARING : 05.02.2014 DATE OF PRONOUNCEMENT : 06-02.2015 ORDER PER T.R.SOOD, A.M. THE APPEALS FILED BY THE ASSESSEES ARE DIRECTED AGA INST THE SEPARATE ORDERS DATED 30.10.2014 OF CIT(A), CHANDIGARH. 2. IN BOTH THE APPEALS, SIMILAR GROUNDS HAVE BEEN R AISED WHICH ARE AS UNDER:- THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS THEREBY ERRED IN SUSTAINING PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2 THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT TH AT APPELLANT WAS MAKING PURCHASES FROM VILLAGERS WHO DID NOT HAVE BANK ACCOUNTS. PENALTY U/S 271(1)(C) IS NOT ATTRACTED FOR DISALLOW ANCE OF EXPENDITURE. 3. FIRST WE SHALL DEAL WITH ITA NO. 1026/CHD/2014. 4. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT ASSESSEE HAD MADE C ERTAIN CASH PAYMENTS FOR WHICH ULTIMATELY ADDITION WAS MADE U/S 40A(3) OF R S. 2,98,475/-. PENALTY PROCEEDINGS U/S 271(1)(C) WAS ALSO INITIATED. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY IT WAS MAINLY SUBMITTED AS UNDER:- IN THIS REGARD, IT IS STATED THAT PENALTY PROCEEDI NGS HAVE BEEN INITIATED FOR MAKING CASH PURCHASED OF GOLD IN CONT RAVENTION OF SECTION 40A(3) AND 40A (3A). SECTION 40A(3) OF THE INCOME- TAX ACT, 1961 READS AS UNDER:- THE WORD EXPENDITURE IN SECTION 40A(3) HAS NOT BEEN DEFINED IN ACT. IT IS WORD VIDE IMPORT. SECTION 40A(3) RE FERS TO THE EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF WHICH PAYMENT IS MADE. IT MEANS THAT ALL OUTGOINGS ARE BR OUGHT UNDER WORD EXPENDITURE FOR PURPOSES OF THE SECTIO N. THE EXPENDITURE FOR PURCHASING STOCK IN TRADE IS ONE OF SUCH OUTGOINGS. RULE 6DD OF THE INCOME TAX RULES, 1962 A LSO CONTEMPLATES PAYMENTS MADE STOCK IN TRADE. THE OBJE CT OF THE RULES IS TO RELAX THE RIGOURS OF SECTION 40A(3) IN GENUINE AND BONAFIDE CASES TO AVOID HARDSHIP AND HARASSMENT IN SUCH CASE. THE APPELLANT PURCHASED GOLD ORNAMENTS FROM PERSON WHO LIVE IN NEARBY VILLAGE OF ROPAR. THESE PERSONS DID NOT H AVE ANY BANK ACCOUNT AND WERE ILLITERATE. PETTY GOLD ORNAME NTS WERE PURCHASED FROM THEM;. 3 6. FOR THE ABOVE PROPOSITION THE ASSESSEE ALSO REL IED ON THE VARIOUS CASE LAWS. THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIO NS DID NOT FIND ANY FORCE IN THE SAME AND ULTIMATELY LEVIED MINIMUM PENALTY O F RS. 92,230/-. 7. ON APPEAL, THE ACTION OF THE ASSESSING OFFICER W AS CONFIRMED BY LD. CIT(A). 8. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PURCHASES WERE NOT FOUND BOGUS. THE ASSESSEE HAD CONTENDED THAT PURCHA SES WERE MADE FROM FARMERS LIVING IN THE NEARBY VILLAGES, THEREFORE, C ASE WAS COVERED BY RULE 6DD(G) OF THE INCOME TAX RULES, 1962. THOUGH THIS PLEA WAS NOT ACCEPTED BUT STILL IT CANNOT BE SAID THAT ASSESSEE HAS CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. 9. ON THE OTHER HAND LD. DR STRONGLY RELIED ON THE ORDER OF ASSESSING OFFICER. 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND FORCE IN THE SAME BECAUSE IT CANNOT BE SAID THAT ASSESSEE HAS CONCEAL ED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V RELIANCE PETROPRODUCTS PVT. LTD 3 22 ITR 158 HAS OBSERVED AS UNDER:- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OF INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, 4 UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACC URATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETA ILS SUPPLIED IN THE RETURN MUST NO BE ACCURATE, NOT EXACT OR CORRECT NO T ACCORDING TO THE TRUTH OR ERRONEOUS. RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE OPIN ION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY WE SET ASIDE TH E ORDER OF LD. CIT(A) AND DELETE THE PENALTY. ITA NO. 1027/CHD/2014 11. IN THIS APPEAL ALSO THE ISSUE IS SAME AS ADJUD ICATED IN THE ABOVE NOTED ITA NO. 1026/CHD/2014. THE FACTS AND CONTENTIONS MA DE BY BOTH THE PARTIES ARE IDENTICAL AS MADE IN THE ABOVE NOTED CASE, THER EFORE, FOLLOWING THE ABOVE ORDER WE SET ASIDE THE ORDER OF LD. CIT(A) AND DELE TE THE PENALTY. 12. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.02.2015. SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6 TH FEBRUARY,2015 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR