M/s. Jagdambey Industries, Kapurthala V. The Income tax Officer, Kapurthala

ITA 108/ASR/2012

• Counselvise Citation: 10820914 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 21-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Wrong claim; Notional interest
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 108(ASR)/2012 ASSESSMENT YEAR: 2005-06 PAN: AAAFJ6561F M/S JAGDAMBAY INDUSTRIES, VS. INCOME TAX OFFICER, NOORPUR DOONA, KAPURTHALA KAPURTHALA (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S. BHASIN, ADVOCATE RESPONDENT BY: SH. MAHAVIR SINGH, SR. DR DATE OF HEARING: 28.11.2013 DATE OF PRONOUNCEMENT: 29.11.2013 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 18.01.2012 PASSED BY LEARNED CIT(A), JA LANDHAR, FOR THE ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS: I. THAT THE ORDER OF LD. CIT(APPEALS), JALANDHAR, SUST AINING THE PENALTY U/S 271(1)(C) ON ACCOUNT OF ADDITIONS OF RS . 1,64,035/- AND RS. 30,500/- MADE BY THE A.O. & SUSTAINED BY THE CI T(APPEALS) IS AGAINST FACTS OF THE CASE AND LAW ON THE POINT. II. THAT ACCORDING TO THE FACTS AND CIRCUMSTANCES OF TH E CASE PENALTY U/S 271(1)(C) SUSTAINED BY HON'BLE CIT(APPEALS), JA LANDHAR, ON ACCOUNT OF ADDITION MADE BY THE I.T.O. AMOUNTING TO RS. 1,64,035/- IS ILLEGAL AND IS LIABLE TO BE SET ASIDE. 2 III. THAT ACCORDING TO THE FACTS AND CIRCUMSTANCES OF TH E CASE PENALTY U/S 271(1)(C) SUSTAINED BY THE HON'BLE CIT(APPEALS) , JALANDHAR, ON ACCOUNT OF NOTIONAL INTEREST ADDED BY THE I.T.O. AM OUNTING TO RS. 30,500/- IS ILLEGAL AND IS LIABLE TO BE SET ASIDE. IV. ANY OTHER GROUND OF APPEAL MAY BE URGED WITH THE PE RMISSION OF THE HON'BLE TRIBUNAL. 2. FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSING OFFICER VIDE HIS ORDER DATED 28.12.2007 UNDER SECTI ON 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) MADE VARI OUS ADDITIONS IN DISPUTE ON WHICH THE PENALTY IN DISPUTE I.E. RS. 1, 64,035/- HAS BEEN LEVIED ON ACCOUNT OF UNEXPLAINED OPENING CREDIT BALANCE, F OR WHICH THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED PARTICULARS OF INCOME. THEREFORE, THE ASSESSING OFFICER LEVIED THE PENALTY IN DISPUTE. SECONDLY, THE ADDITION OF RS. 30,500/- AS INTEREST @ 15% ON DEPOSIT AMOUNTING TO RS. 3,60,969/- FROM SMT. POONAM MARWAH A AND ON THE SAME LEVIED THE PENALTY IN DISPUTE, AS STATED BY LE ARNED COUNSEL FOR THE ASSESSEE. VIDE DATED 25.07.2008, THESE ADDITIONS HA VE BEEN CONFIRMED BY LEARNED CIT(A), JALANDHAR, IN THE APPEAL FILED BY T HE ASSESSEE BUT THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THIS ORDE R. 3. THE ASSESSING OFFICER LEVIED THE PENALTY IN DISP UTE ON THE ADDITION OF RS. 1,64,035/- ON ACCOUNT OF CREDIT BAL ANCE BY STATING THAT THERE HAS BEEN CREDIT BALANCE OF RS. 1,64,035/- AS ON 01.04.2004 IN THE 3 NAME OF M/S RAJ ENTERPRISES, DELHI. THE ASSESSING O FFICER AFTER SHOWING SALES (TAX FREE) BETWEEN 25.01.2005 TO 21.03.2005, EQUALIZE THE CREDIT BALANCE. DURING THE COURSE OF INQUIRY, IT WAS CONFI RMED BY M/S RAJ ENTERPRISES, DELHI, THAT DURING THE PERIOD UNDER CO NSIDERATION, NO TRANSACTION WAS MADE BY THEM WITH THE ASSESSEE. WHE N THE ASSESSEE CONFRONTED WITH THIS FACT, IT STATED THAT THIS AMOU NT OF RS. 1,64,035/- WAS DUE TO BE PAID TO THE SAID M/S RAJ ENTERPRISES AS O PENING BALANCE. THE SAID M/S RAJ ENTERPRISES TOOK THE DELIVERY OF GOODS FROM THE ASSESSEE AND IT CANNOT BE SAID THAT WHETHER THE PARTY SOLD THE G OODS ON THEIR WAY TO DELHI. THE EXPLANATION OF THE ASSESSEE WAS NOT ACCE PTED BY THE ASSESSING OFFICER AND HE HELD THAT OPENING CREDIT BALANCE OF RS. 1,64,035/- IS ASSESSEES OWN INCOME FROM SECRET PROFITS PLOUGHED BACK IN THE FORM OF UNEXPLAINED OPENING CREDIT BALANCE. CONSEQUENTLY, T HE ASSESSING OFFICER LEVIED THE PENALTY IN DISPUTE IN THE APPEAL FILED B Y THE ASSESSEE. LEARNED FIRST APPELLATE AUTHORITY HAS UPHELD THE FINDING OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. SIM ILARLY, THE SECOND ADDITION OF RS. 30,500/- ON ACCOUNT OF INTEREST PAI D TO THE FAMILY DEPOSITORS AMOUNTING TO RS. 3,60,969/- BUT HAS NOT CHARGED INTEREST ON ADVANCE MADE TO SMT. POONAM MARWAHA, THE CLOSE RELA TIVE TO THE 4 ASSESSEE. THE ASSESSING OFFICER THUS MADE THE ADDIT IONS OF RS. 30,500/- AND LEARNED CIT(A) HAS ALSO CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. SIMILARLY, THE PENALTY IN DISPUT E HAS ALSO BEEN UPHELD BY LEARNED FIRST APPELLATE AUTHORITY BY PASSING THE IMPUGNED ORDER DATED 18.01.2012 AND CONFIRMING THE PENALTY ORDER DATED 0 6.01.2009 ON THE ISSUE IN DISPUTE. NOW, THE ASSESSEE HAS FILED THE P RESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 18.01.2012 PASSED BY LEARN ED CIT(A), JALANDHAR. 4. LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE AMOUNT OF RS. 1,64,035 WAS DUE TO BE PAID TO THE SAID M/S RAJ ENT ERPRISES AS OPENING BALANCE. THE SAID RAJ ENTERPRISES TOOK THE DELIVERY OF GOODS FROM THE ASSESSEE AND IT CANNOT BE SAID THAT WHETHER THE PAR TY SOLD THE GOODS ON THEIR WAY TO DELHI. HE ALSO STATED THAT THE SALE OF THE GOODS IN DISPUTE HAS BEEN ACCEPTED BY THE REVENUE. THEREFORE, THE PENALT Y IN DISPUTE IS NOT LEVIABLE. IN SUPPORT OF HIS ARGUMENT HE RELIED UPON THE JUDGMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF COMMISSI ONER OF INCOME TAX VS. DCM LTD., REPORTED IN (2013) 93 DTR (DEL) 406 A ND THE JUDGMENT OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RAJIV BHATARA, REPORTED IN (2013) 94 DTR (P&H) 137. 5 HE STATED THAT MERE MAKING OF THE CLAIM, WHICH WAS ULTIMATELY FOUND TO BE UNSUSTAINABLE MAY NOT BY ITSELF AMOUNT TO FURNIS HING OF INACCURATE PARTICULARS REGARDING INCOME AND THUS THE PENALTY I S NOT LEVIABLE. HE FURTHER STATED THAT THE LAW DOES NOT BAR OR PROHIBI T AN ASSESSEE FOR MAKING A CLAIM, WHICH HE BELIEVES MAY BE ACCEPTED OR IS PL AUSIBLE; WHEN SUCH A CLAIM IS MADE DURING THE COURSE OF REGULAR OR SCRUT INY ASSESSMENT, LIBERAL VIEW IS REQUIRED TO BE TAKEN AS NECESSARILY THE CLA IM IS BOUND TO BE CAREFULLY SCRUTINIZED BOTH ON FACTS AND IN LAW. AT LAST HE REQUEST THAT THE APPEAL FILED BY THE ASSESSEE MAY BE ACCEPTED. 5. LEARNED DR RELIED UPON THE ORDER PASSED BY LEARN ED FIRST APPELLATE AUTHORITY AND STATED THAT THE ASSESSEE HA S MADE A FALSE CLAIM AND THE LEARNED FIRST APPELLATE AUTHORITY HAS RIGHT LY LEVIED THE PENALTY IN DISPUTE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS AVAILABLE WITH US. WE HAVE ALSO THOROUGHLY GONE THR OUGH THE ASSESSMENT ORDER AS WELL AS THE IMPUGNED ORDER PASSED BY LEARN ED CIT(A), JALANDHAR, IN THE CASE OF ASSESSEE ALONG WITH THE ORDER PASSED BY THE REVENUE AUTHORITY ON THE IMPUGNED PENALTY IN DISPUTE. WE AR E OF THE CONSIDERED VIEW THAT AS REGARDS TO THE ADDITION OF RS. 1,64.03 5/-, THE REVENUE 6 AUTHORITY HAS LEVIED THE PENALTY ON ACCOUNT OF CERT AIN ENTRIES SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT IN RELATION TO TRANSACTION WITH M/S RAJ ENTERPRISES, WHICH HAVE BEEN CATEGORICALLY DENI ED BY THE OTHER PARTY. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISPROVE THE STATEMENT OF OTHER PARTY OR TO PROVE THE ENTRIE S IN ITS BOOKS OF ACCOUNT IN THE PRESENCE OF CATEGORICALLY DENIED BY THE OTHE R PARTY REGARDING TRANSACTION IN DISPUTE AND IN THE ABSENCE OF DISPRO VING THE STATEMENT OF OTHER PARTY OR TO PROVE THE ENTRIES IN ITS BOOKS OF ACCOUNTS. WE ARE OF THE VIEW THAT THE REVENUE AUTHORITY HAS RIGHTLY HELD TH AT THE ASSESSEE HAS FILED INACCURATE AND FALSE PARTICULARS REGARDING THE CLAI M IN DISPUTE. IN A NUTSHELL, THE ASSESSEE HAS FALSELY CLAIMED RS. 1,64 ,035/- AND ENTER AT PAGE NO. 61 OF THE LEDGER IN THE OPENING CREDIT BALANCE ON 01.04.2004 IN THE NAME OF M/S RAJ ENTERPRISES. THE REVENUE AUTHORITY CALLED THE COPY OF ACCOUNT FROM M/S RAJ ENTERPRISES, DELHI, AS APPEARI NG IN THE BOOKS OF ACCOUNT, WHO VIDE THEIR LETTER DATED 10.09.2007 GAV E IN WRITING THAT THEY DID NOT MAKE ANY TRANSACTION DURING THE PERIOD FROM 01.04.2004 TO 31.03.2005 AND THERE IS NO BALANCE OUTSTANDING IN T HE ACCOUNT OF ASSESSEE I.E. M/S JAGDAMBAY INDUSTRIES AS PER THEIR BOOKS O F ACCOUNT. THESE FACTS WERE CONFRONTED BY THE REVENUE AUTHORITY TO THE ASS ESSEE WHO FAILED TO 7 DISPROVE THE VERSIONS OF M/S RAJ ENTERPRISES WITH T HE SUPPORT OF ANY DOCUMENTARY EVIDENCE BEFORE THE ASSESSING OFFICER A S WELL AS EVEN BEFORE US. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS CLAIMED OPENING CREDIT BALANCE OF RS. 1,64,035/- AS ON 01.04.2004 IN THE NAME OF M/S RAJ ENTERPRISES, DELHI, IS TOTALLY FALS E, FOR WHICH THE ADDITION HAS BEEN MADE BY THE REVENUE AUTHORITY, WH ICH WAS ACCEPTED BY THE ASSESSEE BY NOT FILLING ANY APPEAL BEFORE THIS APPEAL. IN OUR CONSIDERED VIEW, THE REVENUE AUTHORITY HAS RIGHTLY LEVIED THE PENALTY ON THE ADDITION OF RS. 1,64,035/-, WHICH NEEDS NO INTE RFERENCE AND WE UPHOLD THE PENALTY IN RESPECT OF ADDITION OF RS. 1, 64,035/-. 7. AS REGARDS TO THE ADDITION OR RS. 30,500/- ON AC COUNT OF INTEREST CHARGED ON ADVANCE MADE TO SMT. POONAM MARWAHA, THE CLOSE RELATIVE OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED TH AT THE ASSESSEE HAS PAID INTEREST TO THE FAMILY DEPOSITORS AMOUNTING TO RS. 3,60,969/- BUT HAS NOT CHARGED ADVANCE MADE TO SMT. POONAM MARWAHA, TH E CLOSE RELATIVE OF THE ASSESSEE, AND HE MADE THE ADDITION OF RS. 30 ,500/-. LEARNED FIRST APPELLATE AUTHORITY HAS ALSO CONFIRMED THE ADDITION IN DISPUTE AND THE PENALTY ON THIS ADDITION HAS ALSO BEEN CONFIRMED IN THE IMPUGNED ORDER. 8 8. LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE HAS NOT CONCEALED ANY FACTS BY FILING THE RETURN ON THE ISS UE IN DISPUTE AND HAS ALSO NOT CONCEALED ANY PARTICULARS AS PER THE RECOR D, THUS NO PENALTY IS LEVIABLE. HE FURTHER STATED THAT THE AMOUNT IN DISP UTE BEING AN ADVANCE TO CLOSE RELATIVE SMT. POONAM MARWAHA, MUST HAVE BEEN USED THIS AMOUNT FOR PERSONAL USE BUT PENALTY IS NOT LEVIABLE ON THI S AMOUNT. 9. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE IN D ISPUTE AS WELL AS THE ORDER OF THE REVENUE AUTHORITY AND WE ARE OF TH E VIEW THAT THE INTEREST OF RS. 30,500/- WAS DISALLOWED BY THE REVENUE AUTHO RITY SINCE THE ASSESSEE HAS GIVEN THE ADVANCE TO A CLOSE RELATIVE WHO MUST HAVE USED THIS AMOUNT FOR PERSONAL USE. BUT IN OUR CONSIDERED VIEW, THE ASSESSEE HAS DISCLOSED ALL THE INFORMATIONS TO THE REVENUE AUTHO RITY IN THE RETURN AND HAS NOT CONCEALED OR FURNISHED ANY INACCURATE PARTI CULARS. THEREFORE, THE PENALTY ON THE ADDITION OF RS. 30,500/- IS NOT LEVI ABLE. WE ARE OF THE VIEW THAT THE ASSESSEE HAS GIVEN THE ADVANCE TO ITS CLOS E RELATIVE BUT IF THAT ADVANCE IS USED BY THE OTHER PARTY FOR HER PERSONAL USE, THEN THE PENALTY IS NOT LEVIABLE UNDER THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE. THE ASSESSEE HAS NOT DELIBERATELY GIVEN INTEREST FREE A DVANCE TO ITS CLOSE RELATIVE, HENCE, THE PENALTY IN DISPUTE IS NOT LEVI ABLE AND DESERVES TO BE 9 DELETED ON THE ADDITION OF RS. 30,500/- MADE ON ACC OUNT OF INTEREST CHARGED ON ADVANCE MADE TO SMT. POONAM MARWAHA, THE CLOSE RELATIVE OF THE ASSESSEE. THE ASSESSING OFFICE IS DIRECTED TO L EVY THE PENALTY ON THE ADDITION OF RS. 1,64,035/- AND DELETE THE PENALTY O N THE ADDITION OF RS. 30,500/-. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER, 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH NOVEMBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S JAGDAMBAY INDUSTRIES, NOORPUR DO ONA, KAPURTHALA 2. INCOME TAX OFFICER, KAPURTHALA 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR 5. THE SR DR, I.T.A.T., ASR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.