M/s. Diamond Ply Pvt.Ltd., Ahmedabad V. The Dy.CIT.(OSD)Range-1, Ahmedabad

ITA 1099/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9221 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 21-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Unexplained cash credit
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 1099/AHD/2012 (ASSESSMENT YEAR:2007-08) M/S. DIAMOND PLY PVT. LTD. SHOP NO.1, NIRMIT APARTMENT, B/H. THAKKARNAGAR LAST BUST STOP, THAKKARNAGAR, AHMEDABAD - 382350 APPELLANT VS. DY.CIT (OSD), RANGE-1, AHMEDABAD R ESPONDENT PAN: AAACD8364P /BY ASSESSEE : SHRI S. N. DIVATIA, A.R. /BY REVENUE : SHRI K. MADHUSUDAN, SR. D.R. /DATE OF HEARING : 02.02.2017 /DATE OF PRONOUNCEMENT : 17.02.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 ARISES AGAINST THE CIT(A)-6, AHMEDABADS ORDER DATED 07.03.2012 PASSED IN APPEAL NO. CIT(A)-VI/DCIT(OSD)/R-1/65/10-11, UPHOLDING PENALTY OF RS.28,30,981/- ITA NO. 1099/AHD/2012 (M/S. DIAMOND PLY PVT. LTD. V S. DCIT(OSD)) A.Y. 2007-08 - 2 - AS IMPOSED BY THE ASSESSING OFFICER IN HIS ORDER DA TED 21.06.2010, IN PROCEEDINGS U/S.271(1)(C) OF THE INCOME TAX ACT, 19 61; IN SHORT THE ACT. 2. WE COME TO RELEVANT FACTS FIRST. THIS ASSESSEE IS A COMPANY MANUFACTURING PLYWOOD, BLACK BOARDS AND FLUSH DOORS . IT HAD CLAIMED SUNDRY CREDITORS OF RS.87,48,322/-. THE ASSESSING OFFICER SOUGHT DETAILS OF THE SAID CREDITORS. WE NOTICE FROM ASSESSMENT ORDER DATED 1 8.12.2009 THAT THE ASSESSEE FURNISHED ONLY ONE CREDITORS DETAILS INVO LVING A SUM OF RS.1LAC. THIS MADE THE ASSESSING OFFICER TO PROPOSE THE ABOV E CREDITORS TO BE TREATED AS BOGUS ONES. THE ASSESSEE THEREAFTER FILED CONFI RMATION OF M/S. MAHESH TIMBERMART PVT. LTD., GANDHIDHAM ONLY. THE ASSESSI NG OFFICER THEN NOTICED ASSESSEES ABOVE STATED GROSS SUM INCLUDED NEW CRED ITORS OF RS.49,35,116/- AND THE REMAINING PARTIES INVOLVED TOTAL SUM OF RS. 38,13,206/- TO BE OLDER THAN A YEAR. THE ASSESSING OFFICER THEN COMPLETED A REGULAR ASSESSMENT INVOKING SECTION 68 ADDITION OF UNEXPLAINED CREDIT ENTRY TO THE TUNE OF RS.45,49,317/- AS THE ASSESSEE HAD PROVED ITS CLAIM QUA THE REMAINING SUM OF RS.3,37,799/-. HE THEN INVOKED SECTION 41(1) OF TH E ACT FOR THE BALANCE AMOUNT OF RS.38,13,206/- BY CONCLUDING THAT THE SAM E HAD NOT BEEN PROVED BY WAY OF FURNISHING ALL RELEVANT DETAILS. THE ASS ESSING OFFICER ACCORDINGLY TREATED THESE LIABILITIES TO HAVE BEEN CEASED UNDER SECTION 41(1) OF THE ACT. HE FURTHER INITIATED THE IMPUGNED PENALTY PROCEEDIN GS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. LEARNED REPRESEN TATIVES INFORM US VERY FAIRLY THAT THE ASSESSEE DID NOT PREFER ANY APPEAL. 3. WE NOW ADVERT TO THE IMPUGNED PENALTY PROCEEDING S. THE ASSESSING OFFICER PLACED HEAVY RELIANCE ON THE ABOVE STATED Q UANTUM PROCEEDINGS TO CONCLUDE THAT ASSESSEES CLAIM OF SUNDRY CREDIT HER EINABOVE AMOUNTED TO AN INSTANCE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE THUS IMPOSED ITA NO. 1099/AHD/2012 (M/S. DIAMOND PLY PVT. LTD. V S. DCIT(OSD)) A.Y. 2007-08 - 3 - THE IMPUGNED PENALTY OF RS.28,30,981/-. THE CIT(A) CONFIRMS THE SAME AS FOLLOWS: 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; PENAL TY ORDER AND APPELLANT'S WRITTEN SUBMISSION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER CALLED FOR CONFIRMATIONS AND ADDRESSES OF SUNDRY CREDITORS. HOWEVER APPELLANT COULD NOT SUBMIT ANY INFORMATION OR DETAI LS IN RESPECT OF MOST OF THE CREDITORS AND ACCORDINGLY ASSESSING OFFICER HELD TH AT THE CREDITORS APPEARING IN APPELLANT'S BOOKS ARE NOT GENUINE. ASSESSING OFFICER MADE THE ADDITION IN RESPECT OF CREDITS INTRODUCED DURING THE YEAR UNDER SECTION 68 OF IT ACT AND IN RESPECT OF OLD CREDITORS THE ADDITION WAS MADE UNDER SECTION 4 1 (1) BEING CESSATION OF LIABILITIES. ASSESSING OFFICER INITIATED PENALTY UN DER SECTION 271 (1) (C) OF IT ACT. AGAINST THE ADDITIONS MADE BY THE ASSESSING OFFICER , APPELLANT DID NOT PREFER APPEAL AND ACCORDINGLY THE ADDITIONS MADE BY THE AO HAVE BECOME FINAL. DURING PENALTY PROCEEDINGS ALSO APPELLANT DID NOT S UBMIT ANY INFORMATION RELATING TO THE CREDITORS AND THEREFORE THE ADDITIO NS MADE AN ACCOUNT OF UNEXPLAINED CREDITS AND CESSATION OF LIABILITIES WE RE NOT EXPLAINED AT ALL. EVEN DURING APPEAL HEARING, APPELLANT SUBMITTED NO INFOR MATION ABOUT THE CREDITORS. ONLY LEGAL SUBMISSIONS WERE MADE. EVEN ASSESSING OFFICER MENTIONED IN THE ASSESSMENT ORDER THAT AUTHORIZED REPRESENTATIVE OF THE APPELLANT ADMITTED THAT NO FURTHER RETAILS AND CONFIRMATION CAN BE FURNISHED B Y THE ASSESSEE IN THE CASE OF THESE CREDITORS. IN VIEW OF THIS, IT IS CLEAR THAT APPELLANT DID NOT DISCHARGE ITS PRIMARY ONUS BY FURNISHING CONFIRMATION AND OTHER D ETAILS, ACCORDINGLY, ASSESSING OFFICER IS JUSTIFIED IN TREATING THE CRED ITS RECEIVED DURING THE YEAR AS UNEXPLAINED CASH CREDITS WHICH IS DEEMED TO BE THE INCOME OF THE APPELLANT. SIMILARLY, FOR EARLIER YEARS' CREDITS, THE ADDITION UNDER SECTION 41 (1) IS ALSO JUSTIFIED ON ACCOUNT OF NO DETAILS IN RESPECT OF CR EDITORS AND NO VERIFICATION POSSIBLE AT THE END OF THE ASSESSING OFFICER. SINCE APPELLANT DISCLOSED THESE CREDITS IN ITS BALANCE SHEET WHICH IT IS UNABLE TO SUBSTANT IATE OR EXPLAIN, AS PER EXPLANATION-1 TO SECTION 271 (1) (C), THE ADDITION MADE BY THE AO IS DEEMED TO BE CONCEALED INCOME. SINCE APPELLANT DID NOT EXPLAIN THESE CREDITORS AND ADDITION IN RESPECT OF THESE CREDITORS IS FINAL, THE SAME AMOUN TS TO DEEMED CONCEALMENT OF INCOME. THE DECISIONS RELIED UPON BY THE APPELLANT DO NOT HELP THE APPELLANT'S CASE SINCE APPELLANT DID NOT EXPLAIN THE CREDITS APPEARI NG IN ITS BOOKS AND THEREFORE THE AMOUNT ADDED IS DEEMED CONCEALMENT. THE DECISION OF APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD RELATES TO THE ISSUE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AS P ER MAIN SECTION. THE PENALTY IN THIS CASE IS SUSTAINABLE AS PER EXPLANATION-1 AN D THEREFORE THE DECISIONS RELIED UPON BY THE APPELLANT ARE NOT APPLICABLE. AS AGAINS T THIS, ASSESSING OFFICER RELIED UPON CERTAIN DECISIONS WHICH ARE APPLICABLE SINCE A PPELLANT FAILED TO GIVE ANY EXPLANATION WITH REGARD TO THE ADDITIONS MADE. JUST BY KEEPING THE CREDITORS IN THE BOOKS WITHOUT EXPLAINING THE NATURE AND SOURCE THEREOF, APPELLANT CAN'T TAKE HELP OF THE DECISIONS WHEREIN PRIMARY ONUS WAS DISC HARGED WITH REGARD TO THE GENUINENESS OF THE CREDITS. CONSIDERING THESE FACTS, PENALTY IS LEVIABLE ON THE ADDITIONS IN RESPECT OF UNEXPLAINED CREDITS AND CES SATION OF LIABILITIES. THE PENALTY LEVIED BY THE AO IS ACCORDINGLY CONFIRMED. ITA NO. 1099/AHD/2012 (M/S. DIAMOND PLY PVT. LTD. V S. DCIT(OSD)) A.Y. 2007-08 - 4 - 4. HEARD BOTH SIDES REITERATING THEIR RESPECTIVE ST ANDS. CASE FILE PERUSED. THERE IS NO DISPUTE THAT THE IMPUGNED PENALTY INVOL VES TWO ADDITION COMPONENTS OF SECTION 68 AND SECTION 41(1) OF THE A CT (SUPRA). WE QUOTE THE RELEVANT FACTS NARRATE IN THE PRECEDING PARAGRA PH. THE ASSESSEE COULD NOT FILE EVEN A SINGLE RELEVANT PARTICULAR OF ITS CREDI TOR SO FAR AS SECTION 68 ADDITION AMOUNT OF RS.45,97,317/- IS CONCERNED SO A S TO FORM EVEN A PRIMA FACIE CASE TO CLAIM GENUINENESS THEREOF. EVEN IN T HE INSTANT PENALTY FILE DOES NOT CONTAIN ANY SUCH PARTICULARS MUCH LESS TO TALK ABOUT QUANTUM PROCEEDINGS. IT IS THUS CLEAR THAT THE ASSESSEE RA ISED THE IMPUGNED SUNDRY CREDITS CLAIM WITHOUT ANY EVIDENCE AT ALL. WE ACCO RDINGLY FIND NO REASON TO DISTURB LEARNED CIT(A)S FINDING AS EXTRACTED IN TH E PRECEDING PARAGRAPH THAT THE ABOVESTATED SECTION 68 ADDITION AMOUNT IS AN IN STANCE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. WE NOW ADVERT TO SECTION 41(1) ADDITION AMOUNT O F RS.38,13,206/- FOR THE PURPOSE OF THE IMPUGNED PENALTY. BOTH THE AUTH ORITIES BELOW HOLD THAT THE ASSESSEE DID NOT FILE ANY DETAILS OF THE RELEVA NT CREDITOR IN ORDER TO PROVE ITS LIABILITY BY WAY OF VERIFICATION. SHRI MADHUSU DAN (LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE) STRONGLY ARGUES THAT T HE ASSESSEE FAILED TO DISCHARGE EVEN ITS PRIMA FACIE ONUS ALIKE SECTION 6 8 ADDITION SO AS TO CLAIM ITS SUNDRY CREDIT LIABILITY. WE FIND NO FORCE IN T HIS PLEA AS THE ASSESSING AUTHORITY INVOKED SECTION 41(1) OF THE ACT THEREBY TREATING ASSESSEES LIABILITY TO HAVE BEEN CEASED TO EXIST AS THE SAME WAS MORE THAN A YEAR OLD. WE OBSERVE IN THESE PECULIAR FACTS THAT THE SAID LI ABILITY CLAIM ALREADY STOOD ACCEPTED EARLIER SINCE SECTION 41(1) PRE-SUPPOSES E XISTENCE OF A LIABILITY IN ORDER TO TREAT THE SAME TO HAVE BEEN CEASED TO EXIS T. WE ACCORDINGLY CONCLUDE THAT THE AUTHORITIES BELOW HAVE ERRED IN T REATING THE ASSESSEES LIABILITY OF RS.38,13,206/- AS BOTH BOGUS AS WELL A S CEASED TO EXIST U/S.41(1) OF THE ACT. WE THUS ACCEPT ASSESSEES CHALLENGE TO THE IMPUGNED PENALTY ITA NO. 1099/AHD/2012 (M/S. DIAMOND PLY PVT. LTD. V S. DCIT(OSD)) A.Y. 2007-08 - 5 - PERTAINING TO THIS LATTER COMPONENT. THE ASSESSEE S SOLE SUBSTANTIVE GROUND IS PARTLY ACCEPTED. 6. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 17 TH DAY OF FEBRUARY, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 17/02/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0