Shri Rajubhai V.Mehta, Bhavnagar V. The Income tax Officer,Ward-2(1), Bhavnagar

ITA 1107/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85796 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2015
• Assessment Year: 1989-1990
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B PARMAR; PARIMAL SINGH
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 143(3); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO . 1 107 /AHD/2011 A. Y . 1989 - 90 SHRI RAJUBHAI V. MEHTA, THROUGH POWER OF ATTORNEY, DANAPITH, BHAVNAGAR. VS THE ITO, WARD - 2(1), BHAVNAGAR . (APPELLANT) (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV , SR.D.R. . ASSESSEE(S) BY : S/SHRI PARIMAL SINGH AND B. PARMAR, A.R. / DATE OF HEARING : 1 2 / 0 3 /201 5 / DATE OF PRONOUNCEMENT: 20 / 0 3 /201 5 / O R D E R PER: MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(A) - XX, AHMEDABAD, DATED 13.01.2011. THE APPELLANT IS AGGRIEVED BY THE CONFIRMATION OF PENALTY LEVIED U/S.271(L)(C) AMOUNTING TO RS.3,78,274/ - . 2. FACTS IN BRIEF AS EMERGED FROM T HE CORRESPONDING PENALTY ORDER PASSED U/S.271( 1 )(C) DATED 24.03.2010 AND THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S. 254 DATED 15.12.2006 WERE THAT IN THE FIRST ROUND OF PROCEEDINGS AN ORDER U/S. 144 R.W.S. 147 WAS PASSED ON 7 TH MARCH, 2002 WHEREIN AN AD DITION OF RS. 1,91,96,156 / - WAS MADE U/S.68 OF IT ACT. THE CREDITS WERE IN THE NATURE OF LOANS/DEPOSITS. THE SAID ADDITION WAS ITA NO. 1107 /AHD /201 1 SHRI R AJUBHAI V. MEHTA VS. ITO, WARD - 2(1), BHAVNAGAR FOR A.Y. 1989 - 90 - 2 - CONFIRMED BY LEARNED CIT(A) IN THE FIRST ROUND VIDE AN ORDER DATED 30 TH SEPTEMBER, 2004. WHEN THE MATTER WAS CARRIED BEFORE THE TR IBUNAL, IT WAS RESTORED BACK TO THE FILE OF THE AO VIDE ORDER DATED 13 TH OF OCTOBER, 2005. IN CONSEQUENCE THEREUPON, THE AO HAS PASSED A FRESH ASSESSMENT ORDER AS REFERRED ABOVE, RELEVANT PARAGRAPH IS REPRODUCED BELOW: 'FROM THE ABOVE CONCERNS AND IN RESPE CT OF HIS PERSONAL ACCOUNT, ASSESSEE SUBMITTED SEPARATE BALANCE SHEET WITH ORIGINAL RETURN OF INCOME. FROM THE BALANCE SHEET IN RESPECT OF BUSINESS NAME OM STEEL ASSESSEE HAS SHOWN DEPOSITS/LOANS AMOUNTING TO RS.1,87,25,296/ - AS LIABILITY WITHOUT ANY DETAI LS SUCH AS NAMES, AMOUNTS, ETC. WITH REGARD TO BUSINESS OF M/S. MEHTA CORPORATION (T&G DIVISION) AND IN RESPECT OF PERSONAL ACCOUNT ASSESSEE HAS SHOWN LOANS I DEPOSITS OUTSTANDING AT RS.4,50,440/ - AND RS.20,420/ - RESPECTIVELY. THE ASSESSEE HAS NOT FURNISHED THE LIST OF LOANS/DEPOSITS/LIABILITY AMOUNTING TO RS.1,87,25,296/ - AS PER BALANCE SHEET OF OM STEEL NOR HAS FILED ANY CONFIRMATION INSPITE OF REPEATED SPECIFIC REQUEST SINCE THE ASSESSEE HAD FAILED TO FURNISH THE LIST OF DEPOSITORS/LENDER AND ALSO EXPLANA TION ABOUT THE NATURE AND SOURCE THEREOF RS.1,91,96,156/ - BEING THE TOTAL AMOUNT OF LOANS/DEPOSITS IS CHARGED TO INCOME - TAX AS INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR UNDER CONSIDERATION AS PER PROVISIO N U/S. 68 OF THE IT ACT, 1961. 3. SINCE THE SAID ADDITION WAS CONFIRMED; HENCE AGAIN THE ASSESSEE PREFERRED AN APPEAL BEFORE LEARNED CIT(A). 4. VIDE AN ORDER DATED 7 TH FEBRUARY, 2008 FOR A.Y.I989 - 90, LEARNED CIT(A) - XX, AHMEDABAD IN APPEAL NO. CIT(A) - XX/201/2006 - 07 ORDER DATED 7 TH FEBRUARY, 2008 HAS GRAN TED SUBSTANTIAL RELIEF AS UNDER: '5.3(I) BEFORE ME, THE LEARNED AUTHORISED REPRESENTATIVE OF THE APPELLANT HAS CLAIMED THAT THIS YEAR, NEW CREDITS ARE ONLY TO THE EXTENT OF RS. 7,25,85 0 / - AND THE ADDITION CAN BE MADE ONLY TO THAT EXTENT, AS NO CONFIRMATIO NS ARE AVAILABLE WITH THE APPELLANT. IT IS CLAIMED BY HIM THAT AIL OTHER DEPOSITS ARE CARRIED FORWARD FROM THE LAST YEAR; BUT IT IS TO BE MENTIONED THAT THE LEARNED AUTHORISED REPRESENTATIVE OF THE APPELLANT AT THIS STAGE ALSO, BEFORE ME, HAS NOT FILED ANY CONFIRMATIONS AND OTHER EVIDENCES IN SUPPORT TO PROVE THE GENUINENESS OF CREDITORS. AS REGARDS FRESH CREDITS DURING THE YEAR ALSO, THE APPELLANT IS NOT IN A POSITION TO FILE CONFIRMATIONS AND SUPPORTING EVIDENCE TO PROVE THE GENUINENESS OF THE CREDITS ... ...... 5.3 ( III ) KEEPING IN VIEW ALL THESE FACTS AND DISCUSSION MADE AS ABOVE, I HOLD THAT THE ADDITION TO THE EXTENT OF RS.7,25,850/ - BEING THE UNEXPLAINED CASH CREDIT OF THE CURRENT YEAR CAN ONLY BE SUSTAINED. THEREFORE, THE ADDITION TO THE ITA NO. 1107 /AHD /201 1 SHRI R AJUBHAI V. MEHTA VS. ITO, WARD - 2(1), BHAVNAGAR FOR A.Y. 1989 - 90 - 3 - EXTENT OF RS. 7 ,25,850/ - IS HEREBY CONFIRMED FOR WANT OF ANY CONFIRMATIONS AND EXPLANATION. AS REGARDS INTEREST PORTION RELATING TO THE CURRENT CREDITS HAS ALSO TO BE DISALLOWED AND ADDITION TO THAT EXTENT IS HEREBY CONFIRMED. ' 5. ON THE BALANCE AMOUNT, THE IMPUGN ED PENALTY U/S.271(L)(C) WAS IMPOSED. LEARNED CIT(A) REPRODUCED THE SUBMISSION OF THE ASSESSEE ; STATING THE PAST HISTORY OF THE CASE AS UNDER: 'FOR THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD FILED RETURN OF INCOME ON 24/05/1999 DECLARING TOTAL INCOME OF RS. 69,131/ - , WHICH WAS PROCESSED UNDER SECTION 143(1) (A) OF THE ACT. SUBSEQUENTLY THE CASE WAS REOPENED UNDER SECTION 147 AND RE - ASSESSMENT WAS FINALIZED UNDER SECTION 144 R.W.S. 147 OF THE ACT ON 07/03/2002 DETERMINING TOTAL INCOME OFRS.1,92,65,287/ - BY MAKING IN ADDITION OF RS. 1,91,96,156/ - ON ACCOUNT OF NON - GENUINE DEPOSITS UNDER SECTION 68 OF THE ACT. THE MATTER TRAVELLED TO THE HON'BLE ITAT WHICH RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. THE LEARNED ASSESSING OFFICER, THEREA FTER, PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 254 OF THE ACT DETERMINING TOTAL INCOME AT RS.1,92,65,287 - BY MAKING IN ADDITION OF RS. 1,91,96,1561 - ON ACCOUNT OF NON - GENUINE DEPOSITS UNDER SECTION 68 OF THE ACT, AGAINST WHICH THE APPELLANT FILE AN APPEAL BEFORE LEARNED CIT(A), WHO HAS PARTLY ALLOWED THE APPEAL OF THE APPELLANT BY CONFIRMING THE ADDITION TO THE EXTENT OF RS. 7,25,8501 - UNDER SECTION 68 OF THE ACT. SUBSEQUENTLY THE LEARNED ASSESSING OFFICER - ISSUED NOTICE UNDER SECTION 271(L)(C ) OF THE ACT ASKING THE APPELLANT WHY THE PENALTY SHOULD NOT BE LEVIED. IN THIS CONNECTION, THE APPELLANT VIDE LETTER DATED 19/03/2010 SUBMITTED THE EXPLANATION FOR NON - LEVY OJ THE PENALTY. HOWEVER, THE LEARNED ASSESSING OFFICER DID NOT APPRECIATE THE FACT S OF THE CASE AND LEVIED THE MINIMUM PENALTY OF RS.3,78,274/ - UNDER SECTION 271(L)(C) OF THE ACT. HENCE THIS APPEAL.' 6. LEARNED CIT(A) WAS OF THE OPINION THAT THE ASSESSEE HAS NOT FILED C ONFIRM ATION LETTER OF THOSE CREDITORS. RATHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS FAILED TO FURNISH THE GENUINENESS OF THE CASH CREDITORS. HE HAS CONCLUDED THAT IN A SITUATION WHEN THE ASSESSEE HAS NOT ESTABLISHED THE IDENTITY, CREDITWORTHINESS IN RESPECT OF THE CREDITS INTRODUCED DURING THE YEAR THEN THE DEPOSITS REMAINED UNEXPLAINED WHICH RESULTED INTO LEVY OF CONCEALMENT PENALTY. ITA NO. 1107 /AHD /201 1 SHRI R AJUBHAI V. MEHTA VS. ITO, WARD - 2(1), BHAVNAGAR FOR A.Y. 1989 - 90 - 4 - 7. SINCE THE PENALTY WAS CONF IRMED; HENCE, THE ASSESSEE IS NOW AGAIN BEFORE US. 8. FROM THE SIDE OF THE APPELLANT, LEARNED AR, MR. PARIMAL SINGH APPEARED. HE HAS NARRATED IN SHORT THAT THE ASSESSMENT YEAR INVOLVED WAS A.Y. 1989 - 90; HENCE DUE TO LAPSE OF SO MANY YEARS, ALMOST OVER 16 Y EARS, THE REQUISITE CONFIRMATION LETTERS AND DETAILS OF THOSE DEPOSITORS WERE NOT AVAILABLE TO THE ASSESSEE. BUT THERE WAS NO MALA FIDE ON THE PART OF THE ASSESSEE TO HIDE THE BASIC FACTS IN CONNECTION WITH THE DEPOSITS CREDITED IN THE ACCOUNT. HE HAS ALSO PLEADED THAT IN A SITUATION WHEN THE NAMES AND OTHER DETAILS OF ALL THE DEPOSITORS WERE REVEALED TO THE REVENUE DEPARTMENT AS PER THE INCOME TAX RETURN THEN THE ONUS WAS ON THE REVENUE DEPARTMENT TO INVESTIGATE THE CORRECTNESS OF THOSE DEPOSITORS. RATHER, THE REVENUE DEPARTMENT HAD NO EVIDENCE IN ITS HAND TO DEMONSTRATE THAT THERE WAS ANY WRONG STATEMENT OF FACTS. FINALLY, HE HAS ALSO PLEADED THAT NOW THE QUESTION OF PENALTY U/S.271(L)(C) IN RESPECT OF ADDITION MADE U/S.268 HAS BEEN SETTLED IN ASSESSEE'S FAVOUR IN THE CASE OF NATIONAL TEXTILES VS. COMMISSIONER OF INCOME TAX, 249 ITR 125. 9. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., MR. NIMESH YADAV HAS SUPPORTED THE LEVY OF PENALTY AND PLEADED THAT THE SAME WAS RIGHTLY CONFIRMED BY THE LEAR NED CIT(A), ESPECIALLY, WHEN THE ASSESSEE HAS NOT FURNISHED THE BASIC INFORMATION SUCH AS COPY OF ACCOUNT, CONFIRMATION LETTER AND IDENTITY OF THOSE CASH CREDITORS. 10. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS CASE HAS A CHEQUERED PAST HISTORY. A HUGE ADDITION U/S.68 WAS MADE IN THE PAST BUT WHEN THE ASSESSEE WAS PROVIDED AN ANOTHER ITA NO. 1107 /AHD /201 1 SHRI R AJUBHAI V. MEHTA VS. ITO, WARD - 2(1), BHAVNAGAR FOR A.Y. 1989 - 90 - 5 - OPPORTUNITY OF HEARING THEN HE HAS SUCCESSFULLY PLACED EVIDENCES BEFORE LEARNED CIT(A) IN RESPECT OF MAJOR PORTION OF THE LOANS TAKEN BUT REMAI NED UNSUCCESSFUL IN RESPECT OF THE SMALL AMOUNT OF RS.7,25,850/ - . EVEN THAT COULD HAVE BEEN EXPLAINED BY THE AO IF THE MATTER WAS DECIDED IN THE YEAR WHEN FOR THE FIRST TIME A QUESTION WAS RAISED IN RESPECT OF THE DEPOSITS INTRODUCED BY THE ASSESSEE . NOW, AFTER A LAPSE OF MORE THAN 14 YEARS IT WAS VERY DIFFICULT FOR THE ASSESSEE TO COLLECT THE SOURCE OF INVESTMENT OF THOSE DEPOSITORS. THIS DIFFICULTY OF THE ASSESSEE CAN BE APPRECIATED , C ONSIDERING SYMPATHETICALLY THE LONG DRAWN LEGAL PROCEEDINGS CARRIED OUT BY THE ASSESSEE IN THE PAST. MOREOVER, THE ISSUE NOW STOOD SETTLED BY A DECISION OF HON'BLE GUJARAT HIGH CO URT PRONOUNCED IN THE CASE OF NATIONAL TEXTILES VS. CIT, 249 ITR 125 (GUJ.), WHEREIN IT WAS HELD AS UNDER: 'HELD, THAT, IN THE INSTANT CASE, THE CASH CREDITS WERE NOT SATISFACTORILY EXPLAINED BY EVIDENCE AND DOCUMENTS. THE PARTIES WHO HAD ADVANCED THE ALLE GED TEMPORARY LOANS WERE NEITHER DISCLOSED NOR WERE THERE ANY SUPPORTING DOCUMENTS ON RECORD. THE ACCOUNTANT, WHO HAD ARRANGED THE LOANS WAS NOT PRODUCED AND IT WAS STATED THAT HE HAD LEFT THE SERVICE AS RELATIONS WITH HIM WERE STRAINED. IN THIS STATE OF A CCOUNTS AND EVIDENCE IN THE QUANTUM PROCEEDINGS THE DEPARTMENT WAS JUSTIFIED IN TREATING THE CASH CREDITS AS INCOME OF THE ASSESSEE, BUT MERELY ON THAT BASIS BY RECOURSE TO EXPLANATION - 1, PENALTY UNDER 271(L)(C) COULD NOT HAVE BEEN IMPOSED WITHOUT THE DEPA RTMENT MAKING ANY OTHER EFFORT TO COME TO THE CONCLUSION THAT THE CASH CREDITS COULD IN NO CIRCUMSTANCES HAVE BEEN AMOUNTS RECEIVED AS TEMPORARY LOANS FROM VARIOUS PARTIES. ADMITTEDLY, THE ASSESSEE IN THE QUANTUM PROCEEDINGS FAILED TO PRODUCE THE ACCOUNTAN T BUT THE DEPARTMENT ALSO IN PENALTY PROCEEDINGS MADE NO EFFORT TO SUMMON HIM. THEREFORE, IT WAS A CASE WHERE THERE WAS NO CIRCUMSTANCE TO LEAD TO A REASONABLE AND POSITIVE INFERENCE THAT THE EXPLANATION THAT CASH CREDITS WERE ARRANGED AS TEMPORARY LOANS W AS FALSE. THE FACTS AND CIRCUMSTANCES WERE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THEY COULD HAVE BEEN SUNDRY LOANS IN SMALL AMOUNTS OBTAINED FROM DIFFERENT PARTIES. THEREFORE, THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED. ' 11. FROM THE SIDE OF THE APPELLANT, TWO MORE DECISIONS HAVE ALSO BEEN CITED OF RESPECTED CO - ORDINATE BENCHES AS FOLLOWS: ITA NO. 1107 /AHD /201 1 SHRI R AJUBHAI V. MEHTA VS. ITO, WARD - 2(1), BHAVNAGAR FOR A.Y. 1989 - 90 - 6 - ' 1. M/S. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. VS. ACIT (OSD), RANGE - 1, AHMEDABAD IN IT A NO.LL38/AHD/2011 ORDER DATED 20.02.2 015 (AHD TRIBUNAL) 2. PRAGNESH TRADING CO. VS. ITO S.K. WARD - 1, HIMATNAGAR IN IT A NO.2173/AHD/2010 ORDER DATED26.02.2015 (AHD TRIBUNAL) 12. THE LEGAL PROPOSITION LAID DOWN IN THOSE DECISIONS WAS THAT THE MATERIAL FACTS WERE DISCL OSED BY THE ASSESSEE BEFORE THE AO AND THOSE MATERIAL FACTS WERE NOT FOUND TO BE FALSE. THE ONLY LEG A L POINT WHICH GOES AGAINST THE ASSESSEE WAS THAT HE HAS NOT FURNISHED THE EVIDENCES IN SUPPORT OF THE MATERIAL FACTS PERTAINING TO CASH CREDITS INTRO DUCED IN THE BOOKS OF ACCOUNT. IN THIS CASE, THE ASSESSEE HAS OFFERED AN EXPLANATION GIVING REASONS OF HIS HARDSHIP OF NOT PRODUCING CERTAIN CONFIRMATION LETTERS, ETC. SINCE THE PENALTY PROCEEDINGS ARE UNDISPUTEDLY A DISTINCT PROCEEDINGS FROM THE ASSESSMEN T PROCEEDINGS; THEREFORE, THE ADDITION CONFIRMED IN THE ASSESSMENT PROCEEDINGS ARE TO BE JUDGED INDEPENDENTLY INSTEAD OF DRAWING ANY CONCLUSION FROM THOSE PROCEEDINGS IN A MATTER CONCERNED WITH THE CONCEALMENT PENALTY. WE, THEREFORE, HOLD THAT MERELY ON TH E GROUND THAT A PART CONFIRMATION WAS MADE U/S.68 OF IT ACT IN THE CASE OF THE ASSESSEE SHOULD NOT BE CONSIDERED AS A VALID GROUND FOR LEVY OF CONCEALMENT PENALTY. WE, THEREFORE, REVERSE THE FACTUAL AS WELL AS LEGAL FINDINGS OF THE AUTHORITIES BELOW AND DI RECT TO DELETE THE PENALTY LEVIED. RESULTANTLY GROUNDS ARE ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20 / 0 3 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S ITA NO. 1107 /AHD /201 1 SHRI R AJUBHAI V. MEHTA VS. ITO, WARD - 2(1), BHAVNAGAR FOR A.Y. 1989 - 90 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD