Sh. Charanjit Singh, Machhiwara V. ITO, Khanna

ITA 118/CHANDI/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0055 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-02-2016
• Assessment Year: 1992-1993
• Appeal Filed On: 28-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITAL
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.118/CHD/2011 (ASSESSMENT YEAR : 1992-93) SH.CHARANJIT SINGH, VS. THE INCOME TAX OFFICER, L/H OF SH.GURBACHAN SINGH WARD 1, PROP. M/S KHALSA CLOTH HOUSE, KHANNA. MACHHIWARA. PAN: - (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI ASHOK GOYAL & SUDHIR SEHGAL RESPONDENT BY : SHRI S.K. MITAL, DR DATE OF HEARING : 30.03.2016 DATE OF PRONOUNCEMENT : 28.04.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA DATED 19.11.2010 FOR ASSESSM ENT YEAR 1992-93, PASSED UNDER SECTION 250(6) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY, THE FACTS ARE THAT THE ASSESSMENT UNDE R SECTION 143(3) OF THE ACT WAS MADE IN THIS CASE AT AN INCOME OF RS.27,99,200/- VIDE ORDER DATED 14.2.2001 . 2 DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO JUSTIFY THE ADVANCE MONEY RECEIVED BY HIM FROM CERTAIN CREDITORS. THE ASSESSEE FAILED TO PROVE TH E GENUINENESS OF THE LOANS TO THE EXTENT OF RS.19 LAC S AND ALSO THE SOURCE OF RS.8,53,150/- AS HIS OWN INVESTM ENT. IN THIS VIEW, AN ADDITION OF RS.27,53,150/- WAS MAD E BY THE ASSESSING OFFICER. THE PENALTY UNDER SECTION 2 71(1)(C) OF THE ACT WAS LEVIED ON THE SAID ADDITION BY THE A SSESSING OFFICER RELYING ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTI LE PROCESSORS (2007) 295 ITR 244, WHEREBY IT HAS BEEN HELD THAT THE OBJECT BEHIND ENACTMENT OF SECTION 271(1)( C) READ WITH EXPLANATIONS INDICATES THAT THE SAID SECTION H AS BEEN ENACTED TO DIRECT FOR A REMEDY FOR LOSS OF REVENUE AND THEY CREATE THE ELEMENT OF STRICT LIABILITY ON THE ASSES SEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WH ILE FILING THE RETURN. 3. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMITTED THAT THE ASSESSEE HAD FILED CONFIRMATIONS FROM THE PERSONS WHO HAD ADVANCED THE AMOUNTS TO THE ASSESSEE. EVEN SOME STATEMENTS WERE RECORDED BY TH E ASSESSING OFFICER, WHEREBY IT HAS BEEN CONFIRMED TH AT THE LOANS WERE GIVEN TO THE ASSESSEE. AFFIDAVITS OF TH E CREDITORS WERE ALSO FILED AND ALL THE AMOUNTS HAVE BEEN ADVANCED TO THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQ UES. AS REGARDS THE SAVINGS AND AMOUNT OF SALE OF PROPER TY, THE RELEVANT PROOFS HAVE BEEN TENDERED AND IT IS ONLY THE CASE 3 OF REJECTION OF BONAFIDE EXPLANATION OF THE ASSESSE E FOR WHICH PENALTY CANNOT BE LEVIED. RELIANCE WAS PLAC ED ON A NUMBER OF JUDGMENTS. AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, THE LEARNED CIT (APPEALS) HELD THA T THE ASSESSEE COULD NOT SATISFACTORILY LEAD THE EVIDENCE WITH REGARD TO THE CREDIT WORTHINESS OF THE CREDITORS AN D ALSO HE COULD NOT PROVE THE SAVINGS WHICH HE HAD STATED TO HAVE CONTRIBUTED TOWARDS THE PURCHASE OF THE LAND. IN VIEW OF THIS, THE PENALTY UNDER SECTION 271(1)(C) O F THE ACT WAS CONFIRMED BY THE LEARNED CIT (APPEALS). 4. AGGRIEVED BY THIS, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING FOLLOWING GROUNDS OF APPE AL : 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING PENAL TY OF RS.15,42,4647- U/S 281 (1 )(C ) LEVIED BY THE ASSES SING OFFICER. 2. THAT THE PENALTY U/S 271 (1 )(C ) HAS BEEN CONFIRMED BY THE CIT(A) AGAINST FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT WHILE CONFIRMING THE PENALTY, OUR DETAILED SUBMISSIONS ALONGWITH VARIOUS CASE LAWS HAVE NOT BE EN CONSIDERED PROPERLY. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 5. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET DREW OUR ATTENTION TO THE ORDER OF THE I.T.A .T., CHANDIGARH BENCH IN ASSESSEES OWN CASE IN THE QUA NTUM 4 PROCEEDINGS IN ITA NO.46/CHD/2009 DATED 27.2.2016, WHEREBY OUT OF THE TOTAL ADDITION OF RS.27,28,150/- , ONLY AN ADDITION OF RS.7,75,000/- WAS CONFIRMED BY THE H ON'BLE I.T.A.T. WHILE GIVING A RELIEF OF RS.19,78,150/-, IT WAS STATED THAT IT IS A CASE OF ADDITION MADE ON ACCOUN T OF CASH CREDIT, WHICH THE ASSESSEE HAS TRIED TO EXPLAI N AT HIS BEST AT ALL LEVELS THAT IS WHY A SUBSTANTIAL RELIE F HAS BEEN GIVEN TO IT BY THE I.T.A.T. THE ADDITION SUSTAINED IS ALSO ON ACCOUNT OF THOSE CREDITORS WHICH COULD NOT BE PR ODUCED FOR THE REASON THAT EITHER THEY HAVE DIED OR GONE A BROAD, THEREFORE, WERE NOT AVAILABLE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. KAMAL CHEMICALS INDUSTRIES (20 05) 277 ITR 150 FOR THE PROPOSITION THAT THE DEPARTMENT HAVING FAILED TO PROVE THAT THE ASSESSEE HAD DELIBE RATELY FURNISHED INACCURATE PARTICULARS OF INCOME OR FILED INCORRECT RETURN , PENALTY CANNOT BE LEVIED ON ACCO UNT OF ADDITION MADE FOR CASH CREDITS. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BHURAMAL MANIKCHAND (1981) 130 ITR 129 TO THE EFFECT THAT IN THE ABSENCE OF FURTHER FINDING THAT THE CREDITS REPRESENTED ASSESSEES OWN INCOME, THE APPL ICATION OF SECTION 68 OF THE ACT IS LIMITED ONLY TO ASSESSM ENTS AND DOES NOT EXTEND TO PENALTY FOR CONCEALMENT. ANOTHER JUDGMENT OF THE GUJRAT HIGH COURT IN THE CASE OF N ATIONAL TEXTILES VS. CIT (2001) 249 ITR 125 WAS RELIED ON VERY 5 HEAVILY BY THE LEARNED COUNSEL FOR THE ASSESSEE. I T WAS STATED THAT AFTER CONSIDERING THE EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT, IT HAS BEEN HELD IN THIS CASE THAT NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANC ES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMO UNT DOES NOT REPRESENT CONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOES. IF AN ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E . IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE S CASE IS FALSE, THE EXPLANATION CANNOT HELP THE DEPARTMEN T BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE. 6. THE LEARNED D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THAT OF THE LEARNED CI T (APPEALS). FURTHER RELIANCE WAS PLACED ON THE JUDG MENT OF THE HON'BLE SUPREME COURT IN THE CASE OF DHARMENDR A TEXTILE PROCESSORS (SUPRA) FOR THE PROPOSITION THAT THE PENALTY IS STRICTLY A CIVIL LIABILITY. RELIANCE WA S ALSO PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ATUL MOHAN BINDAL, 317 ITR 1 AN D THAT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF NEW BIJLI FOUNDRY VS. CIT, 135 ITR 593. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AU THORITIES 6 BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON THE PERUSAL OF THE ORDER OF THE I.T.A.T. IN ASSE SSEES CASE IN QUANTUM PROCEEDINGS, WE OBSERVE THAT OUT OF A TOTAL ADDITION OF RS.27,53,150/-, AN AMOUNT OF RS.19,78,150/- HAS BEEN GRANTED TO THE ASSESSEE. O NLY AN ADDITION OF RS.7,75,000/- HAS BEEN CON FIRMED. IN VIEW OF THIS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY ON AN ADDITION OF RS.19,78,150/-. FOR THE REMAININ G ADDITION OF RS.7,75,000/- SUSTAINED BY THE I.T.A.T. , THE DISCUSSION FOLLOWS. 8. AS REGARDS THE ADDITION OF RS.7,75,000/- SUSTAINED BY THE I.T.A.T., THE DISCUSSION IS AT PAR A 11 OF ITS ORDER. FROM THE PERUSAL OF THE SAME, WE OBSERV E THAT THE ADDITION HAS BEEN SUSTAINED FOR THE REASONS EIT HER THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY DOCUMENT TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CRED ITORS OR HE HAS FILED ONLY THE SELF-SERVING DOCUMENTS LIKE D EATH CERTIFICATE AND AFFIDAVIT ETC. IN SUCH CIRCUMSTANC ES, THE PROVISION OF EXPLANATION-1 TO SECTION 271(1)(C) IS CLEARLY APPLICABLE. AS PER THIS EXPLANATION, WHERE IN RESP ECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOM E, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE, OR OFFERS A N EXPLANATION WHICH IS UNSUBSTANTIATED AND FAILS TO P ROVE THAT ALL MATERIAL FACTS HAVE BEEN DISCLOSED, HE SHO ULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF THAT AM OUNT WHICH IS CONSEQUENTLY ADDED OR DISALLOWED IN THE ASSESSMENT. HERE IS A CASE, WHEN THE ASSESSEE TRIE D TO 7 OFFER AN EXPLANATION FOR THE REMAINING CREDITORS, H OWEVER, HIS EXPLANATION REMAINS UNSUBSTANTIATED IN VIEW OF INSUFFICIENT EVIDENCES. IN VIEW OF THE ABOVE, WE C ONFIRM THE PENALTY ON THE AMOUNT OF ADDITION SUSTAINED BY THE I.T.A.T. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF APRIL, 2016. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACOUNTANT MEMBER DATED : 28 TH APRIL, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH