S. Inderpal Singh, Ludhiana V. ACIT, Ludhiana

ITA 1200/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5071 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 16-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: SSH B M MONGA ROHIT KAURA
• Section: 40A(3); 69; 27; 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1200/CHD/2016 ASSESSMENT YEAR: 2008-09 S. INDERPAL SINGH, VS. THE ACIT,C-VII, PROP M/S EKSON SUGAR, AYEKAR BHAWAN, LUDHIANA LUDHIANA PAN NO. BCUPS1010F (APPELLANT) (RESPONDENT) APPELLANT BY : S/SH. B.M.MONGA, ROHIT KAURA RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 22.06.2017 DATE OF PRONOUNCEMENT : 06.07.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-4 [HER EINAFTER REFERRED TO AS CIT(A)], LUDHIANA DATED 02.09.2016. IN THIS AP PEAL, THE ASSESSEE HAS AGITATED THE CONFIRMATION OF LEVY OF PENALTY U/S 27 1(1)(C) OF THE ACT. 2. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONS IDERATION ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN S UGAR IN THE NAME AND STYLE OF M/S EKSON SUGARS AND HAD FILED HIS RETURN OF INCOME FOR THE YEAR 2 UNDER CONSIDERATION DECLARING THEREIN AN INCOME OF RS. 11,78,030/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE PAYMENTS OF RS.5 6,54,310/- TO SOME PARTIES IN CONTRAVENTION OF THE PROVISIONS OF SECTI ON 40A(3) OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). AS THE ASSESSEE MADE CONTRAVENTION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT, THE AS SESSING OFFICER DISALLOWED THESE EXPENSES AND MADE AN ADDITION OF R S.56,54,310/- TO THE RETURNED INCOME OF THE ASSESSEE. ANOTHER ADDITION O F RS.34,39,107/- WAS ALSO MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UN ACCOUNTED SALES UNDER SECTION 69 OF THE ACT. THE ASSESSMENT IN THIS CASE WAS ULTIMATELY COMPLETED BY THE ASSESSING OFFICER AT AN ASSESSED I NCOME OF RS. 1,02,71,447/-. THE PENALTY PROCEEDINGS UNDER SECTIO N 271(L)(C) OF THE ACT WERE ALSO INITIATED AGAINST THE ASSESSEE FOR FURNIS HING OF INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.90.93,417 /-[RS. 56,54,310/- + RS.34,39,107/-]. 3. BEING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFOR E THE LD. CIT(A) AND CHALLENGED BOTH THE ADDITIONS. THE LD. CIT(A) VIDE HIS ORDER IN APPEAL NO. 292/IT/CIT(A)-2/LUDHIANA/20I2-13 DATED 28.10.2013 D ELETED THE ENTIRE ADDITION OF RS.56,54,310/- WHICH WAS MADE BY THE AS SESSING OFFICER BY INVOKING PROVISIONS OF SECTION 40A(3) OF THE ACT AN D DELETED ADDITION TO THE EXTENT OF RS.31,00,177/- OUT OF TOTAL ADDITION OF RS.34,39,107/-. THE LD. CIT(A) CONFIRMED AN ADDITION OF RS.3,38,930/- O UT OF AN ADDITION OF RS.34,39,107/- MADE BY THE ASSESSING OFFICER U/S 6 9 OF THE ACT. 4. NEITHER THE ASSESSEE PREFERRED ANY FURTHER APPEA L AGAINST THE SAID ORDER OF CIT(A) NOR THE REVENUE. THE LD. ASSESSING OFFICER VIDE ORDER 3 DATED 26.3.2015 IMPOSED PENALTY OF RS. 1,04,730/- U /S 271(1)(C) OF THE ACT IN RESPECT OF THE DISALLOWANCE OF RS. 3,38,930/- ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE C HALLENGED THE ABOVE LEVY OF PENALTY BEFORE THE CIT(A) BUT REMAINED UNSU CCESSFUL. 5. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE ASSESSING OFFICER HAD DOUBTED THE GENUINENESS OF 17 TRANSACTIONS AS UNACCOUNTED SALES OF THE ASSESSEE. IN APPEAL BEFOR E THE LD. CIT(A), THE ASSESSEE PRODUCED RELEVANT EVIDENCES, CONFIRMATION S ETC. AND EXPLAINED THAT TRANSACTIONS WERE RELATING TO THE SALES MADE B Y SISTER CONCERN OF THE ASSESSEE M/S M.K. SUGAR. THAT THE PAYMENTS WERE INADVERTENTLY REMITTED BY THE PARTIES TO THE ASSESSEE, WHICH WAS FURTHER T RANSFERRED BY THE ASSESSEE TO M/S M.K. SUGAR BY WAY OF GENERAL ENTRY. THE SA ID M.K. SUGAR HAS DULY ENTERED THE RELEVANT TRANSACTIONS IN ITS AUDIT ED BOOKS OF ACCOUNT. 6. THE LD. CIT(A) CALLED FOR REMAND REPORT ON THE D ETAILS AND EVIDENCES SUBMITTED BY THE ASSESSEE. THE ASSESSING OFFICER VI DE HIS REPORT DATED 19.8.2013 VERIFIED AND CONFIRMED THAT ALL THE TRANS ACTIONS IN QUESTION WERE FOUND TO BE GENUINE AND DULY ACCOUNTED FOR BY M/S M .K. SUGAR AND CONFIRMED BY THE PARTIES EXCEPT THE TWO TRANSACTION S ONE RELATING TO PAYMENT OF RS. 2,06,150/- RECEIVED BY THE ASSESSEE FROM M/S K.D. SALES CORPORATION AND THE OTHER REGARDING PAYMENT OF RS. 1,32,780/- RECEIVED BY THE ASSESSEE FROM M/S JOGIDNER PAL & BROTHERS AGAI NST SALE OF SUGAR. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE LD. C IT(A) HAS CONFIRMED THE ABOVE ADDITIONS BECAUSE OF THE FACT THAT THE AS SESSEE COULD NOT PRODUCE CONFIRMATIONS FROM THE ABOVE STATED TWO PARTIES. IT WAS EXPLAINED TO THE 4 CIT(A) THAT M/S K.D SALES CORPORATION HAD LEFT THE SHOP FROM WHERE IT USED TO CONDUCT THE BUSINESS, WHEREAS, M/S JOGINDE R PAL & BROTHERS DID NOT RESPOND BECAUSE IT HAD CEASED TO DEAL WITH THE ASSESSEE. HOWEVER, THE TRANSACTIONS RELATING TO OTHER PARTIES WERE ACCEPTE D TO BE GENUINE BY THE ASSESSING OFFICER AFTER VERIFICATION OF ACCOUNTS AN D CONFIRMATION FROM THE PARTIES. THE LD. AR SUBMITTED THAT MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE TWO PARTIES BEFORE THE ASSESSING OFFICER OU T OF TOTAL 17 PARTIES, THAT DOES NOT MEAN THAT THE SAID TRANSACTIONS WERE NOT GENUINE. THE EXPLANATION RELATING TO THE RECEIPT OF MONEY BY THE ASSESSEE ON BEHALF OF ITS SISTER CONCERN HAS BEEN FOUND TO BE CORRECT AND THE RE WAS NO REASON TO SUSPECT THE GENUINENESS OF OTHER TWO TRANSACTIONS. HE HAS, HOWEVER, SUBMITTED THAT EVEN THE ASSESSING OFFICER HAS NOT D ISPROVED THE TRANSACTIONS IN QUESTION. THE ASSESSEE DUE TO REASO NS BEYOND HIS CONTROL COULD NOT PRODUCE THE ABOVE TWO PARTIES OUT OF THE TOTAL 17 PARTIES AND THAT ITSELF CANNOT BE A GROUND TO HOLD THAT THE SAID TRA NSACTIONS WERE NOT GENUINE OR THAT THE ASSESSEE HAD FURNISHED INACCURA TE PARTICULARS OF INCOME. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE FI NDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT THE LD. CIT(A) HAS CONFIRMED THE ADDITIONS IN RESPECT OF TWO PARTI ES OUT OF TRANSACTION RELATING TO THE 17 PARTIES, NOT BECAUSE THAT THE TRANSACTIONS WITH THE TWO PARTIES WERE DISPROVED OR FOUND TO BE NOT GENUINE BUT ONLY BECAUSE THE ASSESSEE COULD NOT BRING CONFIRMATIONS FROM THE ABOVE STATED TWO PARTIES. THE ASSESSEE HAS PROVED THE GENUINENES S OF THE TRANSACTIONS WITH ALL THE OTHER PARTIES EXCEPT THE ABOVE STATED TWO PARTIES AND THE ASSESSEE HAS ALSO EXPLAINED THE REASONS THAT ONE OF THE PARTIES HAD LEFT THE 5 USUAL PLACE OF ITS BUSINESS AND THAT THE OTHER PART Y HAS CEASED TO DEAL WITH HIM. THE ASSESSING OFFICER HAS NOT DISPROVED THE C LAIM OF THE ASSESSEE BY BRINGING OR POINTING OUT ANY EVIDENCE AGAINST THE G ENUINENESS OF THE TRANSACTIONS IN QUESTION. HE COULD NOT PROVE THAT THE CLAIM PUT BY THE ASSESSEE WAS WRONG OR BOGUS. THE QUANTUM ADDITIONS WERE MADE BECAUSE OF THE INABILITY OF THE ASSESSEE TO FURNISH CONFIRM ATION OF THE REMAINING TWO PARTIES RELATING TO THE TRANSACTIONS IN QUESTIO N, BUT THAT ITSELF, IS NOT ENOUGH FOR THE LEVY OF THE PENALTY U/S 271(1)(C) OF THE ACT. THE PENALTY PROCEEDINGS ARE SEPARATE FROM THE QUANTUM PROCEEDIN GS. IN THE CASE OF LEVY OF PENALTY, IT SHOULD BE ESTABLISHED ON THE FILE TH AT PARTICULARS FURNISHED BY THE ASSESSEE WERE INACCURATE PARTICULARS OF INCOME OR THAT THERE WAS CONCEALMENT OF INCOME. EVERY CASE OF CONFIRMATION O F ADDITION OR DISALLOWANCE CANNOT BE REGARDED AS FURNISHING OF IN ACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. EVEN, IT CANNOT BE SAID THAT THIS CASE OF THE ASSESSEE WAS A CASE OF NO EVIDENCE AT ALL. THE ASSESSEE HAS GOT VERIFIED THE TRANSACTIONS RELATING TO THE 15 PARTIES OUT OF TOTAL 17 PARTIES AND HAS ALSO GIVEN EXPLANATION FOR HIS INABILITY TO PRODUCE THE REMAINING TWO PARTIES. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF 'CIT VS. UPENDRA V. MILHANI' IN 1TA (L) NO. 1860 OF 2009 DECIDED ON 05.08.2009, HAS OBSERVED IN THE MATTER OF LEVY OF PENALTY UNDER SEC TION 271(L)(C) OF THE ACT, THAT IF THE ASSESSEE GIVES AN EXPLANATION WHIC H 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, THEN NO PENALTY CAN BE IMPOSED IN SUCH CASES. WHEN THE F ACTS OF THE CASE IN HAND ARE CONSIDERED IN THE LIGHT OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF 'CIT VS. UPENDRA V. MITHA NI (SUPRA), THE LEVY 6 OF PENALTY ON THIS ISSUE CANNOT BE HELD TO BE JUSTI FIED IN THIS CASE. THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.07.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6 TH JULY, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR