M/s. Prakash Agro Mills, Ahmedabad V. The Income Tax Officer, Ward 12(1), Ahmedabad

ITA 1230/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6275 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Opportunity of being heard; Additional evidence; Reasonable cause; Bad and doubtful debts; Condonation of delay
• Section: 143(3); 142(1); 68; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 1230/AHD/2014 / ASSESSMENT YEAR: 2008-09 M/S. PRAKASH AGRO MILLS, NR. OMKAR TEXTILE MILLS, MEMCO NARODA ROAD, AHMEDABAD-382330 PAN : AACFP 0947 R VS. THE ITO, WARD 12 (1), AHMEDABAD [ / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI PRATIK JAIN, AR REVENUE BY : SHRI PRASOON KABRA, SR DR / DATE OF HEARING : 04/04/2017 / DATE OF PRONOUNCEMENT: 07/04/2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XX, AHMEDABAD DATED 30.12.2 013 VIDE APPEAL NO.CAT(A)-XX/06/12-13, ARISING OUT OF ORDER UNDER S ECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT), FRAMED ON 19.03.2012 BY THE ITO, WARD-12(1), AHMEDABAD. 2. AS OBSERVED BY REGISTRY, THIS APPEAL IS TIME BAR RED BY 40 DAYS. LEARNED COUNSEL HAS PLACED ON RECORD THE APPLICATION BY PAR TNER OF THE ASSESSEE FIRM FOR CONDONATION OF DELAY IN FILING APPEAL. WE HAVE GONE THROUGH THE APPLICATION AND FIND THAT CERTAIN DOCUMENTS NECESSARY FOR FILIN G APPEAL WERE MISPLACED WHICH RESULTED IN DELAY IN FILING APPEAL. IN OUR VI EW ASSESSEE HAD A REASONABLE CAUSE DUE TO WHICH THIS DELAY OCCURRED. WE CONDONE THE DELAY IN FILING OF THIS APPEAL AND ADMIT IT FOR ADJUDICATION. ITA NO. 1230/AHD2014 M/S. PRAKASH AGRO MILLS VS. ITO AY : 2008-09 - 2 3. ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITS APP EAL:- 1. THE LEARNED CIT(A) HAS ERRED IN MAKING THE A SSESSMENT BY KEEPING THE SOME OF THE PENALTY AS PASSED BY THE LEARNED AO. 2. THE LEARNED CIT(A) HAS CONFIRMED THE PENALTY ON ADDITION OF RS. 4,56,445/- ON THE BASIS OF NON DEDUCTION OF TDS. AS PER THE PR OVISIONS OF SECTION 271(1)(C) OF THE ACT THERE SHOULD BE CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME FOR LEVYING PENALTY BUT NON D EDUCTION OF TDS DOES NOT FALL WITHIN THE AMBIT OF CONCEALMENT OF INCOME OR INACCU RATE PARTICULARS OF INCOME AS PER THE VARIOUS JUDGMENTS OR PRONOUNCEMENTS. HENCE THE LEARNED CIT(A) HAS ERRED IN KEEPING THE S AME PENALTY AS PASSED BY THE AO. 3. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING TH E SAME PENALTY IN RESPECT OF OTHER ADDITION OF RS 7,50,000/- AND RS 15,000/-. TH E LEARNED CIT(A) HAS ALLOWED THE EXPENSES SUBJECT TO VERIFICATION BY THE AO. HOWEVER THE LEARNED AO HAS NOT CALLED THE APPELLANT NOT GIVEN ANY OPPORTUN ITY OF BEING HEARD TO VERIFY THE EVIDENCES AS DIRECTED BY THE AO. 4. THE APPELLANT HAS FILED A RECTIFICATION UNDER SECTION 154 OF THE ACT WITH CIT(A) DATED 25.11.2011 AND HAS DIRECTED TO THE AO TO CHECK AND VERIFY THE SAID DOCUMENTS. THE RECTIFICATION APPLIED IS STILL PENDI NG WITH THE CIT(A). NO CONCEALMENT IS LAWFUL IN THIS REGARD AND NEEDS TO B E DELETED. 5. THE APPELLANT CRAVES LEAVED TO ADD, AMEND, AL TER VARY OR WITHDRAWAL ANY OR ALL THE ABOVE GROUNDS OF APPEAL OR DURING COURSE OF HEARING. 4. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE REC ORD, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TRADING, PROCESSING AND COMMISSION AGENT OF PULSE AND OTHER MERCHANDISE. RETURN OF INCOME DECLARING INCOME AT RS.7,83,300/- WAS FILED ON 06.10.2008. CASE WAS SELECTED FOR SCR UTINY ASSESSMENT AND NOTICE U/S 143(2) FOLLOWED BY 142(1) OF THE ACT WAS DULY S ERVED ON THE ASSESSEE. ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED ON 27.12.2010, AFTER MAKING ADDITION OF RS.66,48,023/- AND INCOME WAS AS SESSED AT RS.74,31,320/-. AGAINST THE IMPUGNED ADDITION OF RS.66,48,023/-, AS SESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND GOT PARTIALLY SUCCEEDED. THEREAFTER, AGAINST THE DELETION OF ADDITION OF RS.41,14,374/- MADE BY THE LD. ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT, REVENUE PREFERRED APP EAL BEFORE THE TRIBUNAL, BUT ITA NO. 1230/AHD2014 M/S. PRAKASH AGRO MILLS VS. ITO AY : 2008-09 - 3 THE SAME WAS DISMISSED BY THE TRIBUNAL VIDE ORDER D ATED 13.08.2015 IN ITA NO.2394/AHD/2011. 5. SUBSEQUENT TO THE ORDER OF CIT(A) ON THE QUANTUM ADDITION, PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) OF THE ACT VIDE ORDER DATED 19.03.2012 AND PENALTY OF RS.3,77,680/- WAS LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON THE CONCEALED INCOME OF RS.12,22,260/-. 6. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE THE LD .CIT(A) AGAINST THE ORDER UNDER SECTION 271(1)(C) OF THE ACT AND PARTLY SUCCEEDED. 7. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT OUT OF TOTAL ADDITION OF RS.66,48,023/- MADE BY THE LD. ASSESSING OFFICER IN HIS ORDER UNDER SECTION 143(3) OF THE ACT, THE STATUS OF THE IMPUGNED ADDIT ION IS AS UNDER- I) ADDITION UNDER SECTION 40(A)(IA) OF RS.41,14,375/- HAS BEEN DELETED BY THE TRIBUNAL, UPHOLDING THE ORDER OF LD. CIT(A); II) ADDITION OF RS.3,89,344/- UNDER SECTION 36(1) OF T HE ACT HAS BEEN DELETED BY LD. CIT(A); III) ADDITION OF BAD DEBTS OF RS.8,71,541/- HAS ALSO BEE N DELETED BY LD.CIT(A); IV) AS REGARDS THE ADDITION OF RS.4,56,455/- UNDER SECT ION 40(A)(IA) OF THE ACT, ASSESSEE DID NOT CONTEST BEFORE THE APPELLATE AUTHORITIES; V) OUT OF ADDITION UNDER SECTION 68 OF THE ACT OF RS.8 ,16,308/-, LD. CIT(A) HAS DELETED THE ADDITION OF RS.51,308/-; AND , FOR THE REMAINING AMOUNT OF RS.7,65,000/-, THE LD. CIT(A) SENT IT BAC K TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION AS THE ASSESSEE HAS CONTENDED THAT RS.7,50,000/- PERTAINS TO LOAN OBTAINED FROM RELIAN CE CONSUMER ITA NO. 1230/AHD2014 M/S. PRAKASH AGRO MILLS VS. ITO AY : 2008-09 - 4 FINANCE AND INTRODUCED AS CAPITAL AND THEREFORE, CA NNOT BE TREATED AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT. HO WEVER, TILL DATE NO OPPORTUNITY HAS BEEN PROVIDED BY THE ASSESSING OFFI CER FOR THE NECESSARY VERIFICATION OF THIS AMOUNT. 9. LD. COUNSEL FURTHER SUBMITTED THAT THE ORDER UND ER SECTION 271(1)(C) OF LD. ASSESSING OFFICER IS ERRONEOUS AS IT CONTAINS M ANY CONTRADICTIONS FOR THE REASON THAT IN PARAGRAPH 3 OF THE IMPUGNED ORDER IT REFERS TO THE CONFIRMED ADDITION BY CIT(A) AT RS.5,07,763/-, WHEREAS IN PAR A 6 HE MENTIONED THE CONCEALED INCOME AT RS.12,22,260/- AND HAS IMPOSED PENALTY @ 100% OF THE TAX AT RS.3,77,680/-. LD. COUNSEL FOR THE ASSESSEE REQ UESTED THAT THE ISSUES MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRAMING AFRESH THE PENALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT IN THE LIGHT OF THE DECISION OF HONBLE TRIBUNAL AND LD. CIT(A)S APPELLATE ORDER. 10. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE VEHEMENTLY ARGUED AND ALSO ADDED THAT ASSESSEE HAS BEEN UNABLE TO PRO VIDE ANY DETAILS ABOUT THE ALLEGED ADDITION IN CAPITAL AT RS.7,50,000/- AND IS LIABLE TO PAY PENALTY ON THE SAID AMOUNT ALONG WITH OTHER ADDITIONS CONFIRMED BY THE LD. CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE ASSESSEE HAS RAISED VARIOUS GROUNDS , BUT ALL ARE CENTERED AGAINST THE ORDER OF LD. CIT(A) PARTLY CONFIRMING THE PENAL TY UNDER SECTION 271(1)(C) OF THE ACT. WE NOTICE THAT PENALTY OF RS.3,77,680/- WAS IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON THE CONCEALED INCOME OF RS. 12,22,260/-, WHICH RELATES TO FOLLOWING ADDITIONS:- A) DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AT RS.4,56,455/- TOWARDS NON-DEDUCTION OF TDS ON INTEREST PAYMENT TO RELIANC E CONSUMER FINANCE; B) CAPITAL CONTRIBUTION OF RS.51,308/- AND RS.7,14,505 /-. ITA NO. 1230/AHD2014 M/S. PRAKASH AGRO MILLS VS. ITO AY : 2008-09 - 5 12. WE ALSO OBSERVE IN PARAGRAPH 3 OF THE IMPUGNED ORDER UNDER SECTION 271(1)(A) OF THE ACT THAT LD. ASSESSING OFFICER HAS REFERRED ONLY TWO ADDITIONS WHICH STANDS CONFIRMED BY LD. CIT(A) AT RS.4,56,455 /- UNDER SECTION 40(A)(IA) AND CAPITAL CONTRIBUTION OF RS.51,308/-. IN THE NO RMAL COURSE, PENALTY SHOULD HAVE BEEN LEVIED ONLY ON THE TAX EVASION ON THE TOT AL ADDITION CONFIRMED BY TRIBUNAL/CIT(A), BUT SURPRISINGLY, WHEN WE GO THROU GH PARA NO.6 OF THE IMPUGNED ORDER, WE NOTICE THAT LD. ASSESSING OFFICE R HAS IMPOSED PENALTY OF RS.3,77,680/- ON THE CONCEALED INCOME OF RS.12,22,2 60/-. THEREFORE, THERE IS A VARIATION IN THE FIGURE OF CONFIRMED CONCEALED INCO ME IN THE IMPUGNED ORDER IN PARAGRAPH 3 AS WELL AS IN PARAGRAPH 6. WE ALSO OBS ERVE THAT AT THE TIME OF COMPLETION OF ASSESSMENT UNDER SECTION 143(3) OF TH E ACT, ADDITION OF RS.7,65,000/- WAS MADE TOWARDS UNEXPLAINED CAPITAL CONTRIBUTION. BUT WHEN THE ISSUE CAME UP BEFORE THE LD. CIT(A), IT WAS CON TENDED THAT OUT OF RS.7,65,000/-, RS.7,50,000/- WAS A LOAN RECEIVED FR OM RELIANCE CONSUMER FINANCE IN THE PERSONAL CAPACITY AND WAS ACCORDINGL Y INTRODUCED AS CAPITAL IN THE FIRM AND BALANCE SUM OF RS.15,000/- WAS TRANSFE RRED FROM SAVINGS BANK ACCOUNT OF THE PARTNERS HELD WITH DENA BANK TO THE ACCOUNT OF THE ASSESSEE-FIRM. LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCE FURNISH ED BY THE ASSESSEE IN RELATION TO THE ALLEGED SUM OF RS.7,65,000/- AND DI RECTED THE ASSESSING OFFICER TO VERIFY THE GENUINENESS OF THESE TWO DOCUMENTS AN D IF THEY ARE FOUND CORRECT, HE HAS ALSO DIRECTED THE ASSESSING OFFICER TO DELET E THE IMPUGNED ADDITION. HOWEVER, DURING THE COURSE OF HEARING BEFORE US, IT WAS SUBMITTED THAT TILL DATE NO OPPORTUNITY HAS BEEN PROVIDED BY THE ASSESSING A UTHORITY CALLING FOR NECESSARY DETAILS SO THAT THE ASSESSEE CAN PROVE TH E GENUINENESS OF THE UNEXPLAINED CASH CREDIT OF RS.7,65,000/-. THIS FAC T HAS ALSO NOT BEEN CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE . 13. WE ALSO OBSERVE THAT THE IMPUGNED ADDITION OF R S.4,56,455/- UNDER SECTION 40(A)(IA) OF THE ACT IS TOWARDS THE NON-DED UCTION OF TDS ON THE ITA NO. 1230/AHD2014 M/S. PRAKASH AGRO MILLS VS. ITO AY : 2008-09 - 6 PAYMENT OF INTEREST TO RELIANCE CONSUMER FINANCE WH ICH IS WELL OBSERVED IN PARA 4.2 OF THE OF THE ORDER UNDER SECTION 143(3) O F THE ACT, WHICH FURTHER ADDUCE THE FACT THAT THERE IS A LOAN FROM RELIANCE CONSUMER FINANCE. 14. IN TOTALITY OF ALL THESE FACTS, WE ARE OF THE C ONSIDERED VIEW THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT NEEDS TO BE FRAM ED AFRESH AS THE PRESENT ORDER IS HAVING LOTS OF DEFICIENCIES IN FORM OF VAR IATION OF FIGURES, AND ALSO IT IS NOT COMPLYING TO THE DIRECTIONS OF LD. CIT(A) IN TH E QUANTUM APPEAL ORDERS. WE, THEREFORE, SET ASIDE ALL THE ISSUES RAISED IN T HIS APPEAL TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO FRAME THE PEN ALTY ORDER UNDER SECTION 271(1)(C) OF THE ACT AFRESH. NEEDLESS TO MENTION T HAT ASSESSEE MAY BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD FOR FURNISHING ALL NECESSARY EVIDENCES. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 7 TH APRIL, 2017 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 07/04/2017 **BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ & / CONCERNED CIT 4. & ) ( / THE CIT(A)- 5. $ , $ , /DR,ITAT, AHMEDABAD, 6. 0 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) $ ITAT, AHMEDABAD