M/s Anubhuti Cold Chains Pvt. Ltd., Chandigarh V. ITO, W-4(4), Chandigarh

ITA 1269/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1220 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 29-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAHIL CHADHA
• Keywords: Corroborative evidences; Agreed addition; Commercial expediency
• Section: 40A(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER ITA NO. 1269/CHD/2017 (ASSESSMENT YEAR: 2012-13) M/S ANUBHUTI COLD CHAINS VS. THE ITO PVT. LTD.,SCO 363-364, WARD 4(4), 2 ND FLOOR, SECTOR 35-B, CHANDIGARH CHANDIGARH PAN NO. AAGCA7238R (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SAHIL CHADHA REVENUE BY : SHRI MANOJ KUMAR DATE OF HEARING : 20/06/2018 DATE OF PRONOUNCEMENT : 04.09.2018 ORDER PER DIVA SINGH, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSA ILING THE CORRECTNESS OF THE ORDER DT. 29/06/2017 OF CIT(A)-2, CHA NDIGARH PERTAINING TO A.Y. 2012-13 ON THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S 271(1)(C ) UNDER INCOME TAX ACT, 1961 LEVIED BY LD. ASSESSING OFFICER ON THE ADDITION OF RS. 12,58.918/- IN VIOLATION OF SECTION 40A (3) OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING THE FACTS AND SUPPORTIVE JUDGMENTS WHEN NO CONCEALMENT OF INCOME HAS TAKEN PLACE. 2 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S 271(1)(C) UNDER INCOME TAX ACT, 1961 LEVIED BY LD. ASSESSING OFFICE R ON THE ADDITION OF RS. 5,00,000/- ON DISALLOWANCE OF SHARE APPLICATION MON EY INTRODUCED WITHOUT CONSIDERING THE FACTS AND FIGURES WHEN NO CONCEALME NT OF INCOME HAS TAKEN PLACE. 2. THE LD. AR INVITING ATTENTION TO THE GROUNDS RAISED SU BMITTED THAT IN THE PENALTY PROCEEDINGS, THE ADDITIONS SUSTAINED IN SERIAL NO. 1 AND 3 OF PAGE 2 PARA 5.1 OF THE CIT(A) ARE BEING ADDRESSED AS QUA THE ADDITIONS AT SL. NO. 2, THE CIT(A) HAS ACCEPTED THE ASSESSEE'S EXPLANAT ION. THUS, THE SAID ISSUE IS NOT BEFORE THE ITAT. 3. ADDRESSING THE FACTS, IT WAS HIS SUBMISSION THAT THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF SALE OF FRUITS, VEGETABLES AND CO LD STORAGE BUSINESS. ADDITIONS WERE MADE ON ACCOUNT OF VIOLATION OF SE CTION 40A(3) FOR CAR RUNNING & MAINTENANCE EXPENSE AMOUNTING TO RS. 5 7,200/-; PURCHASES MADE FROM MR. RAKESH BHATIA & MR. JASPAL. AP ART FROM THESE PURCHASES IN CASH, PURCHASES AT TIMES WERE ALSO NOTICED FROM M/S SHIVA TRADERS AMOUNTING TO RS. 5,76,100/-. APART FROM THAT, IT WAS SUBMITTED ITA-1269/CHD/2017 A.Y. 2012-13 2 PENALTY HAD ALSO BEEN LEVIED FOR ENHANCEMENT OF AUTHORIZED CAPITAL WHICH HAS BEEN CONFIRMED WITHOUT GIVING ANY REASON. 3.1. ADDRESSING THE ADDITION MADE IN VIOLATION OF SECTION 40 A(3) IT WAS SUBMITTED THAT THE CAR RUNNING AND MAINTENANCE EXPENSE S FOR WHICH PAYMENTS HAVE BEEN MADE IN CASH, THE ARGUMENTS BEFORE THE LD. CIT(A) AS PER WRITTEN SUBMISSION DATED 27.06.2017 AVAILABLE ON RECORD WERE RELIED UPON. REFERRING TO PARA 2 OF THE SAME, IT WAS SUBMITTED, T HAT THE PAYMENT WAS FOR REPAIR OF CAR OF SHRI RAJINDER GARG, DIRECTOR OF THE COMPANY. IT WAS SUBMITTED THE MECHANICS DO NOT ACCEPT CHEQUE PAYM ENTS AND INSIST ON CASH PAYMENT. ON GOING THROUGH THE SUBMISSION IT WAS NOTICED THAT THE STATEMENT OF DIRECTOR FOR THE SAID SUBMISSION IS FOUND RECORDED . HOWEVER NECESSARY DETAILS AS TO WHICH CAR AGENCY ETC. WAS USED, THERE APPEARS TO BE NO DISCUSSION. 3.2. THE LD. AR SOUGHT TO PLACE ON RECORD SOME DETAILS OF CAR AGENCY STATING THAT IT WAS MADE AVAILABLE AT THE ASSESSMENT STA GE HOWEVER FOR WANT OF DISCUSSION IN THE ORDER THE CORRECTNESS OF THE STATEMENT COULD NOT BE ASCERTAINED. SIMILARLY FOR THE CASH PAYMENT TO SHRI. RA KESH BHATIA AND JASPAL SINGH AS WELL AS M/S SHIVA TRADER THE LD. AR SUBM ITTED THAT RAKESH BHATIA AND JASPAL SINGH WERE AGRICULTURIST / FRUIT GROWER AND PAYMENT WERE MADE ON ACCOUNT OF BUSINESS EXIGENCIES A ND THOUGH M/S SHIVA TRADER HAD BEEN PAID BY RTGS/ CHEQUE ETC. HOWEVE R ONE CASH PAYMENT WAS NECESSITATED ON THE GROUNDS OF COMMERCIAL EXPEDIENCY. READING FROM THE SUBMISSION BEFORE THE LD. CIT(A) IT WAS SUB MITTED THAT THESE PLEADINGS HAVE BEEN MADE AND REMAIN UNADDRESSED ON RECORD . 4. THE LD. SR.DR RELYING ON THE ORDER SUBMITTED THAT NO SUPPORTING EVIDENCE OR AFFIDAVIT ETC. IS PLACED ON RECORD AND THESE W ERE AGREED ADDITIONS SUBMITTED THAT THE ORDER ACCORDINGLY, MAY BE CONFIRMED. 5. I HAVE HEARD THE SUBMISSIONS AND SEEN THE RECORD . CONSIDERING THE LACK OF EVIDENCES WHICH IS MATERIAL IN VIEW OF THE VEHEMENT DEPARTMENTAL STAND THAT THE ASSESSEE IN THE COURSE OF THE ASSESSME NT PROCEEDINGS CONCEDED THAT ADDITION BE MADE AND HAS NOT OFFERED ANY EXPLANATION AND EVEN IN THE PENALTY PROCEEDING THOUGH THE SR.DR AGREED THAT SOME EXPLANATION APPEARS TO HAVE BEEN GIVEN, HOWEVER IT HAS NOT BEEN SUBSTANTIATED. IN THE SAID BACKGROUND, HAVING HEARD THE SUBMISSIONS, I FIND THAT LD. CIT(A) IN PARA 5.3 OF HIS ORDER HAS MISDIRECTED HIMSELF IN NOT ADDRESSING THE EXPLANATIONS OFFERED. IT IS SEEN THAT THE PENALTY ORDER IS ITA-1269/CHD/2017 A.Y. 2012-13 3 CONFIRMED ON THE REASONING THAT ADDITION HAS BEEN MADE IN THE ASSESSMENT ORDER. THE SAID RATIONALE/REASONING OF THE C IT(A) CANNOT BE UPHELD. IT IS WELL SETTLED THAT PENALTY PROCEEDINGS AND QU ANTUM PROCEEDINGS ARE SEPARATE AND DISTINCT. THE MERE FACT TH AT ADDITION HAD BEEN SUSTAINED PER SE WILL NOT ATTRACT THE LEVY OF PENALTY . ACCORDINGLY, IT IS DEEMED APPROPRIATE AFTER HEARING THE PARTIES TO REMAND THE ISSUE BACK TO THE FILE OF THE CIT(A) TO ADDRESS THE EXPLANATION OFFERED AND IF IT IS FOUND TO BE INSUFFICIENT OR INCOMPLETE, PROVIDE THE ASSESSEE OPPORTUN ITY TO FILE SUPPORTING EVIDENCES ETC. IF ANY AND THEREAFTER PASS AN O RDER IN ACCORDANCE WITH LAW. ACCORDINGLY GROUND NO. 1 OF THE ASSE SSEE STANDS RESTORED. 6. THE FACTS RELATABLE TO THE SECOND ISSUE RAISED BY THE ASSESSEE ARE THAT THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PR OCEEDINGS WAS REQUIRED TO JUSTIFY THE AMOUNT OF RS. 5 LACS PAID BY SHR I SURESH HIMALVI. THE ASSESSEE ADMITTEDLY ACCEPTED THE ADDITION AND FAILED TO OFFER ANY EXPLANATION. AS A RESULT THEREOF, PENALTY WAS LEVIED AND CO NFIRMED U/S 271(1)(C). THE ASSESSEE IS AGGRIEVED BY THE SAID FINDINGS. TH E LD. AR ARGUED THAT ALL THE RELEVANT DOCUMENTS IN SUPPORT OF ITS CLAIM WERE MADE AVAILABLE AND SINCE THE ASSESSEE COULD NOT PRODUCE THE SAID PARTY, THEN IT WAS THE RESPONSIBILITY OF THE AO TO ISSUE SUMMONS TO THE SAID PERSON TO BE PRESENT. 7. THE LD. SR. DR ON THE OTHER HAND INVITING ATTENTION TO THE FACTS NOTED IN PARA 6 TO 6.3 BY THE AO SUBMITTED THAT THE SA ID PERSON AS PER RECORD HAS INTRODUCED FRESH CAPITAL IN CASH AS SHARE APP LICATION MONEY FROM SHRI SURESH HIMALVI AN UNKNOWN PERSON WHOSE WHEREAB OUTS THE ASSESSEE FAILS TO DEMONSTRATE DESPITE OPPORTUNITY. THE CA SH HAS BEEN INTRODUCED ON THE FOLLOWING DATES AS PER THE FOLLOWING CHART: SR. NO. DATE MODE OF PAYMENT AMOUNT 1 25/04/2011 CASH RS. 1,50,000/- 2 27/05/2011 CASH RS. 1,00,000/- 3 20/09/2011 CASH RS. 50,000/- 4 08/02/2012 CASH RS. 1,25,000/- 5 10/03/2012 CASH RS. 75,000/- TOTAL RS. 5,00,000/- 7.1 . THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENES S OF THE CLAIM. FOR THE SAID PURPOSE, SHOW CAUSE NOTICE ETC. WAS ISSUED . ULTIMATELY DIRECTOR OF THE COMPANY SHRI RAJINDER GARG WAS CONFRONTE D WITH THESE FACTS AND HIS STATEMENT WAS RECORDED. RELIANCE WAS PLACE D ON THE SAME. ITA-1269/CHD/2017 A.Y. 2012-13 4 RELEVANT DISCUSSION IN PARA 6.2 OF THE ASSESSMENT ORDER IS EXTRACTED HEREUNDER: 6.2 THE DIRECTOR OF THE COMPANY SH. RA]INDER GARG WAS C ONFRONTED ON THIS ISSUE AND HIS STATEMENT WAS RECORDED. THE RELE VANT PART OF HIS STATEMENT IS REPRODUCED AS UNDER: Q DURING THE YEAR 2011-12 (A.Y. 2012-13) YOU HAVE I NTRODUCED CAPITAL IN THE SHAPE OF SHARE APPLICATION MONEY IN THE NAMES V INAYAK SINGH, SH. KEDAR SINGH, SH. SURESH HIMALVEE, IN YOUR NAME AND YOUR HUF. VIDE ORDER SHEET ENTRY ENTERED ON 16.01.2015, YOU WERE REQUEST ED TO PRODUCE ALL THE PERSONS & FURNISH THEIR COPY & ITR, KYC & CREDIT WO RTHINESS. TILL DATE YOU HAVE NOT PRODUCED SH. SURESH HIMALVEE AND ALSO NO D OCUMENT WHAT SO EVER HAS BEEN SUBMITTED IN SUPPORT OF GENUINENESS OF THI S TRANSACTION? ANS;- SH SURESH HIMAALVEE BELONGS TO VILL THEONG (HP), COULD NOT BE PRODUCED BECAUSE IN SPITE OF BEST EFFORTS, HE CO ULD NOT BE CONTRACTED. THAT IS WHY HE HAS NOT BEEN PRODUCED. Q YOU HAVE STATED THAT SH. SURESH HIMALVEE COULD NO T BE PRODUCED AS HE IS NOT AVAILABLE IN THIS VILLAGE. PLEASE SHOW CAUSE AS TO WHY SHARE APPLICATION MONEY AMOUNTING TO RS. 5 LAC SHOWN IN THE NAME OF S H, SURESH HIMALVEE SHOULD NOT TREATED AS COMPANY'S INCOME EARNED FROM UNDISCLOSED SOURCES INTRODUCED IN THE SHAPE OF SHARE CAPITAL? ANS :- I HAVE ALREADY STATED THAT SH. SURESH HIMALV EE COULD NOT BE CONTACTED AT THE GIVE ADDRESS. WE ARE UNABLE TO PRO DUCE THE ABOVE PERSON. THE SHARE APPLICATION MONEY SHOWN IN THIS N AME IN THE BOOKS OF ACCOUNTS OF THE COMPANY SHOULD BE ADDED IN THE TOTA L INCOME OF THE COMPANY AS ITS INCOME EARNED FROM UNDISCLOSED SOURC ES. 7.2. IT WAS SUBMITTED THAT THE ADDITION WAS MADE BY THE AO HOLDING AS UNDER : 6.3 THE ASSESSEE COMPANY HAS FAILED TO DISCHARGE ITS DU TY TO PROVE THE GENUINENESS OF THE TRANSACTION. THE ONUS WAS ON THE ASSESSEE COMPANY TO PROVE THAT THE PERSON WHO HAS GIVEN SHARE APPLICATI ON MONEY IS GENUINE AND MAN OF MEANS. KEEPING IN VIEW THE ADMISSION ON THE PART OF THE DIRECTOR OF THE COMPANY, AN ADDITION OF RS5,00,000/ - IS TO THE TOTAL INCOME OF THE ASSESSEE COMPANY BY TREATING THE SAME AS ITS INCOME EARNED FROM UNDISCLOSED SOURCES INTRODUCED IN THE SHAPE OF SHAR E APPLICATION MONEY. NO DEDUCTION U/S 80-IB (11A)SHALL BE ALLOWED. PENALTY PROCEEDINGS U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 IS BEING INITIATED SEPARATELY FOR CONCEALING AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. 7.3. ACCORDINGLY, HEAVY RELIANCE WAS PLACED ON THE ORDER PASSED. 8. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MATER IAL ON RECORD. THE LD. AR IN THE ABOVE PECULIAR FACTS AND CIRCUMSTANCES WAS REQUIRED TO ADDRESS WHETHER THERE WAS ANY DOCUMENT, EVIDENCE, OR A RGUMENT TO ASSAIL THE SAID FINDINGS AND TO REFER TO ANY EXPLANATION PLACED BE FORE TAX AUTHORITIES. THE LD. AR PLEADED HIS INABILITY TO TRACE THE SA ID PERSON OR MAKE ANY OTHER SUBMISSION. IN THESE PECULIAR FACTS I FIND THAT IN THE ABSENCE OF ANY FURTHER EXPLANATION IN THE PENALTY PROCEED INGS, THE ORDER CONFIRMING THE PENALTY DESERVES TO BE CONFIRMED AS NO ARG UMENT LET ALONE AN ACCEPTABLE ARGUMENT WAS MADE ON BEHALF OF THE ASSESS EE. THE ASSESSEE ADMITTEDLY HAS BEEN UNABLE TO JUSTIFY THAT MR. SURESH H IMALVI HAD THE RESOURCES TO APPLY FOR SHARES AND ADVANCED 5 LACS. TH E PERSON ADMITTEDLY ITA-1269/CHD/2017 A.Y. 2012-13 5 IS UNTRACEABLE, THE TRANSACTION HAS NOT BEEN SHOWN TO B E GENUINE. NO LACK OF OPPORTUNITY IS PLEADED. THE INSISTENCE THAT AO MAY SUMMON A PERSON WHOSE ADDRESS IS NOT AVAILABLE IS A FACILE MEANINGLES S ARGUMENT. NO EXPLANATION LET ALONE AN ACCEPTABLE EXPLANATION FOR THE TRANSACTION WHICH PATENTLY IS NOT GENUINE, IS MADE AVAILABLE. ACCORDINGL Y, IN THE FACTS OF THE CONSISTENT FINDINGS WHICH STAND UNREBUTTED ON REC ORD, GROUND NO. 2 OF THE ASSESSEE IS DISMISSED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04.09. 2018. SD/- (DIVA SINGH) JUDICIAL MEMBER AG/POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4 THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT CHANDIGARH