M/s Ajay Kumar Sood Engineers & Contractors, Chotta Shimla V. DCIT, CC-II, Chandigarh

ITA 1361/CHANDI/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0648 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 12-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Documents seized
• Section: 271(1)(c); 69C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , ! ' #$ % & ' ($ , ! BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.1361/CHD/2017 / ASSESSMENT YEAR : 2005-06 M/S AJAY KUMAR SOOD ENGINEERS & CONTRACTORS, SANJAY SADAN, CHOTTA SHIMLA. THE D.C.I.T., CENTRAL CIRCLE-II, CHANDIGARH. ./PAN NO: AAKFA4648J /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADV. / REVENUE BY : SMT.CHANDERKANTA, SR. DR ! /DATE OF HEARING : 18.02.2019 '#$% ! /DATE OF PRONOUNCEMENT: 27.03.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, GURGAON (IN SHORT CIT(A) DATED 14.6. 2017 UPHOLDING THE PENALTY U/S 271(1)(C) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 2. THE APPEAL OF THE ASSESSEE IS TIME BARRED BY 3 DAYS. THE COUNSEL FOR THE ASSESSEE PLEADED CONDONI NG THE SAME CONSIDERING THE SMALLNESS OF THE SAME. THE LD DR DID NOT OBJECT TO THE SAME. ACCORDINGLY, WE CONDONE THE DELAY CONSIDERING THE SMALLNESS OF THE DELAY. THE ORDER WAS PRONOUNCED IN OPEN COURT AND THE HEARING OF THE CASE WAS THEREAFTER PROCEEDED WI TH. ITA NO.1361/CHD/2017 A.Y.2005-06 2 3. BRIEF FACTS RELATING TO THE CASE ARE THAT A SEAR CH AND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CONDUCTED ON 8.10.2010 IN SOOD GROUP OF CASES. DURING THE SEARCH OPERATION AT THE RESIDENCE OF SHR I SANJAY SOOD, BOOKS OF ACCOUNT/DOCUMENTS MARKED A-1 TO A-40 WERE FOUND AND SEIZED. CERTAIN DOCUMENTS RELATING TO THE ASSESSEE WERE ALSO FOUND DURING THE SEARCH AS UNDER: S.NO. DOCUMENT/PAGE NO. AMOUNT OF UNEXPLAINED A.Y. EXPENDITURE INVOLVED 1. PAGE 9 OF A-2 1,78,225 2005-06 2. PAGE 45 OF A-2 1,06,160 2005-06 3. PAGE 92 OF A-2 4,59,117 2005-06 TOTAL 7,43,502 4. THE ASSESSEE FAILED TO RECONCILE THE EXPENSES RECORDED ON THE SAID DOCUMENT WITH THE REGULAR BOOK S OF ACCOUNT. IN VIEW OF THE SAME ADDITION OF RS.7,43,502/- WAS MADE TO THE INCOME OF THE ASSESSE E AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. THEREAFTER PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT READ WITH EXPLANATION-5A AND PENALTY LEVIED ON THE SAME AMOUNTING TO RS.2,29,740 /- BEING EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(A) WHO ON NOTING THAT THE ADDITIONS HAD BEEN CONFIRMED BY THE CIT(A) HELD THAT THE CASE WAS CLEARLY COVERED UNDER THE PROVISIONS OF SECTION ITA NO.1361/CHD/2017 A.Y.2005-06 3 271(1)(C) READ WITH EXPLANATION 5-A OF THE ACT AND THEREFORE UPHELD THE PENALTY LEVIED. 6. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS OF THE CASE BY UPHOLDING PENALTY U/S. 271(1)(C) IMPOSED BY THE LD. A.O. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS OF THE CASE BY UPHOLDING PENALTY ORDERS WHICH ARE TIME BARRED. 3. THE LD. CIT (A) HAS ERRED IN LAW AND FACTS OF THE CASE BY UPHOLDING PENALTY U/S. 271(1)(C) FOR ADDITIONS MADE UNDER DEEMING PROVISIONS OF SECTION 69C. 4. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS OF THE C ASE BY PASSING EX-PARTE ORDERS EVEN WHEN THE QUANTUM ADDITIONS ARE SUBJECT MATTER OF APPEAL BEFORE THE HO N. ITAT, CHANDIGARH. 7. TAKING UP GROUND NO.1, REGARDING THE MERITS OF THE CASE, THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THE QUANTUM ADDITION MADE AS AFORESAID HAD BEEN CHALLENGED BY THE ASSESSEE BEFORE THE I.T.A.T., WHO VIDE THEIR ORDER PASSED IN ITA NO.319/CHD/2014 DATE D 13.6.2018, HAD DELETED THE ADDITION MADE RELATING T O UNEXPLAINED EXPENDITURE OF RS.1,78,225/- AND RS.4,59,117/-, UPHOLDING ONLY THE UNEXPLAINED EXPENDITURE RELATING TO PAGE 45 OF A-2 AMOUNTING TO RS.1,06,160/-. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE I.T.A.T. AT PARA 11.7 OF THE ORDER AS UNDER: 11.7 HAVING GONE THROUGH THE DOCUMENTS PRODUCED BEFORE US WHICH WERE ALSO AVAILABLE BEFORE THE LOWER AUTHORITIES THE AMOUNTS ON PAGE NO.9 AND 92 STANDS EXPLAINED AGAINST THE CASH WITHDRAWALS AND HENCE THE AMOUNT OF ADDITION IS HEREBY ORDERED TO BE DELETED. ITA NO.1361/CHD/2017 A.Y.2005-06 4 REGARDING THE PAGE NO.45 OF ANNEXURE A-2 SINCE THE WITHDRAWALS PRECEDES THE CASH PAYMENTS NO BENEFIT OF AVAILABILITY OF THE CASH IN HAND CAN BE GIVEN. THE ASSESSEES ARGUMENT THAT THE ENTRIES ON THIS PAGE ARE VAGUE AND HAS NO RELEVANCE CANNOT BE ACCEPTED AS THE ENTRIES ON THE LEDGER ON ALL PAGES IS FOUND TO BE WRITTEN CONTINUOUSLY IN CONTINUITY AND PURPOSEFULLY. HENCE, THE AMOUNT OF RS.1,06,160/- WHICH COULD NOT BE EXPLAINED WITH RELATION TO THE CASH WITHDRAWALS HEREBY STANDS CONFIRMED. 8. THE LD. COUNSEL FOR ASSESSEE SUBMITTED, THEREFOR E, THAT THE PENALTY, IF ANY, WAS SUSTAINABLE ONLY TO T HE EXTENT ADDITION WAS UPHELD BY THE I.T.A.T. I.E. RS.1,06,160/-. VIS--VIS THE SAME, THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE ASSESSEE COULD NOT BE HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME SINCE THE ADDITION WAS UPHELD REJECTING THE EXPLANATION OF TH E ASSESSEE, THAT THE SOURCE OF THE EXPENDITURE WAS ATTRIBUTABLE TO THE CASH WITHDRAWN FROM THE BANK ACCOUNT OF THE ASSESSEE, SINCE THE CASH WAS FOUND WITHDRAWN ON A DATE WHICH WAS SUBSEQUENT TO THE DAT E OF PAYMENT OF THE EXPENDITURE AS NOTED IN THE DIARY . THE LD. COUNSEL FOR ASSESSEE HAS CONTENDED THAT TH E NOTINGS WERE ROUGH NOTINGS AND OUT OF TOTAL NOTIN GS OF RS.7,43,502/-(RS.1,78,225+1,06,160+4,59,117), TH E ASSESSEE HAD BEEN ABLE TO EXPLAIN ALL EXCEPT THE NOTINGS TO THE EXTENT OF RS.1,06,160/- AND EVEN FOR THE SAME THE ASSESSEE HAD ATTEMPTED TO CO-RELATE THE SA ME WITH THE CASH SHOWN AS WITHDRAWN IN THE BOOKS. BUT ONLY ON ACCOUNT OF THE EXPENDITURE PRECEDING THE ITA NO.1361/CHD/2017 A.Y.2005-06 5 WITHDRAWAL THAT TOO BY ONLY 9 DAYS THE SAID NOTINGS WERE HELD TO BE UNEXPLAINED. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT BEING IN THE ABSENCE OF CIV IL CONSTRUCTION WHICH WAS UNDERTAKEN AT SEVERAL DIFFERENT PLACES, IT WAS PART OF HIS BUSINESS PRACT ICE TO WITHDRAW CASH AND UTILIZE IT FOR MAKING VARIOUS PAYMENTS AND HAVING CORRELATED MAJORITY OF SUCH EXPENSES INCURRED WITH THE CASH WITHDRAWN VIS--VIS THE EXPENSES OF RS.1,06,160/- IT COULD NOT BE SAID THAT THE ASSESSEE HAD CONCEALED ANY PARTICULARS OF INCOM E AND, THEREFORE, NO PENALTY WAS LEVIABLE. 9. THE LD. DR, ON THE OTHER HAND, STATED THAT IN VI EW OF THE CLEAR FINDINGS OF THE I.T.A.T. THAT THE ASSE SSEE WAS UNABLE TO EXPLAIN THE SOURCE OF EXPENSES NOTED IN THE DOCUMENT AMOUNTING TO RS.1,06,160/-, THE PENALT Y ON THE SAME WAS RIGHTLY LEVIED BY THE A.O. AS FAR T HE BALANCE, THE LD. DR CONCEDED THAT SINCE THE ADDITIO N WITH REGARD TO THE SAME HAD BEEN DELETED BY THE I.T.A.T. VIDE ITS ORDER IN ITA NO.319/CHD/2014 DATE D 13..6.2018, NO PENALTY WAS LEVIABLE ON THE SAME. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF AUTHORITIES BELOW. UNDISPUTEDLY, THE PENALTY IN THE PRESENT CASE WAS LEVIED ON ADDITION MADE OF UNEXPLAINED EXPENDITURE RELATING TO NOTING S IN DOCUMENTS SEIZED DURING THE COURSE OF SEARCH ON THE ASSESSEE, AMOUNTING TO RS,7,43,502/-,WHICH WER E HELD TO BE IN THE NATURE OF EXPENDITURE INCURRED BY THE ITA NO.1361/CHD/2017 A.Y.2005-06 6 ASSESSEE, THE SOURCE OF WHICH HAD NOT BEEN EXPLAINE D. ADMITTEDLY, THE I.T.A.T. IN QUANTUM PROCEEDINGS DELETED THE ADDITION OF RS. 6,37,342/- ,UPHOLDING O NLY THE BALANCE AMOUNTING TO RS.1,06,160/-. THEREFORE, PENALTY LEVIED ON THE ADDITION DELETED OF RS.6,37,3 42/- DOES NOT SURVIVE AND THE SAME IS, THEREFORE, DIRECT ED TO BE DELETED. 11. AS FOR THE PENALTY LEVIED ON THE ADDITION SUSTAINED OF RS.1,06,160/-, WE ARE IN AGREEMENT WIT H THE LD. COUNSEL FOR ASSESSEE THAT NO PENALTY WAS LEVIABLE ON THE SAME. ADMITTEDLY THE EXPLANATION OFFERED FOR THE SOURCE OF THESE EXPENSES WAS THE SA ME AS WAS OFFERED FOR THE REST, THAT IT WAS OUT OF CAS H WITHDRAWALS. THE EXPLANATION WAS REJECTED FOR THE REASON THAT THE EXPENDITURE PRECEDED THE WITHDRAWAL BY A PERIOD OF 9 DAYS. THE ASSESSEE WE FIND HAD ALS O EXPLAINED THAT BEING IN THE BUSINESS OF CIVIL CONSTRUCTION CARRYING OUT WORK AT DIFFERENT PLACES, ITS MODUS OPERANDI WAS TO MEET EXPENSES AT THE VARIOUS SITES OUT OF CASH WITHDRAWALS MADE. THE ABOVE FACTS HAVE NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US . THEREFORE CONSIDERING THE ACCEPTED MODUS OPERANDI O F THE ASSESSEE AND THE FACT THAT THE SAME CORROBORATE D THE INCURRENCE OF EXPENSE NOTED TO THE EXTENT OF RS.6,37,342/- IN THE DOCUMENTS FOUND DURING SEARCH, LEAVING ONLY RS.1,06,160/- UNCORROBORATED THAT TOO ON ACCOUNT OF DIFFERENCE OF 9 DAYS ONLY IN INCURRENCE OF ITA NO.1361/CHD/2017 A.Y.2005-06 7 EXPENDITURE AND THE SUBSEQUENT CASH WITHDRAWAL, IT CANNOT BE SAID THAT THE EXPLANATION OF THE ASSESSEE WAS NOT BONAFIDE OR FOR THAT MATTER WAS TOTALLY FAL SE. THEREFORE THOUGH IT MAY BE A FIT CASE FOR TREATING THE NOTINGS AS UNEXPLAINED EXPENDITURES AND MAKING ADDITION OF THE SAME IN QUANTUM PROCEEDINGS, BUT AT THE SAME TIME ,WE HOLD, THAT THE ASSESSEE IN THE FA CTS AND CIRCUMSTANCES OF THE CASE CANNOT BE SAID TO HAV E CONCEALED/FURNISHED ANY INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT THE LEVY OF PENALTY U/S 271 (1) OF THE ACT. THE PENALTY LEVIED ON THE ADDITION OF R S. 1,06,160/- IS ALSO THEREFORE DIRECTED TO BE DELETED . 12. IN EFFECT, THE ENTIRE PENALTY LEVIED AMOUNTING TO RS2,29,740/-IS DIRECTED TO BE DELETED. GROUND NO.3 THEREFORE STANDS ALLOWED. 13. NO OTHER ARGUMENTS WERE MADE BEFORE US. THE RES T OF THE GROUNDS ARE THEREFORE DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE, THER EFORE, STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- % & ' ($ (SANJAY GARG) (ANNAPURNA GUPTA) ! /JUDICIAL MEMBER )* ! /ACCOUNTANT MEMBER , % /DATED: 27 TH MARCH, 2019 * $ * ITA NO.1361/CHD/2017 A.Y.2005-06 8 #&' ()*) / COPY OF THE ORDER FORWARDED TO : 1. + / THE APPELLANT 2. ',+ / THE RESPONDENT 3. - / CIT 4. - ( )/ THE CIT(A) 5. )./' 0 , !0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35 / GUARD FILE #& / BY ORDER, / ASSISTANT REGISTRAR