M/s. R R Steel Re Rolling Mills, Devaliya Village, Anjar-Kutch V. The DCIT Circle, Gandhidham, Gandhidham

ITA 145/RJT/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9490 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 11-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india
• Section: 68; 271(1)(c)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, राजकोट 瀈यायपीठ 瀈यायपीठ瀈यायपीठ 瀈यायपीठ, , , , राजकोट IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted Through Virtual Court) BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SMT.SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.145/RJT/2021 Assessment Year :2012-13 M/s.R.R. Steel Re Rolling Mills C/o. Kalpesh S. Doshi & Co. Chartered Accountants 411, Cosmos Complex Nr.Mahila College Circle Kalawad Road Rajkot 360 001. PAN : AALFR 3113 J Vs. DCIT, Gandhidham Circle Gandhidham. अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri Kalpesh S. Doshi, AR Revenue by : Shri B.D. Gupta, Sr.DR स ु नवाई क तार ख/Date of Hearing : 28/09/2022 घोषणा क तार ख /Date of Pronouncement: 30/09/2022 आदेश/O R D E R PER ANNAPURNA GUPTA, JUDICIAL MEMBER Present appeal has been filed by the assessee against order passed by the ld. Commissioner of Income-Tax(Appeals), National Faceless Appeal Centre [hereinafter referred to as “Ld.CIT(A) by which the ld.CIT(A) has confirmed imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 ("the Act" for short) dated 15.9.2021 pertaining to the Asst.Year 2012-13. 2. Effective ground raised in the appeal is ground no.2 which reads as under: ITA No.145/RJT/2021 2 “1. That the ld.CIT(A) has wrongly confirmed penalty of Rs.1,90,000/- under section 271(1)(c) of the Act.” 3. As transpires from orders of the authorities below, penalty in the present case has been levied on account of addition made to the income of the assessee under section 68 of the Act in relation to the amount received by the assessee allegedly from two parties, genuineness of which it was unable to prove to the satisfaction of the AO. Drawing our attention to the facts of the case, it was pointed out that addition under section 68 which had attracted levy of penalty in the present case under section 271(1)(c) of the Act amounted to Rs.6.00 lakhs in relation to loans/deposits allegedly taken by the assessee from two parties viz. (i) Shri Manish Patel Rs.50,000/-, and (ii) Shri Vinod Barot Rs.5,50,000/-. 4. The contention of the ld.counsel for the assessee before us against levy of penalty was that all possible evidences proving genuineness of the transactions had been filed by the assessee, no infirmity was pointed out therein by the Revenue and merely because genuineness was not proved to the satisfaction of the AO, it could be a fit case for making addition of the impugned cash credit as deemed income of the assessee, but definitely not a fit case for levy of penalty. In this regard, ld.counsel for the assessee drew our attention to the documents filed to the Revenue authorities to prove genuineness of the transaction as under: Sr. No. Depositor Amount Details Furnished 1. Manish Patel 50,000/- The depositor is known as Manish Haribhai Rathvi, as the caste is Patel for bank account the depositor has mentioned as Manish Haribhai Patel. -The appellant has received deposits of Rs. 50,000/- through banking channel. -The copy of PAN is enclosed ITA No.145/RJT/2021 3 on page no. 24. - The copy of bank statement is enclosed on page no. 25-30 -The copy of confirmation of accounts is enclosed on page no. 31 -The copy of ITR and Computation of Income is enclosed on page no.32-33. - The depositor is having gross income of Rs.2,29,675/- and therefore having sufficient source of income. Therefore identity and creditworthiness of the depositor and genuineness of the transaction is proved. - The ld.CIT(A) has failed to consider that the depositor has not filed ITR, however, the ITR was duly submitted during the appeal proceedings. - The ITR is also furnished during penalty proceedings; however, the ld.AO has failed to consider the same. 2 Vinod Barot 5,50,000/- -The appellant has received deposit of Rs.5,50,000/- through banking channel. -The copy of bank statement is enclosed on page no.34-35. -The copy of confirmation of account is enclosed on page no.36 -Therefore the identity and genuineness of the transaction is proved. - However, the AO has imposed penalty merely on the ground that the depositor has not filed the ITR. ITA No.145/RJT/2021 4 5. The ld.DR supported the order of the ld.CIT(A). He drew our attention to para 5 to 5.6 of the order as under: “5. Appellant's submissions were carefully considered. During the course of assessment proceedings, an amount of Rs. 64,15,000/- was added under Section 68 of the Act. On appeal, amount of Rs. 6,00,000/-was confirmed by the CIT (A)-3, Rajkot, being the amounts received from the lenders viz. Shri. Manish Patel - Rs. 50.000/- and Shri. Vinod Barot -Rs. 5.50.000/-. 5.2 It is observed from the assessment order that the Assessing Officer asked the appellant to furnish the details of the lenders. The appellant furnished the bank accounts of the lenders. Assessing Officer on examining these bank accounts, observed that equivalent amount of cash was deposited on the same day when cheques were issued in favour of the appellant. Further the Assessing Officer found that the lenders had declared the source income as far from tuition and cooking classes. Since the sources of income in the case of the lenders were doubtful, the Assessing Officer asked the appellant to produce the lenders before him. The Assessing Officer also informed the appellant that in case it was not able to ensure compliance, the appellant collect the summons under Section 131(1) from him. The appellant not able to produce the lenders before the Assessing Officer. Neither the appellant collected the summons for serving them on the lenders. 5.3 Thus it could be observed that the appellant failed to produce the alleged lenders before the Assessing Officer. The appellant was not able to explain with evidences before the CIT(A) also. Only because of the failure of the appellant to satisfactorily explain the credits, the amount of Rs. 6,00,000/- was confirmed by the CIT(A). Even during the course of the penalty proceedings, the appellant did not make any efforts to produce the alleged lenders before the Assessing Officer. The Assessing Officer had clearly concluded that in view of the above facts and circumstances, the appellant had wilfully concealed particulars of income. The Assessing Officer levy to the penalty of Rs.1,90,000/-. 5.4 The decisions relied upon by the appellant were perused. The facts of the case of the appellant are entirely different from that of those decisions relied upon by the appellant and hence those decisions are not applicable to the appellant's case. In the case of Reliance Petro Products (supra), the assessee claimed deduction of interest on loans taken by it for purchase of shares and the Assessing Officer disallowed such interest. Hence the Hon'ble Supreme Court concluded that penalty could not be levied in every case where the claim made by the assessee was not accepted by the Assessing Officer for any reason. But the facts of the appellant's case are totally different from the above case. Here the appellant had concealed the particulars of his income. Appellant did not produce the alleged lenders for examination before the Assessing Officer in spite of several opportunities provided to it. Similarly the facts of the case in the decisions of other cases relied upon by the appellant were also different from that of the appellant's case. 5.5 The decision in the case of Income-Tax Officer, ward-2(1) Vs. Bhansali Trading Corporation (2016) 69 taxmann.com 60 (Jaipur-Trib.) is ITA No.145/RJT/2021 5 more applicable to the appellant’s case. The relevant extracts of the decision is reproduced as under: ..... .... ... .... 5.6 In view of the above discussions, it becomes clear that the appellant had wilfully concealed the particulars of income. Appellant had failed to produce the alleged lenders before the Assessing Officer in spite of innumerable opportunities provided to it. Thus the Assessing Officer is correct in concluding that the appellant had wilfully concealed particulars of income and in levying the penalty under Section 271(1)(c) of the Act. 6. We have heard both the parties and also gone carefully through orders of the Revenue authorities. Penalty, undoubtedly in the present case, has been levied on addition made to the income of the assessee on account of amounts allegedly received from two parties by the assessee, not having been proved to be genuine to the satisfaction of the AO. The amount involved is Rs.6.00 lakhs and relates to the parties as noted above in earlier part of our order. That the assessee filed every possible document to prove genuineness of these deposits is not disputed, having filed confirmations from these two parties as also copy of their bank statement and given details of their PAN etc. Para-5.2 of the CIT(A) order reveals that this explanation of the assessee regarding genuineness of loans was not found credible enough for the reasons that the lenders were said to have declared income from tuition and cooking classes which was found to be doubtful by the AO and the assessee having not produced lenders before the AO, therefore, these amounts were treated to be not genuine and added to the income of the assessee. The addition was made solely for the reason that the AO doubted the source of the income of these lenders, and the assessee was unable to produce them before him for confirmation. It is not that these lenders were outrightly and categorically found to be non-existent or non-genuine. There was only a doubt created about their credibility to give impugned amounts to the assessee. In ITA No.145/RJT/2021 6 the light of the above facts, we agree with the ld.counsel for the assessee that it could be a fit case for making addition to the income of the assessee, but definitely not for levy of penalty. The assessee in the present case having identified all the persons from whom loans have been received; having filed their confirmation which is not disproved and having also filed copy of their bank statement from which the amount was received, the explanation of the assessee cannot just be brushed aside as false. Nor is this the case of the Revenue that the assesses explanation of the genuineness of the transaction was found to be false. It is just that his explanation was not found satisfactory since the source of lenders was found to be doubtful. The assessee in the present case, by any stretch of logic cannot be said to have concealed or furnished inaccurate particulars of the income. We therefore hold that this is not fit case for levy of penalty under section 271(1)(c) of the Act. Penalty so levied of Rs.1,90,000/- therefore is directed to be deleted. 7. In view of the above, appeal of the assessee is allowed. Order pronounced in the Court on 30 th September, 2022 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 30/09/2022