ACIT, Trichy V. M/s. V.N.C. Steels, Karur

ITA 146/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96474 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 28-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2014
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: SUMITHA KRISHNAN
• Keywords: Unexplained cash credit

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , ! ' , # $% & [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NO.146/MDS/2014 / ASSESSMENT YEAR : 2006-07 THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE II TRICHY VS. M/S V.N.C STEELS NO.18, INDUSTRIAL ESTATE S. VELLALAPATTY KARUR 639 001 [PAN AADFV 2244 C ] ( '( / APPELLANT) ( )*'( /RESPONDENT) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT /RESPONDENT BY : MS. SUMITHA KRISHNAN, ADVOCATE / DATE OF HEARING : 28 - 09 - 2015 / DATE OF PRONOUNCEMENT : 20 - 1 1 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), TIRUCHIR APALLI, DATED 23.10.2013 DELETING THE PENALTY LEVIED BY THE ASSES SING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. ITA NO. 146/14 :- 2 -: 2. SHRI P. RADHAKRISHNAN, LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT THE ASSESSEE-COMPANY RECEIVED LOAN F ROM 182 PERSONS. THE ASSESSEE HAS FILED CONFIRMATION LETTERS IN RES PECT OF 161 PERSONS. HOWEVER, THE ASSESSEE COULD NOT FURNISH ANY CONFIR MATION LETTERS FROM 21 PERSONS. THE TOTAL LOAN RECEIVED AS ON 31.3.200 6 WAS ` 83,83,413/-. HOWEVER, IN RESPECT OF THE LOAN RECEI VED FROM 21 PERSONS TO THE EXTENT OF ` 9,34,272/- THE ASSESSEE COULD NOT FILE CONFIRMAT ION LETTERS, THEREFORE, THE ASSESSING OFFICER TREATED T HE CASH CREDIT AS UNEXPLAINED CREDIT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. SIMILARLY, THE ASSESSEE DEBITED FREIGHT CHARGES TO THE EXTENT OF ` 15,36,937/-. ON VERIFICATION, THE ASSESSING OFFIC ER FOUND THAT SOME OF THE VOUCHERS DO NOT CONTAIN COMPLETE D ETAILS. ACCORDING TO THE LD. DR, TO THE EXTENT OF ` 30,000/- THE ASSESSEE COULD NOT FILE PROPER VOUCHERS TOGETHER WITH DETAILS, THEREFORE, H E DISALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF ` 30,000/-. THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OF FICER THAT IT CO- OPERATED WITH THE DEPARTMENT AND THE CLAIM OF THE ASSESSEE IS GENUINE. MERELY BECAUSE THE ASSESSEE COULD NOT PR ODUCE SOME MATERIALS TO SUBSTANTIATE THE CLAIM, PENALTY CANNOT BE LEVIED U/S 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFIC ER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSE SSEE HAS NOT ITA NO. 146/14 :- 3 -: PRODUCED ANY EVIDENCE TO THE EXTENT OF CASH CREDIT OF ` 9,34,272/- AND ALSO COULD NOT PRODUCE ANY PROPER VOUCHER TO THE EX TENT OF ` 30,000/-. ACCORDINGLY, THE ASSESSING OFFICER LEVIED MINIMUM P ENALTY OF ` 3,14,477/-. 3. ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT EXPLANATION OF THE ASSESSEE WAS BONA-FIDE, THEREFO RE, THE ASSESSEE HAS NOT CONCEALED ANY INCOME OR FURNISHED ANY INACC URATE PARTICULARS OF INCOME. ACCORDINGLY, HE DELETED THE PENALTY LEV IED U/S 271(1)(C) OF THE ACT. ACCORDING TO THE LD. DR, THE VERY FACT THAT THE ASSESSEE COULD NOT FILE CONFIRMATION LETTERS WITH REGARD TO 21 PERSONS SHOWS THAT THE ASSESSEE HAS CONCEALED A PART OF THE INCOME, T HEREFORE, THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY. 4. ON THE CONTRARY, MS.SUMITHA KRISHNAN, LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS INCLUDING THE LOAN OBTAINED FROM 182 PERSONS. SINC E 21 PERSONS LEFT THE COMPANY, THE ASSESSEE COULD NOT PRODUCE THEIR CONFIRMATION LETTERS BEFORE THE ASSESSING OFFICER. ACCORDING TO THE LD. COUNSEL, ALL THE DEPOSITS WERE RECEIVED FROM EMPLOYEES OF VNC GR OUP. SINCE THEY LEFT THE COMPANY, THE ASSESSEE COULD NOT PRODUCE T HE CONFIRMATION LETTERS WITH REGARD TO 21 EMPLOYEES. THE ASSESSEE, IN FACT, HAS PRODUCED CONFIRMATION LETTERS WITH REGARD TO 161 EM PLOYEES OF V.N.C ITA NO. 146/14 :- 4 -: GROUP. THE ASSESSEE HAS CLAIMED BEFORE THE ASSESS ING OFFICER THAT IT HAS RECEIVED FIXED DEPOSITS FROM ITS EMPLOYEES. RE FERRING TO NON- PRODUCTION OF VOUCHERS, THE LD. COUNSEL SUBMITTED T HAT OUT OF ` 15,36,937/-, THE ASSESSEE HAS PRODUCED ALL THE VOUC HERS IN RESPECT OF FREIGHT CHARGES. HOWEVER, THE ASSESSEE COULD NOT OBTAIN PROPER VOUCHERS IN RESPECT OF ` 30,000/- FOR WHICH THE ASSESSEE HAS PRODUCED SELF-MADE VOUCHERS. THEREFORE, IT IS NOT A CASE OF NON-PRODUCTION OF VOUCHERS, BUT IT IS A CASE OF PRODUCTION OF SELF-MA DE VOUCHERS IN RESPECT OF THE AMOUNT FOR WHICH PROPER VOUCHERS COU LD NOT BE OBTAINED FROM THIRD PARTIES. HENCE, IT IS NOT A CA SE OF CONCEALMENT OF ANY PARTICULARS OF INCOME OR FURNISHING ANY INACCUR ATE PARTICULARS OF INCOME. THE ASSESSEE HAS FILED ALL THE DETAILS BE FORE THE ASSESSING OFFICER INCLUDING THE LOAN CREDIT AND THE FREIGHT C HARGES. MERELY BECAUSE THE ASSESSEE COULD NOT SUBSTANTIATE SOME O F THE CLAIM, IT DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S. IT IS NOT THE CASE OF THE REVENUE, ACCORDING TO THE LD. COUNSEL, THAT THE ASSESSEE HAS ANY OTHER SOURCE OF INCOME OTHER THAN ITS BUSINESS. WHEN THE ASSESSEE CLAIMED THE EXPENDITURE AND MERELY BECAUSE IT WAS DISALLOWED, IT CANNOT BE CONSTRUED THAT THE ASSESS EE HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME. THEREFORE, A CCORDING TO THE LD. COUNSEL, THE CIT(A) HAS RIGHTLY DELETED THE ADDITIO N. ITA NO. 146/14 :- 5 -: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT IT HAS RECEIVED L OAN FROM 182 PERSONS TO THE EXTENT OF ` 83,83,413/- AS ON 31.3.2006. THE ASSESSEE, ADMITTEDLY, PRODUCED CONFIRMATION LETTERS IN RESPEC T OF 161 PERSONS. HOWEVER, THE ASSESSEE COULD NOT PRODUCE CONFIRMATI ON LETTERS IN RESPECT OF 21 PERSONS SINCE THEY LEFT THE VNC GROUP . IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FURNISHED ALL THE PA RTICULARS OF INCOME. THE ASSESSEE HAS ALSO FURNISHED THE DETAILS OF THE LOAN RECEIVED FROM 182 PERSONS. THE ASSESSEE HAS ALSO CLAIMED FREIG HT CHARGES TO THE EXTENT OF ` 15,36,937/-. THE ASSESSING OFFICER ALSO DISALLOWE D A SUM OF ` 30,000/- FOR NON-PRODUCTION OF PROPER VOUCHERS. T HE QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSESSEE HAS F URNISHED ALL THE PARTICULARS OF INCOME AND CLAIMED CERTAIN DEDUCTION IN RESPECT OF THE LOAN RECEIVED AND THE FREIGHT CHARGES INCURRED, C AN IT BE CONSTRUED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICU LARS OF INCOME? 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SE CTION 271(1)(C) OF THE ACT. SEC. 271(1)(C) OF THE ACT E NABLES THE ASSESSING OFFICER TO LEVY PENALTY IN CASE HE IS SATISFIED THA T THE ASSESSEE HAS CONCEALED ANY PARTICULARS OF HIS INCOME OR FURNISHE D ANY INACCURATE PARTICULARS OF SUCH INCOME. IN THIS CASE, IT IS NO T THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS FURNISHED ANY INACCURATE ITA NO. 146/14 :- 6 -: PARTICULARS OF ITS INCOME. THE ASSESSEE CLAIMED C ERTAIN RECEIPTS AS LOAN. OUT OF ` 83,83,413/-, THE ASSESSEE COULD NOT PRODUCE CONFIRMATION LETTERS IN RESPECT OF ` 9,34,272/-. THIS IS BECAUSE THE EMPLOYEES OF VNC GROUP LEFT THE COMPANY, THEREFORE, THE ASSESSEE COULD NOT OBTAIN THE CONFIRMATION LETTERS. IN RESP ECT OF ` 30,000/-, THE ASSESSEE CLAIMS THAT IT COULD NOT OBTAIN THE VOUCHE RS FOR THE FREIGHT CHARGES INCURRED. HOWEVER, SELF-MADE VOUCHERS ARE AVAILABLE TO INDICATE THE EXPENDITURE INCURRED BY THE ASSESSEE. WHEN THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS OF INCOM E AND CLAIMED CERTAIN AMOUNT AS EXPENDITURE/LOAN, WHETHER THAT WO ULD AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME, THIS T RIBUNAL FINDS THAT THE APEX COURT IN THE CASE OF CIT VS RELIANCE PETROPROD UCTS PVT. LTD [2010]322 ITR 158 HAD AN OCCASION TO CONSIDER AN I DENTICAL ISSUE. IN THE CASE BEFORE THE APEX COURT, THE ASSESSEE CLAIME D INTEREST EXPENDITURE FOR PAYING THE INTEREST ON THE LOAN INC URRED BY THE ASSESSEE-COMPANY. THE ASSESSING OFFICER, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE AND ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT. THE APEX COURT FOUND THAT IT MUST BE SHOWN TH AT THE CONDITIONS U/S 271(1)(C) OF THE ACT MUST EXIST BEFORE LEVY OF PENALTY. THE APEX COURT FURTHER FOUND THAT MERELY BECAUSE THE ASSESS EE CLAIMED CERTAIN EXPENDITURE IN THE RETURN OF INCOME THAT ITSELF CAN NOT BE TREATED AS FURNISHING OF INACCURATE PARTICULAR OR CONCEALING A NY PART OF ITS INCOME. ITA NO. 146/14 :- 7 -: THE APEX COURT FURTHER OBSERVED THAT IT WAS UPTO TH E AUTHORITIES TO ACCEPT THE CLAIM OF THE ASSESSEE OR NOT. A MERE N ON-ACCEPTANCE OF THE CLAIM MADE BY THE ASSESSEE THAT BY ITSELF WOUL D NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. IN VIEW OF THE ABOVE JUDGMENT OF THE APEX COURT, MERELY BECAUSE THE CLAIM OF THE A SSESSEE WAS NOT ACCEPTED THAT WOULD NOT ATTRACT ANY LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY TH E ASSESSING OFFICER. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( ! ' ) (CHANDRA POOJARI) # / ACCOUNTANT MEMBER ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 20 TH NOVEMBER, 2015 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF