Megha Industries, Ahmedabad V. The Income tax Officer, Ward-7(1), Ahmedabad

ITA 1493/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0433 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-01-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDEY
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained cash credit
• Section: 143(3); 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA , ACCOUNT ANT MEMBER M/S. MEGHA INDUSTRIES 36, MELDI ESTATE-II, BEHIND MELDI MATA MANDIR, NR. GOTA RAILWAYS CROSSING, GOTA, TAL. DASCROI, AHMEDABAD PAN NO. (APPELLANT) VS INCOME TAX OFFICER, WARD 7(1), AHMEDABAD (RESPONDENT) REVENUE BY: SRI A.K. PANDEY, SR. D.R. ASSESSEE BY: SRI S.N. DIVETIA, A.R. DATE OF HEARING : 11-3-2013 DATE OF PRONOUNCEMENT : 22-3-2013 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-XI, DATED 18/03/2010 CONFIRMING THE PENALTY IMPOSED BY ASSESS ING OFFICER OF RS. 68,200/- U/S 271(1)(C) OF THE ACT. ITA NO. 1493AHD/2010 A.Y.:-2004-05 I.T.A NO.1493/AHD/2010 A.Y. 2004-05 PAGE NO M/S. MEGHA INDUSTRIES VS. ITO 2 2. THE FACTS IN RESPECT OF THIS PENALTY AS THEY EME RGED FROM THE ORDER OF LD. CIT(A) ARE AS UNDER:- 2.1 THE APPELLANT HAS CHALLENGED LEVY OF PENALTY O F RS. 68,200/- FOR A.Y. 2004-05. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFAC TURING AND TRADING OF EDUCATIONAL MATERIAL AND OFFICE EQUIPMEN TS. SURVEY U/S. 133A WAS CARRIED OUT AT THE BUSINESS PREMISES ON 05 -03-2004. THE RETURN OF INCOME FOR A.Y. 2004-05 WAS FILED ON 01-1 1-2004 DECLARING TOTAL INCOME AT RS. 5,49,029/-. IN THE ASSESSMENT ORDER PASSED U/S. 143(3) THE ASSESSING OFFICER MADE ADDITION OF GP OF RS. 2,70,829/- AND ALSO MADE ADDITION OF RS. 1,90,000/- IN RESPECT OF LOAN FROM 10 DEPOSITORS FORM WHOM LOAN OF RS. 19,000/- EACH WAS SHOWN BY THE APPELLANT. THE ADDITION OF GP WAS REDUCED TO RS. 75,916/- AND THE ADDITION OF CASH CREDIT OF RS. 1,90,000/- WAS SUSTA INED BY THE CIT(A). HOWEVER THE CIT(A) HELD THAT THE TELESCOPING BENEFI T OF GP ADDITION SHOULD BE ALLOWED. IN OTHER WORDS, THE CIT(A) HELD THAT THE INCOME OF RS. 75,916/- WAS INTRODUCED BY THE APPELLANT IN HIS BOOKS OF ACCOUNTS IN THE FORM OF NON GENUINE LOANS FROM THE DEPOSITOR S. IN OTHER WORDS, THE GP ADDITION TO THE EXTENT OF RS. 75,916/- WAS CONFIRMED AND THE CASH CREDIT OF RS. 1,14,084/- WAS ALSO CONFIRMED AF TER GIVING EFFECT OF TELESCOPING BENEFIT. THE ASSESSING OFFICER THEN PR OCEEDED WITH THE PENALTY PROCEEDINGS IN RESPECT OF THE AMOUNT OF RS. 1,90,000/- IN THE FORM OF UNEXPLAINED CASH CREDIT. THE ASSESSING OFF ICER ASKED THE APPELLANT TO PRODUCE THE CREDITORS BEFORE HIM AS TH E APPELLANT HAS ACCEPTED CASH LOAN OF RS. 19000/- EACH FROM ALL THE TEN DEPOSITORS AND ALSO ASKED THE APPELLANT TO FURNISH THEIR COPY OF B ANK STATEMENT. HOWEVER THE APPELLANT DID NOT PRODUCE THEIR BANK ST ATEMENT ON THE GROUND THAT SINCE THE CONFIRMATION HAS BEEN FILED F ROM SUCH DEPOSITORS WITH THEIR ADDRESSES, THE APPELLANT HAS DISCHARGED ITS ONUS AND THERE FORE PENALTY U/S. 271(1)(C) CANNOT BE LEV IED. . THIS EXPLANATION WAS NOT ACCEPTED BY THE ASSESSING OFFIC ER. HE HOLD THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS IN RESPECT OF THE AMOUNT OF RS. 1,90,000/- ON WHICH MINIMUM PENALTY L EVIABLE COMES TO RS. 68,162/-. THE ASSESSING OFFICER, LEVIED PENALT Y OF RS. 68,200/-. AGAINST THIS PENALTY ORDER OF THE APPELLANT HAS FIL ED PRESENT APPEAL. I.T.A NO.1493/AHD/2010 A.Y. 2004-05 PAGE NO M/S. MEGHA INDUSTRIES VS. ITO 3 3. BEFORE LD. CIT(A) ASSESSEES CONTENTION WAS THAT ONCE THE ASSESSEE HAS FILED CONFIRMATION FROM THE DEPOSITORS, THE O NUS HAS BEEN DISCHARGED BY THE ASSESSEE. OTHER EVIDENCES SUCH AS BANK STATEM ENT ETC COULD NOT BE FURNISHED BEFORE THE A.O AS THE SAME WERE NOT RECEI VED BY THE DEPOSITORS. THE ASSESSEE HAD STARTED A NEW BUSINESS AT NEW DELH I AND IT WAS NOT POSSIBLE TO RAISE FINANCE LOCALLY AT NEW DELHI, THE REFORE, THE BORROWINGS WERE MADE FROM GUJRAT WHICH WERE FROM GENUINE TRADE RS. HOWEVER CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 4. FURTHER AGGRIEVED, NOW THE ASSESSEE IS BEFORE US . AT THE TIME OF HEARING LEARNED COUNSEL FOR ASSESSEE AT THE OUTSET SUBMITTED THAT ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE ORDER OF JURISDICTIONAL HIGH COURT IN THE CASE OF NATIONAL T EXTILES VS. CIT REPORTED IN 249 ITR 125 (GUJ HIGH COURT) ACCORDING TO WHICH PEN ALTY U/S 271(1)(C) CAN NOT BE LEVIED ON ADDITIONS MADE U/S 68 OF THE ACT. HE THEREFORE PRAYED THAT PENALTY IMPOSED BY ASSESSING OFFICER AND SUSTAINED BY LD. CIT(A) MAY KINDLY BE DELETED. LD. D.R. ON THE OTHER HAND RELI ED ON THE ORDER OF THE LOWER AUTHORITIES. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT ASSESSEE HAS FURNISHED THE CONFIRMITY LETTERS FROM ALL THE PARTIES FROM WHOM ASSESSEE RAISED FUNDS FOR HIS NEW BUSINESS STARTED AT NEW DELHI. THUS THE INITIAL ONUS WAS DISCHARGED BY HIM IN RESPECT OF TH ESE CREDIT ENTRIES IN HIS BOOKS OF ACCOUNTS. THE ASSESSING OFFICER WANTED AS SESSEE TO PROVE THE SOURCE OF SOURCE WHEN HE ASKED HIM TO PRODUCE THE B ANK STATEMENTS OF THE I.T.A NO.1493/AHD/2010 A.Y. 2004-05 PAGE NO M/S. MEGHA INDUSTRIES VS. ITO 4 DEPOSITORS. HE DID NOT MAKE ANY DIRECT INQUIRIES F ROM THE CREDITORS. THUS, ASSESSING OFFICER WITHOUT HOLDING THAT CASH CREDIT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT GENUINE OR WERE FALSE HAS IMP OSED PENALTY FOR CONCEALMENT U/S 271(1)(C) OF THE ACT. IN THE ABSEN CE OF ANY FINDING BY A.O. THAT EXPLANATION OFFERED BY THE ASSESSEE WAS NOT BO NAFIDE, PENALTY FOR CONCEALMENT OR FOR FILING OF INACCURATE PARTICULARS OF INCOME CAN NOT BE LEVIED AUTOMATICALLY, SIMPLY BECAUSE ADDITION WAS M ADE FOR UNEXPLAINED CASH CREDITS. THEREFORE IN OUR CONSIDERED OPINION THIS WAS NOT A FIT CASE IN WHICH PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIE D AND THEREFORE PENALTY SO LEVIED BY A.O. AND SUSTAINED BY LD. CIT(A) IS HEREB Y DELETED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R. MEENA) ( D.K.TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 22 /03/2013 AK / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# I.T.A NO.1493/AHD/2010 A.Y. 2004-05 PAGE NO M/S. MEGHA INDUSTRIES VS. ITO 5 STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 13-03-2013 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 14-03-2013 4) DATE OF CORRECTION 18-03-2013 5) DATE OF FURTHER CORRECTION XXXX 6) DATE OF INITIAL SIGN BY MEMBERS 19-03-2013 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) ORDER SENT TO BENCH CLERK 22-03-2013