SURENDRA KUMAER SETHIA(HUF), Jaipur V. ITO, Jaipur

ITA 150/JPR/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3011 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA

Judgement Text

1 ITA 150-13 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER ITA NO. 150/JP/2013 ASSTT. YEAR : 2007-08. SURENDRA KUMAR SETHIA (HUF), VS. THE INCOME-TAX OF FICER, 118A, SANTOSH NAGAR, AJMER ROAD, WARD 6(1), JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHRAWAN GUPTA RESPONDENT BY : MS ROSHANTA MEENA DATE OF HEARING : 26.06.2013 DATE OF PRONOUNCEMENT : 27.6.13 ORDER PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 8. 11.2012 OF LD. CIT (A)-II, JAIPUR CHALLENGES THE CONFIRMATION OF PENALTY OF RS. 64,17 8/- ON THE FOLLOWING GROUNDS :- (1) THE IMPUGNED PENALTY ORDER U/S 271(1)(C) DATED 20.05.2010 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. (2) RS. 64,178/- : THE LD. CIT (A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE PENALTY OF RS. 64,178/- U/S 271(1)(C) IMPOSED BY THE A.O. THE PENALTY SO CONFIRMED BY THE CIT (A) IS TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITIONS MAY KINDLY BE DELETED IN FULL. 2 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE RETURNED INCOME OF RS. 2,19,530/- FROM THE FINANCE BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT ASSESSEE HAS RAISED LOANS OF RS. 49,000/- EACH FROM S/SHRI KASTURI LAL, NEJ KUMAR, MANOHAR LAL AND OM PRAKASH ALL AGGREGATING TO RS. 1 ,96,000/- AND HAS CLAIMED INTEREST OF RS. 17,928/- THEREON. WHEN THE AO INITIATED ENQ UIRY, THE ASSESSEE MERELY FILED CONFIRMATIONS WITHOUT GIVING PERMANENT ACCOUNT NUMB ER AND OTHER REQUISITE DETAILS OF THE LOAN CREDITORS. THESE LOANS WERE ALSO FOUND RAI SED THROUGH BANK DRAFT MADE IN CASH. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FEL T UNABLE TO PRODUCE THE CREDITORS. HE, THEREFORE, SURRENDERED THE AMOUNT OF CREDITS AGGREG ATING TO RS. 1,96,000/- TO BE ASSESSED AS HIS INCOME BESIDES AGREEING FOR DISALLOWANCE OF CLAIM OF INTEREST SO MADE THEREON. THE AO COMPLETED THE ASSESSMENT AT AN INCOME OF RS. 4,8 2,520/- AND ALSO ISSUED A SHOW CAUSE NOTICE UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF HIS INCOME. 3. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE F URNISHED A REPLY ON 29.01.2010 STATING THEREIN AS UNDER :- THE ADDITION OF RS. 1,96,000/- IS U/S 68 SINCE ASSESSEE IS UNABLE TO PRODUCE LENDERS. ASSESSEE HAS SUBMITTED CONFIRMATIO NS OF PARTIES BUT UNABLE TO PRODUCE ALL LENDERS AND TO BUY PEACE SURR ENDERED THE AMOUNT AGGREGATING RS. 1,96,000/- SHOWN IN NAME OF THESE C REDITORS FOR TAXATION. INTEREST PAID ON ABOVE LOANS OF RS. 17,928/- IS ALS O DISALLOWED. THE PENALTY PROCEEDINGS ARE SEPARATE ONE FROM SCRUTINY PROCEEDINGS. ASSESSEE PRODUCED CONFIRMATIONS OF ALL PARTIES. MERE NON SU BMISSION OF SOME OF LENDERS MAY NOT BE PLEASED TAKEN AS CONCEALMENT OF INCOME WHILE ASSESSEE HAS SUBMITTED CONFIRMATION ALONGWITH IDENTITY PROOF OF LENDERS. IN VIEW OF ALL THE FACTS PENALTY IS NOT JUSTIFIED. HENCE IT IS REQUESTED TO PLEASE NOT LEVY PENALTY. THE AO CONSIDERING THE REPLY STATED THAT THE ASSESS EE HAS BEEN PROVIDED SUFFICIENT OPPORTUNITY TO PRODUCE THE ABOVE PERSONS. AS THE AS SESSEE COULD NOT PRODUCE THESE 3 PERSONS AND THE QUANTUM ADDITION HAVING NOT BEEN DI SPUTED IN APPEAL, HE REACHED A CONCLUSION THAT THE ASSESSEE HAS COMMITTED THE CONC EALMENT. AS THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE LOANS, HE TOOK THAT TH E ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND WAS THUS SATISFIED TH AT IT WAS A FIT CASE TO IMPOSE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY PE NALTY AMOUNTING TO RS. 64,178/- EQUAL TO 100% OF TAX SOUGHT TO BE EVADED STOOD IMPOSED BY HIS ORDER DATED 20.5.2010. 4. THE LD. CIT (A) DID NOT SHOW ANY INDULGENCE IN T HE SAID CONCLUSION REACHED BY THE AO AS THE ARGUMENT RAISED BY THE ASSESSEE WAS N OT FOUND TENABLE UNDER THE CIRCUMSTANCES WHEN THE ASSESSEE MADE NO EFFORT TO P RODUCE THE CREDITORS AND THE CONFIRMATIONS LAID ON RECORD DID NOT BEAR THEIR PER MANENT ACCOUNT NUMBER BESIDES PURCHASING DRAFTS IN CASH FOR TAKING THESE CREDITS IN HIS BOOKS OF ACCOUNT. 5. SHRI SHRAWAN GUPTA, LEARNED COUNSEL FOR THE ASSE SSEE FILED WRITTEN SUBMISSIONS AND GIST OF CASE LAWS. HE CONTENDS THAT THE ASSESSE E WAS UNABLE TO PRODUCE THE CASH CREDITORS. IT IS UNDER THESE CIRCUMSTANCES ALONE HE AGREED TO SURRENDER THE AMOUNT OF CASH CREDITS AND DISALLOWANCE OF INTEREST TO BE ASSESSED AS HIS INCOME. HE, HOWEVER, HAD LAID CONFIRMATIONS FROM ALL THE CASH CREDITORS ON RECORD OF THE ASSESSING AUTHORITY. THE ASSESSEE HAD DISCLOSED TRUTHFULLY THE CREDITS OUTST ANDING IN THE ORIGINAL RETURN FURNISHED BY THE APPELLANT. IT WAS, THEREFORE, NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. RELIANCE HAS BEEN PLACED ON THE JUDGMENT BY APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD., 322 ITR 158 (SC) A ND ALSO ON THE JUDGMENT BY SMC BENCH OF ITAT, JAIPUR IN THE CASE OF SUSHIL KUMARI MODI, KOTA VS. ACIT (2013) 49 TAX WORLD 123 (JP). 4 6. ON THE OTHER HAND, THE LD. D/R CONTENDS THAT THE AUTHORITIES BELOW HAVE PASSED A REASONED ORDER WHICH REQUIRES NO INTERFERENCE BY TH E APPELLATE TRIBUNAL. THE APPELLANT HAS NOT PRODUCED THE CASH CREDITORS TO SUBSTANTIATE HIS CLAIM IN PENALTY PROCEEDINGS. EVEN IF THE APPELLANT HAD PRODUCED CONFIRMATIONS IN ASSESSMENT PROCEEDINGS, HE WAS UNDER OBLIGATION TO SHOW AS TO WHY THE CREDITORS CA NNOT BE PRODUCED FOR VERIFICATION OF FACTS. THE JUDGMENTS SOUGHT TO BE RELIED UPON BY T HE ASSESSEES COUNSEL ARE NOT APPLICABLE TO THE PECULIAR FACTS OF THIS CASE IN AS MUCH AS THE AO HAD INITIATED ENQUIRY ABOUT THE GENUINENESS OF CASH CREDITS WHEREAS THERE WAS NO SURRENDER OF INCOME IN THE CASE OF SUSHIL KUMAR MODI VS. ACIT (SUPRA) BEFORE S MC AND IN THE CASE OF RELIANCE PETROPRODUCTS LTD. (SUPRA) BEFORE HON'BLE APEX COUR T. THAT APART, THE FACT REMAINS THAT THE EXPLANATION-1 BELOW SECTION 271(1)(C) OF THE AC T WAS ATTRACTED IN THIS CASE AS THE ASSESSED INCOME WAS MUCH MORE THAN THE RETURNED INC OME OF THE ASSESSEE AND IT IS A CASE OF DEEMED CONCEALMENT BY FURNISHING INACCURATE PART ICULARS OF INCOME. IN THIS VIEW OF THE MATTER THERE IS NO MERIT IN THE GROUND RAISED I N APPEAL BY THE ASSESSEE. 7. I HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE PERUSAL OF IMPUGNED ORDER REVEALS THAT THE ASSESSING AUTHORITY HAS RESTED HIS CONCLUSION ON THE ADMISSION MADE BY THE ASSESSEE IN ASSESSMENT PROCEE DINGS. A FINDING IN ASSESSMENT PROCEEDINGS CANNOT BE AUTOMATICALLY ADOPTED IN PENA LTY PROCEEDINGS AS IN THE PENALTY PROCEEDINGS THE TAXING AUTHORITY IS BOUND TO CONSID ER THE MATTER AFRESH ON THE MATERIAL BEFORE IT. THE FINDING IN ASSESSMENT PROCEEDINGS C ANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSE OF PENALTY PROCEEDINGS IN A CASE LIKE THIS WHERE THE APPELLANT CLAIMED TO HAVE LAID ON RECORD THE CONFIRMATIONS BEFORE IMPOSITION OF PENALTY BY THE ASSESSING AUTHORITY. EVEN THOUGH THE APPELLANT DID NOT SUBSTANTIATE AS T O HOW AND WHY HE COULD NOT PRODUCE 5 THE CREDITORS OR AS TO WHAT EFFORTS HE HAD MADE IN REQUIRING THEM TO MAKE STATEMENT OF FACT BEFORE THE ASSESSING AUTHORITY, NOTHING PREVEN TED THE ASSESSING AUTHORITY TO EMBARK ENQUIRY IN THE CORRECTNESS AND TRUTHFULNESS OF LOAN GENUINELY RAISED BEFORE HOLDING IT TO BE A CASE OF FURNISHING OF INACCURATE PARTICULARS BY T HE ASSESSEE IN HIS RETURN OF INCOME. IN THE INTEREST OF SUBSTANTIAL JUSTICE, I CONSIDER IT APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER BACK TO THE ASSESSING AUTHORIT Y SO THAT THE REQUISITE ENQUIRIES ARE MADE BEFORE TAKING A DECISION IN ACCORDANCE WITH LA W. NEEDLESS TO ADD, THE APPELLANT SHALL BE AFFORDED REASONABLE AND EFFECTIVE OPPORTUN ITY OF BEING HEARD. 8. IN THE RESULT, APPEAL STANDS ALLOWED FOR STATIST ICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27.6.13. . SD/- ( B.R. JAIN ) ACCOUNTANT MEMBER JAIPUR, DATED : 27/06/2013. D/- COPY FORWARDED TO :- SURENDRA KUMAR SETHIA (HUF), JAIPUR. THE ITO WARD 6(1), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 150/JP/2013) BY ORDER, AR ITAT JAIPUR.