SANJAY KUMAR, Jaipur V. ITO, Jaipur

ITA 151/JPR/2011

• Counselvise Citation: 15123114 RSA 2011
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Unexplained cash credit; Additional evidence; Assessment record

Judgement Text

1 ITA 151-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 151/JP/2011 ASSTT. YEAR : 2005-06. SHRI SANJAY KUMAR, VS. THE INCOME-TAX OFFICER, FLAT NO. 403, AKANSHA EXCELLENCY, WARD 3(1), B-1/552/553/554, PRATAP MARG, JAIPUR. CHITRAKOOT YOJANA, AJMER ROAD, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD GUPTA RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 04.11.2011 DATE OF PRONOUNCEMENT : 18.11.2011 ORDER DATED : 18/11/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) WHO SUSTAINED PENALTY OF RS. 4,45,183/- LEVIED BY AO UNDER SECTIO N 271(1)(C) RELATING TO ASSESSMENT YEAR 2005-06. 2. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT ASSESSEE HAS INTRODUCED LOAN OF RS. 12,76,000/- IN THE NAME OF SHRI OM PRAK ASH. CONFIRMATION DURING THE ASSESSMENT PROCEEDINGS COULD NOT BE FURNISHED AND T HEREAFTER ASSESSEE ADMITTED THAT THE AMOUNT OF LOAN OF RS. 12,76,000/- MAY BE TREATED AS UNEXPLAINED CREDIT IN THE BOOKS OF THE ASSESSEE SUBJECT TO NON LEVY OF PENALTY AND PEN AL ACTION, IF ANY. BESIDES THIS, A FURTHER 2 ADDITION OF RS. 1,90,563/- WAS ALSO MADE ON ACCOUNT OF RECEIPT OF RS. 23,82,107/- AS ASSESSEE DID FINISHING WORK IN THE HOUSE OF SHRI OM PRAKASH. THIS WAS ALSO OFFERED FOR TAXATION SUBJECT OF NON LEVY OF PENALTY. ACCORDINGL Y, THE ASSESSMENT WAS COMPLETED BY THE AO BY TREATING THE AMOUNT OF LOAN AS UNEXPLAINE D CASH CREDIT OF THE ASSESSEE. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS AN D ASSESSEE WAS SERVED A SHOW CAUSE NOTICE AS TO WHY PENALTY UNDER SECTION 271(1)(C) BE NOT IMPOSED ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS TO CONCEAL THE INCOME OF RS. 12,76,000/-. DETAILED SUBMISSIONS WERE FILED BEFORE THE AO. IT WAS SUBMITTED THAT TH ERE IS NO CONCEALMENT OF INCOME. ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULA RS. IT WAS ALSO SUBMITTED THAT ASSESSEE HAS ADMITTED TO ADD THIS INCOME CONDITIONALLY AS SH RI OM PRAKASH WAS NOT CO-OPERATING TO GIVE CONFIRMATION. IT WAS ALSO SUBMITTED THAT L OAN WAS TAKEN FROM SHRI OM PRAKASH AND, THEREFORE, PENALTY CANNOT BE LEVIED ON THIS AM OUNT. RELIANCE WAS PLACED ON THE DECISION IN CASE OF PUNJAB TYRES, 162 ITR 517 (MP) AND IN CASE OF BHARTIYA BHANDAR, 122 ITR 622 (MP) AND ALSO ON THE DECISION OF CIT VS . P.M.P. SOUNDARA PANDIAN & BROTHERS, 140 ITR 385 (CHENNAI). HOWEVER, AO WAS N OT SATISFIED WITH THE EXPLANATION FILED. IN HIS VIEW, ASSESSEE HAS CONCEALED THE PAR TICULARS OF INCOME AS NO CONFIRMATION OF THE LOAN AMOUNT OF RS. 12,76,000/- WAS FILED. THER EFORE, THE SAME WAS TREATED AS BOGUS/UNEXPLAINED LOAN. THEREFORE, HE LEVIED A PENA LTY OF RS. 4,45,183/-. 3. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). IT WAS CONTENDED BEFORE LD. CIT (A) THAT ASSESSEE IS A BUILDER. ALL THE BUYERS ENT ERED INTO A SEPARATE AGREEMENT FOR FINISHING OF FLATS WITH ONE CONTRACTOR, NAMELY, SHR I OM PRAKASH AND PAYMENT WAS DIRECTLY MADE BY THE BUYERS TO HIM. SHRI OM PRAKASH WAS NOT CO-OPERATING AND, THEREFORE, TO BUY MENTAL PEACE AND TO AVOID LITIGATION, THE ASSESSEE AGREED TO OFFER INCOME @ 8% OVER THE 3 CREDITS APPEARING IN THE BOOKS OF SHRI OM PRAKASH A S WELL AS CASH CREDITS APPEARING IN THE BOOKS OF ASSESSEE IN HIS NAME. THE OFFER WAS MADE SUBJECT TO CONDITION THAT PENALTY UNDER SECTION 271(1)(C) SHALL NOT BE LEVIED. THE C ONDITIONAL OFFER WAS NOT A RESULT OF ENQUIRY OF AO BUT IT WAS MADE IMMEDIATELY AFTER ISS UING FIRST QUESTIONNAIRE WHEREIN SIMPLY CONFIRMATION WAS CALLED FOR. ACCORDINGLY IT WAS SUBMITTED THAT IT IS NOT A CASE OF CONCEALMENT OF INCOME AS THERE IS NO EVIDENCE ON RE CORD EXCEPT ASSESSEES CONDITIONAL AGREEMENT. IT WAS FURTHER SUBMITTED THAT ON THE CO NTRARY LIST OF DOCUMENTS AND INFORMATION WERE AVAILABLE WHICH SUGGESTED THAT SHR I OM PRAKASH IS INDEPENDENT FROM THE ASSESSEE. ADDITION BY WAY OF APPLYING DEEMING PROVISION FOR CASH CREDITS HAS BEEN MADE WITHOUT ANY EVIDENCE EXCEPT ASSESSEES AGREEME NT. IT WAS FURTHER SUBMITTED THAT DURING THE PENALTY PROCEEDINGS, THE IDENTITY DETAIL S IN THE FORM OF PAN WERE FILED ALONG WITH COPY OF NOTICES RECEIVED FROM THE LAWYER OF SH RI OM PRAKASH REGARDING RECOVERY OF LOANS. DESPITE THESE ADDITIONAL EVIDENCES OR REQUE STS FURNISHED DURING THE PENALTY PROCEEDINGS, NO FURTHER ENQUIRY WAS MADE BY THE AO AND HE SIMPLY ACTED ON THE BASIS OF FINDING GIVEN IN THE ASSESSMENT PROCEEDINGS. IT WA S SUBMITTED THAT ON CONDITIONAL OFFER WHICH WAS WITHOUT ENQUIRY OF AN AO, NO PENALTY CAN BE LEVIED. RELIANCE WAS PLACED ON THE DECISION ON WHICH RELIANCE WAS PLACED BEFORE TH E AO. FURTHER RELIANCE WAS PLACED ON VARIOUS CASES MENTIONED IN THE ORDER OF LD. CIT (A) AT PAGE 2. HOWEVER, THE LD. CIT (A) WAS NOT SATISFIED WITH THE EXPLANATION OFFERED BY T HE ASSESSEE AS HE WAS IN AGREEMENT WITH THE FINDING OF AO. ACCORDINGLY, HE CONFIRMED THE LEVY OF PENALTY. 4. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TR IBUNAL. 5. THE LD. COUNSEL OF THE ASSESSEE WHO APPEARED BEF ORE THE TRIBUNAL FILED A WRITTEN NOTE. 4 6. ON THE OTHER HAND, LD. D/R PLACED RELIANCE ON TH E ORDERS OF THE AO AND LD. CIT (A). 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS CASE. WE NOTED THAT DETAILED EXPLANATION WAS FILED BEFORE AO AND IT WAS SUBMITTED THAT SHRI OM P RAKASH WAS NOT CO-OPERATING AND, THEREFORE, TO BUY PEACE, THE ASSESSEE AGREED TO MAD E THE ADDITION SUBJECT TO NON LEVY OF PENALTY. THIS FACT HAS BEEN RECORDED BY AO IN HIS PENALTY ORDER. IT WAS FURTHER SUBMITTED THAT SHRI OM PRAKASH IS INCOME-TAX ASSESSEE HAVING PAN NO. AJMPP 4810A. IT WAS ALSO INFORMED THAT ASSESSEE HAS RECENTLY GIVEN A LE GAL NOTICE THROUGH ADVOCATE FOR RECOVERY OF LOAN GIVEN BY SHRI OM PRAKASH TO THE AS SESSEE, COPY OF THE SAME WAS ALSO FILED. IT WAS ALSO SUBMITTED THAT IN THE BOOKS OF ACCOUNT THE LOAN ACCOUNT STILL APPEARING OUTSTANDING. THIS FACT HAS BEEN RECORDED BY THE AO IN HIS ORDER AT PAGE 3 IN PARA 3. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAS NOT FILED ANY EXPLANATION. THE AO HAS NOT MADE ANY ENQUIRY FROM THE ASSESSMENT RECORD OF SHRI OM PRAKASH NEITHER ANY NOTICE WAS GIVEN TO SHRI OM PRAKASH. LEGAL NOTICE WAS ALSO GI VEN TO THE ASSESSEE FOR RECOVERY OF LOAN AMOUNT. FROM ALL THESE FACTS, IT CLEARLY EMER GES THAT SHRI OM PRAKASH WAS NOT CO- OPERATING WITH THE ASSESSEE AND, THEREFORE, ASSESSE E CAME FORWARD TO SURRENDER THE AMOUNT TO AVOID LITIGATION. THE SURRENDER WAS MADE CONDITIONALLY THAT NO PENALTY PROCEEDINGS SHALL BE INITIATED. IF THE AO WAS HAVI NG ANY DOUBT, THEN HE SHOULD HAVE MADE ENQUIRY DURING THE ASSESSMENT PROCEEDINGS ITSE LF WHETHER CREDIT IS GENUINE OR NOT. AS STATED ABOVE, EVEN DURING THE PENALTY PROCEEDING S WHEN ALL THE EVIDENCES AND EXPLANATION WERE GIVEN, NO EFFORTS WERE MADE BY THE AO TO MAKE ENQUIRY TO UNEARTH THE TRUTH. THEREFORE, IN OUR CONSIDERED VIEW, THE AO W AS NOT JUSTIFIED IN LEVYING PENALTY 5 UNDER SECTION 271(1)(C) AS LEVY OF PENALTY IS QUASI CRIMINAL IN NATURE. IT IS ALSO A SWELL SETTLED POSITION THAT PENALTY PROCEEDINGS ARE SEPAR ATE AND DISTINCT FROM ASSESSMENT PROCEEDINGS AND IF ANY EXPLANATION IS GIVEN DURING THE PENALTY PROCEEDINGS THAT HAS TO BE TAKEN INTO CONSIDERATION. AS STATED ABOVE, THE DET AILED EXPLANATION WAS GIVEN ALONG WITH THE PARTICULARS OF INCOME-TAX OF SHRI OM PRAKASH AL ONG WITH A COPY OF RECOVERY NOTICE ISSUED BY LAWYER OF SHRI OM PRAKASH. IN VIEW OF TH E ABOVE FACTS AND CIRCUMSTANCES, WE HOLD THAT LEVY OF PENALTY WAS UNJUSTIFIED AND WE CA NCEL THE LEVY OF PENALTY. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18. 11.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/ COPY FORWARDED TO :- SHRI SANJAY KUMAR, JAIPUR. THE ITO WARD 3(1), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 151/JP/2011) BY ORDER, AR ITAT JAIPUR.