Sh. Praveen Gupta, Delhi V. Addl. CIT, New Delhi

ITA 1608/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7127 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 05-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 18-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Assessee Lawyers: S KRISHNAN
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH F NEW DELHI BEFORE : SHRI I.C. SUDHIR, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1608/DEL./2014 ASSTT. YEAR : 2008 - 09 SH. PRAVEEN GUPTA, VS. ADDL. C.I.T., 2606/4, SHOP NO. 103, 1 ST FLOOR, RANGE - 33, NEW DELHI. SOLITAIRE PLAZA, GURUDWARA ROAD, KAROL BAGH, DELHI. [PAN: AEMPG 0199J] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S. KRISHNAN, ADVOCATE RESPONDENT BY : SH. V.R. SONBHADRA, SR. DR DATE OF HEARING : 05.07.2016 DATE OF PRONOUNCEMENT : 06 .07.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD. CIT(A) - XXVIII, NEW DELHI DATED 15.01.2014 ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORD E R PASSED BY CIT(A) - XXVIII, NEW DELHI BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY CIT(A) - XXVIII WAS NOT JUST IFIED IN UPHOLDING THE PENALTY OF RS.4,00,000/ - U/S. 271E OF THE INCOME TAX ACT. ITA NO. 1608/DEL./2014 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. GOEL IMPEX. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS.22,87,842/ - . T HE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED AND COMPLIED BY THE ASSESSEE. THE BOOKS OF ACCOUNT AND ORIGINAL BILLS AND VOUCHERS WERE CALLED FOR AND VERIFIED ON TEST CHECK BASIS BY THE ASSESSING OFFICER. ON EXAMINATION OF THE CASH BOO K, THE LD. AO FOUND THAT THERE WAS A CREDIT ENTRY OF CASH ON 01.10.2007. THEREIN, THE UNSECURED LOAN ACCOUNT WAS DEBITED BY THE SUM OF RS.4.00 LACS AND CREDIT ENTRY WAS MADE TO CASH ACCOUNT. IN RESPECT OF THIS QUERY MADE BY THE AO, THE ASSESSEE REPLIED THA T THE CASH HAS BEEN WITHDRAWN BY THE PROPRIETOR TOWARDS DRAWING. THE CORRECT ENTRY SHOULD BE DRAWING ACCOUNT DEBITED IN LIEU OF UNSECURED LOAN. THE LD. ASSESSING OFFICER FOUND THAT IT IS A CLEAR CUT VIOLATION OF SECTION 269T OF THE IT ACT, 1961 AND APPLYIN G SECTION 271E, PENALTY PROCEEDINGS WERE STARTED. IN THE PENALTY PROCEEDINGS, IN REPLY OF ASSESSEE DATED 22,06,2011 IN RESPECT OF PENALTY NOTICE, THE ASSESSEE SUBMITTED AS UNDER BEFORE THE ASSESSING OFFICER : .M/S. GOEL IMPEX, THE PROPRIETORSHIP CONCERN OF SH. PRAVEEN GUPTA HAD ACTUALLY PAID THIS SUM TO PRAVEEN GUPTA, THE PROPRIETOR OF M/S. GOEL IMPEX, FOR WHICH THE ASSESSEE FIRM M/S. GOEL IMPEX HAS PASSED JOURNAL ENTRY, WHEN IT WAS DETECTED BY ACCOUNTANT DURING A ROUTINE CHECKING, IT IS ALSO PERTINENT TO STATE HERE THAT NO BALANCE WAS OUTSTANDING AT THE BALANCE SHEET DATE BECAUSE OF THE RECTIFICATION OF THIS MISTAKE BY THE ASSESSEE BEFORE THE PREPARATION OF THE BALANCE SHEET . ITA NO. 1608/DEL./2014 3 3. THE SUBMISSION OF THE ASSESSEE WAS CONSIDERED BY THE AO AND HE CONCLUDED T HAT IT IS A CONCOCTED EXPLANATION AND DID NOT SATISFY AND IMPOSED PENALTY U/S. 271E OF THE ACT. AGAINST THE ORDER OF THE LD. AO, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY, WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER STATING AS UNDER : 5.1 . I HAVE CAREFULLY CONSIDERED THE PENALTY ORDER AND SUBMISSIONS THEREOF. THE FACTS OF THE CASE AS PER THE PENALTY ORDER ARE THAT THERE WAS CREDIT ENTRY FOR AN AMOUNT OF RS.4,00,000/ - AS PER THE CASH BOOK AND THE UNSECURED LOAN AMOUNT HAD BEEN DEBITED. THE ASSESSEE CLAIMED THAT THE PROPRIETOR HAD RECEIVED THE SUM, HOWEVER, THE ASSESSING OFFICER CONFIRMED THAT THE DRAWINGS ACCOUNT HAD NOT BEEN DEBITED BUT THE UNSECURED LOAN ACCOUNT HAD BEEN DEBITED. THE ASSESSING OFFICER THUS CONCLUDED THAT THE ASSESSEE WAS TRYING TO GIVE A CONCOCTED EXPLANATION AND IT WAS CLEAR THAT THE ASSESSEE HAD MADE CASH REPAYMENT OF LOAN IN VIOLATION OF SECTION 269T. PENALTY PROCEEDINGS WERE INITIATED AND PENALTY OF RS.4,00,000/ - WAS LEVIED AFTER GIVING DETAILED REASONING IN THE PE NALTY ORDER. IN THE APPELLATE PROCEEDINGS THE APPELLANT REITERATED THAT THE AMOUNT HAD ACTUALLY BEEN PAID TO THE PROPRIETOR AND IT WAS BY MISTAKE OF THE ASSESSEE'S ACCOUNTANT THAT IT WAS SHOWN AS A UNSECURED CASH LOAN, THEREFORE THERE WAS NO BALANCE OUTST ANDING IN THE BALANCE SHEET. THE CLAIM OF THE APPELLANT HAS BEEN CONSIDERED. THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS DEBITED THE UNSECURED LOAN ACCOUNT AND HAS THUS MADE CASH REPAYMENT OF LOAN IN VIOLATION OF SECTION 269T. NO DETAILS REGARDIN G THE PERSON TO WHOM THE AMOUNT HAD BEEN PAID WAS AVAILABLE IN THE RECORDS OF THE ASSESSEE. IN CASE THE AMOUNT HAD BEEN PAID TO THE PROPRIETOR, AS CLAIMED BY THE APPELLANT, THEN THE AMOUNT SHOULD HAVE BEEN DEPOSITED IN THE PERSONAL BANK ACCOUNT OR TAKEN TO THE DRAWINGS ACCOUNT SINCE THIS HAS NOT BEEN FOUND ON EXAMINATION BY THE ASSESSING OFFICER, THE PENALTY IS SUSTAINED. GROUNDS OF APPEAL ARE DISPOSED OF. AGGRIEVED BY THE ORDER OF THE FIRST APPELLATE AUTHORITY, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. ITA NO. 1608/DEL./2014 4 4. THE LD. AR SUBMITTED THAT IT WAS A MISTAKE OF THE ACCOUNTANT WHO WRONGLY DEBITED THE UNSECURED LOAN LEDGER ACCOUNT IN LIEU OF DRAWING ACCOUNT. THE CASH WAS ACTUALLY WITHDRAWN BY THE PROPRIETOR. THE CORRECT ENTRY SHOULD BE PASSED THAT DRAWING ACCOU NT DEBITED IN LIEU OF UNSECURED LOAN ACCOUNT AND CASH ACCOUNT SHOULD BE CREDITED WHEREAS THE ACCOUNTANT PASSED THE ENTRY AND DEBITED TO UNSECURED LOAN. WHEN THIS MISTAKE CAME TO THE KNOWLEDGE, THE ENTRY WAS REVERSED BEFORE FINALIZATION OF THE BALANCE SHEET . THERE WAS NO PAYMENT OF UNSECURED LOAN THROUGH CASH. THE RECTIFICATION ENTRY WAS SUBMITTED BEFORE THE ASSESSING OFFICER AND CIT(A) WHICH IS AT PAPER BOOK PAGE 29. 5. THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. HE SUBMITTED THAT THE ASSESSI NG OFFICER HAS CATEGORICALLY EXAMINED THE CASH BOOK AND FOUND THAT IT WAS A PAYMENT OF UNSECURED LOAN. HE OBJECTED THAT JOURNAL VOUCHERS WERE SUBMITTED WHICH IS ON PAPER BOOK PAGE 19 AND POINTED OUT THAT THERE IS NO ANY VOUCHER NUMBER NOTED. NO ONE HAS CHE CKED. ONLY THE AUTHORIZED SIGNATORY HAS VERIFIED THESE VOUCHERS. HAD THIS REVERSAL ENTRY BEEN PASSED ON 01.10.2007, THEN WHY THIS WAS NOT SUBMITTED BEFORE THE AO DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, WHICH HAS BEEN SUBMITTED IN THE PENALTY ITA NO. 1608/DEL./2014 5 PROCEEDING S. IN THE VOUCHER, THE NARRATION HAS BEEN MENTIONED AS BEING AMOUNT TRANSFERRED . THIS VOUCHER IS SYSTEM GENERATED AND ENTRY CAN EVER BE PASSED. 6. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD , WE OBSERVE THAT THE LOWER AUTHORITIES DID NOT EXAMINE THE CASH BOOK PARTICULARLY WHEN BOTH THE ENTRIES WERE PASSED. ON EXAMINATION OF THE TAX AUDIT REPORT AT PAPER BOOK PAGE NO. 11, AT SL. NO. 21(B) PARTICULAR OF EACH REPAYMENT OF LOAN OR DEPOSIT IN AN AMOUNT EXCEEDING THE LIMI T SPECIFIED IN SECTION 269T MADE DURING THE PREVIOUS YEAR , HAS BEEN SHOWN BY THE TAX AUDITOR AS NIL. ON PAPER BOOK PAGE 13, ANNEXURE OF THE TAX AUDIT REPORT, AT SL. NO. 5, THERE WAS UNSECURED LOAN FOR A SUM OF RS.31,60,768/ - WHICH HAS BEEN REPAID DURING T HE YEAR . THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS NOT EXAMINED THOROUGHLY THE ENTRIES MADE IN THE BOOKS OF ACCOUNT. THE PROPRIETOR HAS PRODUCED JOURNAL VOUCHER WHICH IS ON PAPER BOOK PAGE 20, IS ONLY FOR THE DEBIT ENTRY TO THE DRAWING ACCOUNT. IN O UR OPINION THE FIRST ENTRY WOULD HAVE BEEN PASSED BY THE PROPRIETOR AS UNSECURED LOAN ACCOUNT DEBITED TO CASH ACCOUNT. THEREAFTER, WHEN THE MISTAKE CAME TO KNOWLEDGE, THE ENTRY WOULD HAVE BEEN PASSED AS CASH ACCOUNT DEBIT ED TO UNSECURED LOAN ACCOUNT AND T HEREAFTER IF IT IS A DRAWING BY THE PROPRIETOR, THEN THE CORRECT ENTRY SHOULD BE ITA NO. 1608/DEL./2014 6 AS DRAWING ACCOUNT DEBITED TO CASH ACCOUNT. THE LD. AUTHORITIES BELOW HAD TO SEE THE ORIGINAL ENTRY MADE IN THE BOOKS AND REVERSAL OF THE ORIGINAL ENTRY WHEN IT HAS BEEN MADE IN THE BOOKS OF ACCOUNT. THEREFORE, WE DEEM IT FIT TO RESTORE THE CASE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE OF IMPOSITION OF PENALTY AFTER MAKING PROPER ENQUIRY AS DIRECTED ABOVE IN THIS ORDER. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06.07.2016. SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 06.07.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI