Shri Anil Krishna Paul, Kolkata V. DCIT, Circle - 53, Kolkata, Kolkata

ITA 165/KOL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2513 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 25-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 08-02-2008
• Court: TRIBUNAL
• Department Lawyers: P KOLHE
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit
• Section: 271(1)(c); 274; 251; 208

Judgement Text

, C , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA () BEFORE . . . . . . . . , , , , , !' !' !' !' /AND . .. . . .. .! !! !, , , , # , ,, , [BEFORE HONBLE SRI D. K. TYAGI, JM & HONBLE SRI C. D. RAO , AM] '$ '$ '$ '$ / ITA NO 165/KOL/2008 %&' !() %&' !() %&' !() %&' !()/ // / ASSESSMENT YEAR : 2004-05 SRI ANIL KRISHNA PAUL (PA NO.AEQPP 5447 L) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-53, KOLKATA. (+, / APPELLANT ) - !& - - VERSUS -. (.+,/ RESPONDENT ) +, / 0 / FOR THE APPELLANT: / SHRI S. M. SURANA .+, / 0 / FOR THE RESPONDENT : / SHRI P. KOLHE 1 / ORDER PER D. K. TYAGI, JM ( . . . . . . . . , , , , ) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 17.12.2007 FOR ASSESSMENT YEA R 2004-05 ON THE GROUND OF CONFIRMING THE PENALTY IMPOSED U/S. 271(1)(C) OF TH E ACT. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT IN THE BALANCE SHEET ADVANCE FROM CUSTOMERS HAS BEEN SHOWN AT RS.10,42,559/- IN LIABILITY SIDE. ON VERIFICATION, THE AO FOUND THAT ADVANCES OF RS.4,77,000/- WAS SHOWN AGAINST 27 INDIVIDUALS, WHO HAVE NO OTHER BUSINESS DEALING FROM THE ASSESSEE. ON FURTHER VERIFICATION, IT WAS ALSO FOUND BY THE AO THAT NONE OF THEM EXIST IN THE ADDRESSES PROVIDE BY THE ASSESSEE . HENCE, AFTER GIVING SHOW CAUSE NOTICE TO THE ASSESSEE AND REASONABLE OPPORTUNITY T O PROVE THAT THE PARTICULARS FURNISHED IN THE RETURN ARE GENUINE, ADDED THE SAME AS UNEXPL AINED CASH CREDIT AFTER GIVING DETAILED REASONING IN THE ASSESSMENT ORDER. LIKEWI SE, ON EXAMINATION OF THE CASH BOOK THE AO NOTICED THAT THE TOTAL CASH IN HAND AVAILABL E AS PER CASH BOOK ON 3.4.2003 WAS RS.1,56,827/-. HOWEVER, THE ASSESSEE DEPOSITED CAS H OF RS.4,21,390/- IN THE PNB C/1 A/C. HENCE, AFTER GIVING OPPORTUNITY TO THE ASSESS EE ADDED THE SAME AS UNEXPLAINED MONEY AFTER CONSIDERING THE SUBMISSION OF THE ASSES SEE AND GIVING DETAILED REASONING IN THE ASSESSMENT ORDER. THIS ASSESSMENT WAS COMPLETE D ON 27.12.2006 AND IN COURSE OF THE ASSESSMENT PROCEEDINGS FOLLOWING CONCEALMENT WA S DETECTED BY THE AO AND PENAL PROCEEDINGS U/S. 271(1)(C) OF THE ACT WAS INITIATED AND SHOW CASUSE NOTICE U/S. 271 READ WITH SECTION 274 OF THE I. T. ACT HAS BEEN ISSUED : I) ON ACCOUNT OF UNEXPLAINED CASH CREDIT SHOWN AS ADVANCES RECEIVED FROM CUSTOMERS RS.4,77,000. 00 2 II) ON ACCOUNT OF UNACCOUNTED CASH BROUGHT IN BUSIN ESS FOR ADJUSTING NEGATIVE BALANCE IN CASH BOOK RS .2,64,563.00 TOTAL RS.7,41,563.00 IN REPLY, IN RESPECT OF ADVANCES RECEIVED FROM CUST OMERS, THE ASSESSEE SUBMITTED BEFORE THE AO THAT HE DEALS IN PRODUCTS WHICH HAVE VERY IN TENSIVE AND WIDE DEMAND IN MARKET AND CUSTOMERS, ACCORDING TO THEIR NECESSITY, ON THE IR OWN INITIATIVE DEPOSITED MONEY TO ENSURE SUPPLY. THIS IS THE NORMAL PRACTICE OF TRAD E. HE IS NOT AN EXCEPTION TO THIS. IN ANY BUSINESS, ADDRESSES GIVEN BY THE CUSTOMERS ARE TO BE ACCEPTED, OTHERWISE, IT WILL BE IMPOSSIBLE FOR ANY ONE TO CARRY ON BUSINESS. IN TH E INSTANT CASE THERE IS NO SUPPRESSION AS WELL AS THE SOURCES OF FUND ARE GENUINE AND IN A CCORDANCE WITH GENERAL TRADE PRACTICE. THE ENTIRE ADVANCES HAD BEEN ADJUSTED AGAINST SALES OF SUBSEQUENT YEAR AND OFFERED FOR TAX. THERE IS NO CONCEALMENT AS SUCH. AFTER CONS IDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE, THE AO HELD AS UNDER : IN THE ASSESSMENT ORDER ITSELF THE REASON FOR TRE ATMENT OF CASH CREDIT AS UNEXPLAINED HAS BEEN DISCUSSED ELABORATELY. ALL OF THE INDIVIDU AL CUSTOMERS FROM WHOM ALLEGEDLY ADVANCES WERE RECEIVED BY THE ASSESEE ON GROUND THA T STOCKS WERE NOT READILY AVAILABLE, WERE ISSUED SUMMONS FOR VERIFICATION OF ASSESSEES CLAIM. NONE OF THEM HAS BEEN TRACEABLE. ASSESSEE HAS STATED THAT ADDRESS GIVEN BY CUSTOMERS ARE TO BE ACCEPTED. BUT IS IT EVER POSSIBLE THAT EACH ONE OF 23 PERSONS GAV E FALSE ADDRES ? THEE ASESSEE CLAIMED THAT THE ADVANCES WERE ADJUSTE D AGAINST SALES SUBSEQUENTLY, BUT IT WAS THE ONUS OF THE ASSESSEE TO PRODUCE AT LEAST ON E PERSON FROM WHOM HE ACCEPTED ADVANCE AND SUBSEQUENTLY MADE THE SALES THE ASSESSE E HAS FAILED TO CARRY OUT THIS RESPONSIBILITY WHICH IS REQUIRED FOR JUSTIFYING HIS CLAIM. INCIDENTALLY M/S. R.G. STEEL & CO. THE PROPRIETORSHIP BUSINESS OF THE ASSESSEE IS DISTRIBUTOR OF TATA-TISCON TMT BARS AND BY THE CONDITION LAID DOWN IN THE AGREEMEN T, IT IS STRICTLY PROHIBITED TO SUPPLY ANY PERSON OTHER THAN THE ENLISTED DEALERS. SO FROM EVERY POINT OF VIEW , WHATEVER BE AASESSEE S EXPLANATION , I AM OF THE OPINION THAT THERE WAS DELIBERATE PLAN MADE BY THE ASSESSEE TO INTRODUCE HIS UNACCOUNTED AND UNTAXED I NCOME , IN THE BUSINESS BY ENTERING NAMES OF BOGUS CUSTOMERS IN REPLY, IN RESPECT OF NEGATIVE BALANCE, CASH DEPO SITED INTO BANK THE ASSESSEE SUBMITS THAT AN ADVANCE COLLECTION FROM PARTIES WAS DEPOSIT ED INTO BANK AS REQUIRED FOR BUSINESS PURPOSE. THIS ADVANCE WAS SUBSEQUENTLY ADJUSTED WIT H SALES AND ACCORDINGLY ENTERED IN THE CASH BOOK ON DALE OF SALE INSTEAD OF THE DATE O F ADVANCE COLLECTION. AS SUCH SOURCE OF THIS FUND IS ALSO REAL AND AUTHENTIC. AFTER CONS IDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE, THE AO HELD AS UNDER : THE ASSESSEE COULD NOT PRODUCE ANY SUPPORTING EVID ENCE LIKE BOOKING OF MATERIALS AGAINST ADVANCE, NAMES AND ADDRESSES OF THE PERSONS CONCERNED ALTHOUGH HE WAS GIVEN AMPLE OPPORTUNITY. HE PRODUCED NONE OF THE PERSONS FOR VERIFICATION. THUS THE ASSESSEE HAS NOT MADE CORRECT STATEMENT IN COURSE OF HEARING AT THE ASSESSMENT STAGE . THIS APPEARS TO BE WILLFUL DISTORTION OF FACTS WHICH SHO ULD HE PENALIZED. 3 CERTAIN CASE LAWS REFERRED TO BY THE ASSESSEE IN HI S WRITTEN EXPLANATION HAVE BEEN PERUSED AND IT IS FOUND ASSESSEES CASE DOES NOT FI T INTO THE FACTS AND CIRCUMSTANCES OF THOSE CASES CONSIDERING WHICH THE VERDICTS WERE DEL IVERED BY THE HONBLE BENCHES . HENCE, I AM OF THE OPINION THAT THIS IS A FIT CASE FOR IMPOSING PENALTY U/S. 271 OF THE INCOME TAX ACT, 1961. HENCE, HE IMPOSED A PENALTY OF RS.2,45,380/- WHICH IS 100% OF THE TAX SOUGHT TO BE EVADED. ON APPEAL, THE LD. CIT(A) HELD AS UNDER : I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF LD. AR AND THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS MADE THE ABOVE ADDITION AFTER GIVING DUE OPPORTUNITY THE ASSESSEE, TO EXPLAIN, THE SOURCE O F CASH CREDITS. THE APPELLANT HAS FAILED TO EXPLAIN THE SAME EITHER IN THE ASSESSMENT PROCEEDING OR PENALTY PROCEEDING. HERE, IT MAY BE NOTED THAT THE FINDING OF THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER HAS BEEN ACCEPTED BY THE APPELLANT AND NO APPEAL HA S BEEN FILED. HENCE, THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF HIS INCOME AND THEREBY CONCEALED HIS INCOME IS HELD TO BE CORRECT. CONSIDERING ABOVE THE MINIMUM PENALTY OF RS.2,45380/- LEVIED U/S. 271(1)( C) BY THE ASSESSING OFFICER FOR CONCEALMENT OF INCOME IS CONFIRMED. AGGRIEVED BY THE SAID ORDER, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE WHILE REITERATING HIS SAME SUBMISSIONS AS SUBMITTED BEFOR E THE LOWER AUTHORITIES FURTHER SUBMITTED THAT THE ASSESSEE IS WHOLESALE DEALER AND DISTRIBUTOR OF TMT BARS. DUE TO QUALITY MATERIAL THE ASSESSEE IS GIVEN ADVANCES BY THE CUSTOMERS TO ENSURE SUPPLY AND IN DUE COURSE GOODS ARE SOLD , BILLED AND DELIVERED AN D SUCH ADVANCES PAID BY CUSTOMERS ARE ADJUSTED AGAINST SUCH SALE BILLS AFTER ONE OR T WO MONTHS, AS THE CASE MAY BE, WHEN MATERIAL IS SUPPLIED. DURING THE WHOLE YEAR SUCH AD VANCES WERE RECEIVED, GOODS WERE SUPPLIED AFTER FEW MONTHS, BILLS WERE RAISED , THE ADVANCES WERE ADJUSTED AND SUCH SALES HAVE DULY BEEN ACCEPTED BY THE AO. ON THE YEAR ENDI NG DATE ALSO THERE WERE SOME ADVANCES AGAINST WHICH SALES WERE EFFECTED IN THE I MMEDIATELY SUBSEQUENT YEAR, THE ADVANCES WERE ADJUSTED AND SUCH SALES HAVE BEEN ACC EPTED. SOME ADVANCES WERE ALSO RECEIVED DURING THE YEAR WHICH WERE ADJUSTED ON SUP PLIES MADE AS IS APPARENT FROM THE COPY OF SALE BILLS AGAINST SUCH ADVANCES WHICH WERE NOT CARRIED THROUGH THE CASH BOOK AND ONLY ADJUSTED WHEN BILLS WERE RAISED. THE ABOVE FACTS WERE EXPLAINED TO THE AO AND THE AO ALSO EXAMINED THE BOOKS AND THE FACTS. THE A .O HOWEVER MADE ADDITIONS OF THE AMOUNT OF SUCH ADVANCES RECEIVED TOWARDS THE END OF THE YEAR AND LYING OUTSTANDING IN THE BALANCE SHEET AS ON THE YEAR ENDING IN THE ASSE SSMENT AND THE OTHER ADVANCES WHICH WERE NOT ENTERED INTO THE CASH BOOK BUT WERE DIRECT LY ADJUSTED AGAINST THE SALE BILLS. THE ASSESSEE DID NOT FILE ANY APPEAL. IN THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE AGAIN REITERATED THE SAME FACTS AND EXPLANATIONS. THE AO DID NOT ACCEPT THE EXPLANATION AND ALSO RELIED ON SOME CLAUSES IN THE DISTRIBUTORS AGR EEMENT WHICH ARE NOT AT ALL RELEVANT. 4 HE, THEREFORE, CONTENDED THAT WHEN BONAFIDE EXPLANA TION WERE FILED AND THE EXPLANATION WAS NOT PROVED TO BE FALSE NO PENALTY C AN BE IMPOSED UNDER SEC. 271(L)(C) OF ACT. IN SUPPORT OF HIS SUBMISSIONS, HE CITED A S ERIES OF FOLLOWING CASE LAWS : I) UNREPORTED JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF SUDARSHAN SILK AND SAREES DATED 11.4.2008 II) SHIVLAL TAK 251 ITR 373, (RAJ) III) NATIONAL TEXTILES 249 ITR 125 (GUJ) IV) G. R. RAJENDRA 259 ITR 109 (MAD) V) CIT VS. NELLAI TRADING AUTO MOBILES 288 ITR 557 (MAD) VI) CIT VS. PRAGATI CO. OPERATIVE BANK LTD. 278 IT R 170 VII) CIT VS. GARG ENG. CO. 235 ITR 451 VIII) CIT VS. V. RAMASWAMY NAIDU 208 ITR 377 (MAD) IX) SIRISH R. SHAH VS. CIT 114 TAXMAN MAG. 33 X) EAGLE INVESTMENT LTD. 57 ITD 512 (CAL) XI) DHARAM CH. SAHA 204 ITR 462 XII) DURGAKAMAL RICE MILLS 265 ITR 25 (CAL) XIII) BUDGE BUDGE CO. LTD. 100 ITD 387 (CAL) XIV) M. GUJAN GUDI 290 ITR 168 (KAR). 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE LOWER AUTHORITIES AND URGED BEFORE THE BENCH TO CONFIRM THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS CITED BY THE LD. COUNSEL. WE FIN D THAT THE ASSESSING OFFICER HAS LEVIED PENALTY U/S. 271(1)(C) OF THE ACT DUE TO TWO ADDITIONS MADE DURING THE ASSESSMENT PROCEEDINGS NAMELY, (I) ON ACCOUNT OF UNEXPLAINED C ASH CREDIT SHOWN AS ADVANCES RECEIVED FROM CUSTOMERS AND (II) ON ACCOUNT OF UNAC COUNTED CASH BROUGHT IN BUSINESS FOR ADJUSTMENT OF NEGATIVE CASH BALANCE. IN RESPEC T OF THE FIRST ADDITION, THE AO DID NOT ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEE DURI NG THE ASSESSMENT PROCEEDINGS THAT MONEY WAS ADVANCED BY 23 PERSONS AGAINST PURCHASES ON THE GROUND THAT THE ASSESSEE BEING DISTRIBUTOR OF TATA TISCON TMT BARS WAS STRIC TLY PROHIBITED TO SUPPLY ANY OTHER PERSONS THAN THE ENLISTED DEALERS. HE, THEREFORE, TREATED THE MONEY SHOWN BY THE ASSESSEE AS ADVANCE AGAINST PURCHASES AS THE CONCEA LED INCOME OF THE ASSESSEE AND IMPOSED THE PENALTY. HOWEVER, WE FEEL THAT THE ASS ESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE THE BONAFIDES OF HIS EX PLANATION OFFERED DURING THE ASSESSMENT PROCEEDINGS AND FOR THIS, THE MATTER IS RESTORED TO THE FILE OF THE AO. SO FAR AS THE OTHER ADDITION CONSIDERED BY THE AO FOR IMPO SITION OF PENALTY U/S. 271(1)(C) OF THE ACT IS CONCERNED, WE FIND NO MERIT IN THE ARGUM ENTS ADVANCED BY THE ASSESSEE BEFORE US AS THEY ARE NOT SUPPORTED BY ANY COGENT EVIDENCE AND, THEREFORE, THE PENALTY IN 5 RESPECT OF THIS ADDITION IS HEREBY UPHELD. THEREFO RE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 7. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30. 6.2010 2 1 #3 4 3& 25 (#) __________ SD/- SD/- . .. . . .. .! !! !, , , , # . . . . . . . . , , , , (C. D. RAO) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( (# # # #) )) ) DATED :30TH JUNE, 2010 !67 %&89 %:! JD.(SR.P.S.) 1 / .%%; <;(=- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT , SRI ANIL KRISHNA PAUL 747, D. H. ROAD, BEHALA CHOWRASTA, KOLKATA-8. 2 .+, / THE RESPONDENT, DCIT, CIRCLE-53, KOLKATA 3. %1&/ THE CIT, 4. %1& ()/ THE CIT(A), 5. !C% .%& / DR, KOLKATA BENCHES, KOLKATA ; .%/ TRUE COPY , 1&3/ BY ORDER , D '9 / DEPUTY REGISTRAR .