Smt. Anita Gautam Jain, Vapi V. The Income tax Officer,Vapi Ward-1, Vapi

ITA 1685/AHD/2009

• Counselvise Citation: 168520514 RSA 2009
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 24-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWANI
• Assessee Lawyers: NONEWRITTEN SUBMISSION
• Keywords: Gift; Period of limitation
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.1685/AHD/2009 A. Y.: 2005-06 SMT. ANITA GAUTAM JAIN, PLOT NO.2, GR-4/B, GURUDEV COMPLEX, OPP. IMRANNAGAR, VAPI VS INCOME TAX OFFICER, VAPI,, WARD A. VAPI PA NO. AEMPJ 8710 N (APPELLANT) (RESPONDENT) APPELLANT BY NONE(WRITTEN SUBMISSION) RESPONDENT BY SHRI VINOD TANWANI, DR DATE OF HEARING: 24-08-2011 DATE OF PRONOUNCEMENT:26-08-2011 O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-I, SURAT DATED 16-03-2009 FOR ASSESSMENT YEAR 2005-06, CHALLENGING THE LEVY OF PE NALTY U/S 271 (1) ( C ) OF THE IT ACT. 2. IN THE PENALTY ORDER, THE AO HAS STATED THAT THE ASSESSEE HAD INTRODUCED CASH CREDIT OF RS.53,500/- U/S 68 OF THE IT ACT FOR 3 PERSONS IN RESPECT OF WHICH THE ASSESSEE FAILED TO ESTABLISH THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTION. THEREFORE, IN THE ASSESSMENT ORDER IT WAS HELD THAT CASH CREDITS WERE NOT GENUINE AND ADDITION U/S 68 OF THE IT ACT WAS MADE AND PENALTY PROCEEDINGS WERE INITIATED. DURING THE COURSE OF PENALTY ITA NO. 1685/AHD/2009 SMT. ANITA GAUTAM JAIN VS ITO, VAPI, W- 1, VAPI 2 PROCEEDINGS, THE AO ASKED THE ASSESSEE AS TO WHY PE NALTY BE NOT LEVIED. THE ASSESSEE SIMPLY STATED THAT CONFIRMATIO N LETTERS WERE FILED DURING THE ASSESSMENT PROCEEDINGS. THE AO STATED TH AT THE REPLY OF THE ASSESSEE IS FACTUALLY INCOMPLETE. THE CONFIRMAT ION LETTERS FILED BY THE ASSESSEE DID NOT CONTAIN ADDRESSES OF THE LENDE RS, IT DID NOT HAVE PERMANENT ACCOUNT NUMBERS AND EVEN THE NAME WAS INC OMPLETE. THEREFORE, IT WAS HELD THAT NEITHER THE IDENTITY OF THE LENDERS NOR GENUINENESS OF THE TRANSACTION NOR THE CREDITWORTHI NESS OF THE CREDITORS HAS BEEN PROVED. THE AO, THEREFORE, HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY S HOWING HER INCOME AS CASH CREDITS IN BOGUS NAMES AND THEREBY C ONCEALED THE INCOME. PENALTY WAS ACCORDINGLY LEVIED. THE PENALTY ORDER WAS CHALLENGED BEFORE THE LEARNED CIT(A) AND THE SAME S UBMISSIONS WERE REITERATED. IT WAS ALSO STATED THAT PENALTY IS EXCESSIVE WHICH IS ALMOST 300%. THE ASSESSEE ALSO RELIED UPON THE DECI SION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES, 164 CTR 209 (249 ITR 125). THE LEARNED CIT(A) CONSIDERING T HE FACTS OF THE CASE CONFIRMED THE PENALTY ON MERIT BUT REDUCED THE PENALTY TO MINIMUM. THE APPEAL OF THE ASSESSEE WAS PARTLY ALLO WED. THE FINDINGS OF THE LEARNED CIT(A) IN THE APPELLATE ORD ER ARE REPRODUCED AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION O THE A.O. THE LAW REGARDING CONCEALMENT OF PENALTY HAS NOW BEEN SETTL ED BY THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS & OTHERS ( 306- ITR-277), (219-CTR-617) VIDE ITS ORDER DATED 29.09. 2008. THE HON'BLE SUPREME COURT HAS OBSERVED AS UNDER IN PARA-25 OF ITS ORDER:- ITA NO. 1685/AHD/2009 SMT. ANITA GAUTAM JAIN VS ITO, VAPI, W- 1, VAPI 3 '25. THE EXPLANATIONS APPENDED TO S. 271(L)(C) OF THE IT ACT ENTIRELY INDICATES THE ELEMENT OF STRICT LIABILITY ON THE ASSESSES FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN. THE JUDGMENT IN DILIP N. SHROFF'S CASE (SUPRA) HAS NOT CONSIDERED THE EFFECT AND RELEVANCE OF SECTION 276C OF THE I.T. ACT. OBJECT BEHIND ENACTMENT OF SECTION 271(L) (C) R. W. EXPLANATIONS INDICATE THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABIL ITY AS IS THE CASE IN THE MATTER OF PROSECUTION UNDER S.276C OF THE I.T. ACT. ' IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT, BY SH OWING CASH CREDITS WHICH IT COULD NOT EXPLAIN, THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF HER INCOME AND HENCE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 271(L) (C). IN VIEW OF RECENT DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA), PENALTY U/S. 271 (1) ( C ) FOR FURNISHING INACCURATE PARTICULARS IS CLEARLY LEVIABLE. IN VIEW OF TH4ESE REASONS, I FIND THIS CASE TO BE A FIT CASE FOR LEVY OF MINIMUM PENALTY OF 100% OF TAX, SOUGHT TO BE EVADED. THEREFORE, MIN IMUM PENALTY TO ADDITION IS CONFIRMED AND BALANCE IS DEL ETED. HENCE, THE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 3. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. WRITTEN SUBMISSION IS FORWARDED BY THE LEAR NED COUNSEL FOR THE ASSESSEE WHICH HAS BEEN TAKEN INTO CONSIDERATIO N. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. I HAVE CONSIDERED THE RIVAL SUBMISSION AND DO NO T FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE ASSESSEE IN THE WRITTEN ITA NO. 1685/AHD/2009 SMT. ANITA GAUTAM JAIN VS ITO, VAPI, W- 1, VAPI 4 SUBMISSION SUBMITTED THAT NOTICE FOR LEVY OF THE PE NALTY WAS ISSUED ON 28-02-2007 WHICH WAS SERVED UPON THE ASSESSEE ON 15-03-2007. THEREFORE, PENALTY ORDER PASSED ON 31-08-2007 IS BA RRED BY LIMITATION ACCORDING TO SECTION 275 (1) (C) OF THE IT ACT. THE SUBMISSION OF THE ASSESSEE IS DEVOID OF MERIT. SECTION 275 (1) (C) OF THE IT ACT PROVIDES THAT NO ORDER IMPOSING PENALTY UNDER THIS CHAPTER S HALL BE PASSED IN ANY OTHER CASE, AFTER EXPIRY OF FINANCIAL YEAR IN W HICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX M ONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENA LTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATER. ACCORDING TO THE WR ITTEN SUBMISSION OF THE ASSESSEE SUCH PERIOD ALREADY EXPIRED ON THE DAT E OF PASSING OF THE PENALTY ORDER. THE ADMITTED FACT IS THAT NOTICE OF LEVY OF PENALTY WAS ISSUED ON 28-02-2007 WHICH WAS SERVED UPON THE ASSESSEE ON 15-03-2007; THEREFORE, THE PERIOD OF SIX MONTHS SHO ULD BE COUNTED FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOS ITION OF PENALTY IS INITIATED. IF THE SAID PERIOD IS COUNTED, THE SAME WOULD EXPIRE ON 31-08-2007, THEREFORE, THE AO CORRECTLY PASSED THE ORDER WITHIN THE PERIOD OF LIMITATION. THE CONTENTION OF THE ASSESSE E IS, THEREFORE, REJECTED. ON CONSIDERATION OF THE MERIT OF THE CASE , I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BEL OW. THE ASSESSEE RELIED UPON THE DECISION IN THE CASE OF NATIONAL TE XTILES (SUPRA) IN WHICH IT WAS NOTED THAT IN ORDER TO JUSTIFY LEVY OF PENALTY, TWO FACTORS MUST CO-EXIST (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE REASONABLE CONCLUSION THAT THE AMOUN T DOES REPRESENT THE ASSESSEES INCOME. IT IS NOT ENOUGH FOR THE PUR POSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME AND (II ) THE ITA NO. 1685/AHD/2009 SMT. ANITA GAUTAM JAIN VS ITO, VAPI, W- 1, VAPI 5 CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS, I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PART ICULARS ON THE PART OF THE ASSESSEE. IT WAS FOUND IN THIS CASE THAT THE RE WAS NO CIRCUMSTANCE LEADING TO REASONABLE POSITIVE INFEREN CE THAT IN ASSESSEES CASE THE CASH CREDITS WERE ARRANGED TEMP ORARILY LOANS WAS FALSE. HOWEVER, IN THE CASE OF THE ASSESSEE THE AO NOTED IN THE ASSESSMENT ORDER THAT THE ASSESSEE INTRODUCED UNSEC URED LOANS FROM VARIOUS PERSONS AS PER BALANCE SHEET AND THE A SSESSEE PRODUCED CONFIRMATION AND PROOF OF SOURCE OF THEIR INCOME EXCEPT IN THE CASES OF THESE 3 PERSONS AMOUNTING TO RS.53,500 /- WHICH IS MATTER UNDER CONSIDERATION. IN THE ABSENCE OF ANY M ATERIAL ADDITION WAS MADE BY THE AO BECAUSE THE ONUS UPON THE ASSESS EE TO PROVE GENUINE CREDIT WAS NOT DISCHARGED. THE AO FURTHER N OTED THAT IN THE ABSENCE OF COMPLETE DETAILS EVEN THE CREDITORS COUL D NOT BE SUMMONED. EVEN BEFORE THE AO AT THE PENALTY STAGE T HE ASSESSEE ONLY EXPLAINED THAT THE ASSESSEE PRODUCED CONFIRMAT ION LETTERS. EXCEPT THAT NOTHING WAS EXPLAINED AS TO WHY PENALTY SHOULD NOT BE IMPOSED IN THE MATTER. IT IS ALSO ADMITTED FACT THA T THE ASSESSEE DID NOT CONTEST THE ADDITION BEFORE THE APPELLATE AUTHO RITIES. IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL TO SUPPORT THE GENUINENESS OF THE CREDITS, THE AO WAS JUSTIFIED IN HOLDING THAT T HE ASSESSEE FURNISHED INACCURATE PARTICULARS BY SHOWING HER INC OME AS CASH CREDITS IN THE BOGUS NAMES AND THEREBY CONCEALED IN COME. THE FINDING OF FACT RECORDED BY THE AO IN THE PENALTY O RDER IS NOT REBUTTED BY THE ASSESSEE THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. EVEN IN THE PAPER BOOK, NO SUCH ALLEGED CONFIRMATION HAS BE EN FILED SO THAT ITA NO. 1685/AHD/2009 SMT. ANITA GAUTAM JAIN VS ITO, VAPI, W- 1, VAPI 6 THE SAME COULD BE PERUSED. THE HONBLE DELHI HIGH C OURT IN THE CASE OF CIT VS HARPARSHAD AND COMPANY LTD. 328 ITR 53 HE LD AS UNDER: HELD, THAT THE REASONS GIVEN BY THE TRIBUNAL FOR QUASHING THE PENALTY PROCEEDINGS WERE IRRELEVANT, N OT GERMANE TO THE ISSUE AND THE TRIBUNAL HAD LOST SIGH T OF ASPECTS WHICH HAD BEEN CONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNAL HAD FAILED TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COMMISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE R HAD RENDERED ANY SERVICES BUT BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER CENT OF THE COMMISSION BY R OUT OF THE 3 PER CENT RECEIVED BY HER. AS FAR AS COMMISSION TO R WAS CONCERNED, IT WAS ACCEPTED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICES AT ALL. THE ASSESSEE HAD FAILED TO OFFER A NY EXPLANATION IN RESPECT OF THE ADDITION OF RS.1,83,0 78 AND IT COULD BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, BY VIRTUE OF THIS EXPLANATION. THE TRIBUNAL WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE INCOME-TAX OFFICER UNDER SECTION 271 (1) (C) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES IN PENALTY PROCEEDINGS, HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, BUT ON THE BA SIS THEREOF THE CLAIM WHICH IS MADE IS EX FACIE BOGUS, IT MAY STILL ATTRACT PENALTY PROVISION. ITA NO. 1685/AHD/2009 SMT. ANITA GAUTAM JAIN VS ITO, VAPI, W- 1, VAPI 7 THE EXPLANATION APPENDED TO SECTION 271 (1) (C) OF THE ACT ENTIRELY INDICATE THE ELEMENT OF STR ICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GI VING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJ ECT BEHIND ENACTMENT OF SECTION 271 (1) (C) READ WITH T HE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE . THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILI TY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MA TER OF PROSECUTION UNDER SECTION 276C OF THE ACT. THE FACTS AND CIRCUMSTANCES OF THE CASE CLEARLY JUS TIFY LEVY OF THE PENALTY IN THE MATTER BECAUSE THE ASSESSEE FAILED T O EXPLAIN ANY OF THE CASH CREDITS IN THE MATTER. THE CASES RELIED UP ON BY THE ASSESSEE IN THE WRITTEN SUBMISSION ARE CLEARLY DISTINGUISHAB LE FROM THE FACTS OF THIS CASE. CONSIDERING THE FACTS OF THE CASE IN TH E LIGHT OF THE FINDING OF THE LEARNED CIT(A) RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PRO CESSORS & OTHERS (SUPRA), I DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). THE HONBLE PUNCHAB & HARYAN A HIGH COURT IN THE CASE OF CIT VS DEEPCHAND, 336 ITR 292 HELD THAT ONCE IT WAS HELD THAT THE ASSESSEE HAS RECEIVED BOGUS GIFTS, TH E ONLY CONCLUSION IS THAT THE ASSESSEE HAS FURNISHED INACC URATE PARTICULARS OF HIS INCOME AND THE ORDER OF THE TRIB UNAL DELETING THE PENALTY IS UNSUSTAINABLE IN LAW. THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE AND THE SAME IS ACCORDINGLY DISMISSED. ITA NO. 1685/AHD/2009 SMT. ANITA GAUTAM JAIN VS ITO, VAPI, W- 1, VAPI 8 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A)- CONCERNED 5. THE DR, ITAT, CONCERNED 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD