The DCITBharuch Circle, Bharuch V. M/s. Gujarat Cylinders Pvt.Ltd., Bharuch

ITA 1698/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9668 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2010

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 01/10/2010 DRAFTED ON: 05 /10/2010 1. ITA NO.1698/AHD/2010 A.Y. 2005-06 2. ITA NO.1699/AHD/2010 A.Y. 2005-06 DY.CIT BHARUCH CIRCLE BHARUCH VS. GUJARAT CYLINDERS P LTD. PLOT NO.204 GIDC ESTATE, PANOLI DIST.BHARUCH PAN/GIR NO. : AABCG 1049 B ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI K.M. MAHESH, SR. D.R. RESPONDENT BY: SHRI G.C. PIPARA O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE ARISING FROM TWO SEPARATE ORDERS OF LEARNED CIT(APPEALS)-VI, BAR ODA BOTH IDENTICALLY DATED 22/02/2010 AGAINST THE DELETION OF PENALTY L EVIED U/S.271-D AND 271-E OF THE I.T.ACT. 2. IN RESPECT OF THE PENALTY LEVIED U/S.271D OF T HE I.T.ACT OF RS.20,45,000/-, THE REVENUE WAS AGGRIEVED THAT THOU GH THE UNSECURED LOAN WAS RECEIVED IN CONTRAVENTION OF THE PROVISION S OF SECTION 269-SS OF THE I.T.ACT STILL THE LEARNED CIT(APPEALS) HAS DELE TED THE PENALTY. LIKEWISE, IN RESPECT OF THE PENALTY LEVIED U/S.271E OF THE I.T.ACT OF RS.29,77,298/-, THE REVENUE WAS AGGRIEVED THAT THOU GH THE REPAYMENT OF UNSECURED LOAN WAS IN CONTRAVENTION OF PROVISIONS O F SECTION 269T OF THE ITA NOS. 1698 AND 1699/AHD/ 2010 DY.DCIT VS. GUJARAT CYLINDERS P LTD. ASST.YEAR - 2005-06 - 2 - I.T.ACT, BUT LEARNED CIT(APPEALS) HAS DELETED THE P ENALTY WHICH WAS AGAINST THE PROVISIONS OF LAW. THE BASIC FACT AS E MERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T.ACT DATED 31/12/2007 WERE THAT THE ASSESSEE-COMPANY IS ENGAGE D IN THE BUSINESS OF MANUFACTURING OF LPG CYLINDERS. IT WAS NOTED BY TH E ASSESSING OFFICER THAT THE ASSESSEE HAD ACCEPTED CERTAIN NEW UNSECURE D LOANS. OUT OF THE SAID LIST, IT WAS NOTED BY THE ASSESSING OFFICER TH AT THE ASSESSEE HAS RECEIVED A SUM OF RS.20,25,000/- FROM M/S. N.D.T.FL UXES. THE ASSESSEE HAS INFORMED THAT THE SAID AMOUNT WAS THROUGH BOOK ENTRY AND THE FACT ABOUT THE SAID AMOUNT WAS NARRATED BY THE ASSESSING OFFICER AS UNDER:- THE ASSESSEE HAS RECEIVED THIS DEPOSIT BY WAY OF B OOK ENTRY AS MENTIONED IN THE AUDIT REPORT SHOWING DETAILS OF NE W LOAN ACCEPTED. THE ASSESSEE WAS ASKED TO PROVE THE DEPO SIT AS GENUINE BY PRODUCING THE EVIDENCES. THE ASSESSEE HAS NOT F ILED ANY CONFIRMATION FROM THE DEPOSITORS. THE ASSESSEE HAS FILED ONE LETTER SHOWING CREDIT OF RS.20.25 LACS AND OTHER CREDITS A S STATED ABOVE BY WAY OF SUNDRY CREDITORS. THE ASSESSEE HAS NOT P RODUCED ANY EVIDENCE FOR WHICH TRANSACTION, THE DEPOSITOR WAS S HOWN AS CREDITOR IN THE BOOKS. NO CONFIRMATION OF THE DEPO SITOR OR ACKNOWLEDGEMENT HAVING FILED THE RETURN IS FILED. NO NATURE OF TRANSACTION FOR WHICH THE DEPOSITOR IS SHOWN AS CRE DITOR IS FURNISHED. THUS, THE ASSESSEE HAS FAILED TO PROVE THE DEPOSIT AS GENUINE BECAUSE THE ONUS LIES ON THE ASSESSEE TO PR OVE THE DEPOSIT AS GENUINE. IN VIEW OF THIS FACTS AND DISCUSSION, THE AMOUNT OF DEPOSIT OF RS.22,78,691/- IS ADDED U/S.68 OF THE I. T. ACT. AS THE ASSESSEE WITHOUT PREJUDICE TO THE ABOVE, THE DEPOSI TOR WAS A CREDITOR AND THE CREDIT AMOUNT IS TRANSFERRED AS UN SECURED LOAN AND SUBSEQUENTLY AS SHARE APPLICATION MONEY. EITHE R BY SALE OR OTHER TRANSACTIONS THE NDT FLUXES IS SHOWN AS CREDI TORS. THERE TRANSACTION ARE ALSO REQUIRES DETAILED INVESTIGATIO N BECAUSE NO PRUDENT BUSINESSMAN WILL INVEST THE AMOUNT IN SHARE APPLICATION MONEY FROM WHERE THE EARNING POSSIBILITIES ARE VERY LESS. THEREFORE, THE TRANSACTION BY BOOK ENTRY IS ALSO RE QUIRES TO BE INVESTIGATED. IN VIEW OF THIS, THE DEPOSIT IS NOT PROVED AS GENUINE AND ADDED TO THE TOTAL INCOME U/S.68 OF THE ACT. ITA NOS. 1698 AND 1699/AHD/ 2010 DY.DCIT VS. GUJARAT CYLINDERS P LTD. ASST.YEAR - 2005-06 - 3 - 2.1. IN RESPECT OF THE OTHER AMOUNT OF RS.7,20,000/ - STATED TO BE RECEIVED IN CASH FROM TAPADIYA WELWORTH IND., THE ASSESSING OFFICER HAS NOTED THAT A SUM OF RS.7 LACS WAS RECEIVED THRO UGH CHEQUE, HOWEVER, A SUM OF RS.20,000/- WAS DEPOSITED IN CASH. THE AS SESSING OFFICER HAS INVOKED THE PROVISIONS OF SECTION 68 OF THE I.T.ACT IN RESPECT OF THE SAID DEPOSITOR AS PER THE FOLLOWING OBSERVATION:- THE ASSESSEE WAS ASKED TO PRODUCE THE SUPPORTING D OCUMENTARY AND EVIDENCES TO PROVE THE DEPOSIT AS GENUINE. THE ASSESSEE HAS NEITHER FURNISHED ANY CONFIRMATION OR ANY SUPPORTIN G EVIDENCES. IN ABSENCE OF THE DETAILS, THE GENUINENESS OF TRANS ACTION, IDENTITY OF THE DEPOSITOR AND CREDITWORTHINESS OF THE DEPOSITOR COULD NOT BE EXAMINED. THE ASSESSEE HAS FAILED TO PROVE THE DEP OSITS AS GENUINE AND, THEREFORE, THE SAME IS ADDED U/S.68 OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE. 3. AT THIS JUNCTURE, THE BENCH HAS ASKED THAT ONCE THE ADDITIONS HAVE BEEN MADE U/S.68 OF THE I.T.ACT IN RESPECT OF BOTH THE PARTIES, THEN WHY THE PROVISIONS OF SECTION 269-SS OF THE I.T.ACT HAV E BEEN INVOKED SIMULTANEOUSLY BECAUSE EITHER THE LOAN IS NOT GENUI NE, FOR THE PURPOSES OF THE INVOCATION OF SECTION 68 OF THE I.T.ACT, OR IT IS GENUINE LOAN BUT IN CASH FOR INVOKING THE PROVISION OF SECTION 269-SS O F THE I.T.ACT. BOTH THE SECTIONS OUGHT NOT TO BE INVOKED SIMULTANEOUSLY . THE LEARNED AUTHORISED REPRESENTATIVE HAS PLACED ON RECORD THRO UGH A LETTER THAT THE APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER C HALLENGING THE INVOCATION OF THE PROVISIONS OF SECTION 68 OF THE I .T.ACT IS PENDING BEFORE THE LEARNED CIT(APPEALS) VADODARA. ITA NOS. 1698 AND 1699/AHD/ 2010 DY.DCIT VS. GUJARAT CYLINDERS P LTD. ASST.YEAR - 2005-06 - 4 - 3.1. HOWEVER, APART FROM THE ABOVE LEGAL POSITION, IT HAS ALSO BEEN NOTICED BY THE LEARNED CIT(APPEALS) THAT THE ENTRIE S IN QUESTION WERE NOTHING BUT THROUGH BOOK ENTRIES, THEREFORE, BEYOND THE SCOPE OF THE PENALTY PROVISIONS OF SECTION 271-D AND 271-E OF TH E I.T.ACT, FOR READY REFERENCE, PARAGRAPH NO.3 IS REPRODUCED BELOW:- 3. THIS IS A CASE WHERE THE AO HAS LEVIED PENALT Y U/S.271D AND 271E FOR VIOLATIONS OF THE PROVISIONS OF SECTION 26 9SS AND 269T. AS STATED ALREADY, THE APPEALS ARE DECIDED BASED ON THE MATERIAL ON RECORD. A PERUSAL OF THE PENALTY ORDERS REVEALE D THAT THERE WAS A BOOK ENTRY OF RS.20,25,000/-, CASH ACCEPTED FROM NDT FLUXES AND TWO CASH LOAN REPAID ONE TO GHANSHYAMDAS TAPADI A AMOUNTING TO RS.18,10,000/- AND THE OTHER TO TAPADI A GROUP AMOUNTING TO RS.10,63,018/-. IN THIS CONTEXT, IT M AY BE NOTED HERE THAT SETTLEMENT OF ACCOUNTS BY MAKING BOOK ENTRIES MAY NOT ATTRACT THE PENAL PROVISIONS OF SECTION 271D AND 271E, AS T HE GUJARAT HIGH COURT, IN THE CASE OF CIT VS. BOMBAY CONDUCTOR S & ELECTRICALS LTD, REPORTED IN (2008) 301 ITR 328 (GU J) HELD THAT BY MAKING BOOK ENTRIES BY CONVERTING OUT STANDING PURC HASE PRICE INTO LOAN THE APPELLANT HAS MADE THE ADJUSTMENT BON A FIDE WITHOUT HAVING THE KNOWLEDGE THAT SUCH BOOK ENTRIES MAY REN DER THE APPELLANT LIABLE TO PENALTY U/S.271D ON ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 269SS AND THAT THERE WAS REAS ONABLE CAUSE. THUS, IN LIGHT OF THIS RULING OF THE HON'BLE GUJARA T HIGH COURT, I AM OF THE OPINION THAT APPEALS OF THE APPELLANT ARE ALLOWABLE IN RESPECT OF THE AMOUNTS AS SPELT OUT HEREIN ABOVE 4. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUM STANCES OF THE CASE AS NARRATED ABOVE, WE HEREBY AFFIRM THE VERDICT OF LEARNED CIT(APPEALS) ON BOTH THE COUNTS; THAT THE ASSESSING OFFICER HAS UNDISPUTEDLY RECORDED A FINDING ON FACT THAT THE ENTRIES IN QUESTION WERE BOOK ENTRIES ONLY, THEREFORE, OUT OF THE AMBITS OF THE PROVISIONS OF S ECTION 269SS AND SECTION 269T OF THE I.T.ACT AND, SECONDLY, THE GENU INENESS OF THE LOANS ITA NOS. 1698 AND 1699/AHD/ 2010 DY.DCIT VS. GUJARAT CYLINDERS P LTD. ASST.YEAR - 2005-06 - 5 - IN QUESTION HAVE BEEN DOUBTED BY THE ASSESSING OFFI CER, HENCE, HELD AS DEEMED INCOME OF THE ASSESSEE BY INVOKING THE PROVI SIONS OF SECTION 68 OF THE I.T.ACT AND THAT ORDER OF THE ASSESSING OFFI CER IS A SUBJECT MATTER OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. WI TH THE RESULT, WE HEREBY AFFIRM THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) A ND DISMISS THE GROUNDS OF THE REVENUE IN BOTH THE APPEALS. 5. IN THE RESULT, REVENUES APPEALS ARE DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 8/ 10 /2010. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED / /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VI, BARODA 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NOS. 1698 AND 1699/AHD/ 2010 DY.DCIT VS. GUJARAT CYLINDERS P LTD. ASST.YEAR - 2005-06 - 6 - 1. DATE OF DICTATION..04/10/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 05/10/2010 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER