I.T.O., Ward-3(1), Etah V. Smt. Shanti Devi Gupta, Etah

ITA 186/AGR/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0728 (ITAT-AGRA)
• Duration Of Justice: 5 year(s) 11 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 05-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SHARMA
• Assessee Lawyers: NIKHIL KUMAR
• Keywords: Business income; Initiation of penalty proceedings
• Section: 142(1); 271D; 271E; 145; 27; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 186 & 187/AGRA/2013 ASSTT. YEAR : 2005-06 INCOME-TAX OFFICER, VS. SMT. SHANTI DEVI GUPTA, WARD 3(1), ETAH. C/O SUNIL KUMAR ASHISH KUMAR TOBACCO DEALER, ALIGANJ, ETAH. (PAN : AHCPG 2585 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.D. SHARMA, JR. D.R. RESPONDENT BY : SHRI NIKHIL KUMAR, C.A. DATE OF HEARING : 25.07.2013 DATE OF PRONOUNCEMENT OF ORDER : 26.07.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE REVENUE DEPARTMENT ARE DIR ECTED AGAINST DIFFERENT ORDERS OF LD. CIT(A), MUZAFFARNAGAR DATED 15.02.201 3 FOR THE ASSESSMENT YEAR 2005- 06, CHALLENGING THE CANCELLATION OF PENALTY U/S. 27 1D AND 271E OF THE IT ACT IN A SUM OF RS.8,00,000/- AND RS.7,19,000/- RESPECTIVELY. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND MATERIAL ON R ECORD. BOTH THE APPEALS ARE DECIDED AS UNDER : ITA NO. 186 & 187/AGRA/2013 2 ITA NO. 186/AGRA/2013 (U/S. 271D): 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND FILED RETURN OF INCOME DECLARING INCOME AT RS.1,09,904/- ON 23.12.2 005. ON THE BASIS OF AIR INFORMATION, NOTICE U/S. 148 OF THE ACT ALONG WITH THE NOTICE U/S. 142(1) OF THE ACT WAS ISSUED BY THE ITO, WARD 3(1), ETAH AS THE ASSESSEE HAD DEPOSITED RS.22,30,000/- IN HER SAVING BANK ACCOUNT WITH CANARA BANK. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, IT WAS GATHERED BY THE AO THAT THE ASS ESSEE HAD RECEIVED LOAN OF RS.8,00,000/- IN CASH FROM HER HUSBAND SH. SUNIL KU MAR GUPTA AND HAD ALSO REPAID HIM RS.7,19,000/- BY CASH. THE AO ISSUED NOTICE U/S . 271D OF THE ACT FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE IT ACT, 1961 .IN RESPONSE, THE HUSBAND OF THE ASSESSEE FURNISHED HIS EXPLANATION STATING THAT HIS WIFES BUSINESS WAS THAT OF PURCHASE AND SALE OF TOBACCO. THE PURCHASES ARE MADE FROM TH E FARMERS OF THE VILLAGES IN REMOTE AREA AND THERE WERE NO BANKING FACILITY IN T HE REMOTE RURAL VILLAGES SO SHE HAD MADE PAYMENTS MOSTLY IN CASH. THE AO WAS NOT CONVIN CED WITH THE ASSESSEES REPLY ON THE BASIS OF THE FACT THAT THE PAYMENT MADE IN C ASH TO THE FARMERS OR COMMISSION AGENTS HAD NOT BEEN THE ISSUE ON WHICH THE PENALTY PROCEEDINGS WERE INITIATED AND INITIATION OF PENALTY PROCEEDINGS U/S. 271D WERE NO WAY RELATED TO PENALTY PROCEEDINGS. THUS, IT WAS HELD BY THE AO THAT THE P ROVISIONS OF SECTION 269SS HAD BEEN VIOLATED BY THE ASSESSEE FOR WHICH PENALTY OF EQUAL SUM U/S. 271D OF THE ACT WAS IMPOSED AT RS.8,00,000/-. ITA NO. 186 & 187/AGRA/2013 3 4. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A) AND WRITTEN SUBMISSIONS OF THE ASSESSEE IS REPRODUCED IN THE AP PELLATE ORDER IN WHICH THE ASSESSEE HAS EXPLAINED THAT THE AO HAS NOT PIN POINTED THE E XACT ENTRIES WHICH HAVE BEEN TREATED BY HIM AS DEPOSIT TAKEN BY THE ASSESSEE FRO M HER HUSBAND. SIMILARLY FOR REFUND OF LOAN HE HAS NOT POINTED OUT ANY ENTRY, WHICH MAY BE TREATED AS REFUND OF LOAN TO THE HUSBAND. THE AO HAS RELIED UPON THE STATEMENT OF HU SBAND OF ASSESSEE, WHICH IS NOT RELEVANT. THE HUSBAND OF THE ASSESSEE HAS STATED TH AT IN THE ENTIRE YEAR, HE HAS GIVEN AN AMOUNT OF RS.8,00000/- TIME TO TIME AND GOT REFUND OF RS.7,19,000/- FROM TIME TO TIME. THEREFORE, IT IS NOT CLEAR AS TO ON WHICH DAT E PART AMOUNT WAS GIVEN OR TAKEN. THE AO HAS ALSO NOT CONNECTED ANY ENTRY WITH THE BA NK ACCOUNT FOR MAKING THE ALLEGATION OF TAKING OR GIVING BACK LOAN AMOUNT. TH ERE IS NO ADMISSION ON THE PART OF THE ASSESSEE TO HAVE ACCEPTED ANY LOAN IN CASH OF M ORE THAN 20,000/-. ALL THE BANK ENTRIES ON THE DEPOSIT SIDE APPEARING AGGREGATED TO RS.22,30,000/-, WHICH HAS BEEN CONSIDERED AS SALE OF TOBACCO BY THE AO IN THE ASSE SSMENT ORDER. THE SAME ENTRIES CANNOT HAVE TWO CHARACTERS, I.E., SALES/PURCHASES A ND OF LOAN. THEREFORE, LEVY OF PENALTY IS UNJUSTIFIED. COMMENTS OF THE AO WERE ALS O CALLED FOR IN WHICH THE AO REITERATED THE STAND TAKEN IN THE PENALTY ORDER AND STATED THAT HUSBAND OF ASSESSEE SHRI SUNIL KUMAR GUPTA IN HIS STATEMENT STATED THAT HE H AS GIVEN LOAN OF RS.8,00,000/- TO HIS WIFE AND ALSO LOAN AMOUNT HAS BEEN REPAID OF RS .7,19,000/- WHICH WAS FOUND THROUGH BEARER CHEQUES. THEREFORE, THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION ITA NO. 186 & 187/AGRA/2013 4 269SS AND 269T FOR WHICH THE PENALTIES HAVE BEEN RI GHTLY IMPOSED U/S. 271D AND 271E. 5. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE, COMMENTS OF THE AO AND THE MATERIAL ON RECORD CANCELLED THE PENALTY AND ALLOWED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN THE APPELLATE ORDER ARE R EPRODUCED AS UNDER : THE FACTS OF THE CASE, APPELLANTS WRITTEN SUBMISS IONS, AOS REMAND REPORT AND REJOINDER FILED BY THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE ONLY BASIS OF I NITIATING THE PENALTY U/S. 271D WAS THE STATEMENT OF APPELLANTS HUSBAND IN WH ICH IT WAS ADMITTED BY HIM THAT HE ADVANCED APPROXIMATELY RS.8,00,000/- IN CASH TO HIS WIFE AND RECEIVED BACK RS.7,19,000/- PARTLY BY CHEQUES A ND PARTY BY CASH. HOWEVER, THE FACTUAL POSITION HAD BEEN ENTIRELY DIF FERENT. THERE WERE CASH DEPOSITS OF RS.22,30,000/- IN THE BANK ACCOUNT OF THE APPELLANT AND THE AO WHILE COMPLETING THE ASSESSMENT HAS ACCEPTED SUCH DEPOSITS AS SALE PROCEEDS OF TOBACCO AND THESE FORMED PART OF A PPELLANTS TURNOVER ON WHICH NET PROFIT RATE WAS APPLIED. WITHOUT PIN P OINTING THE AMOUNT ADVANCED BY THE HUSBAND OF THE APPELLANT IN CASH, M ERE ADMISSION BY APPELLANTS HUSBAND HAS NO MEANING. EVEN IF THE AMO UNTS SO RECEIVED FROM HER HUSBAND IN CASH WAS DEPOSITED IN THE BANK A/C, THE AO SHOULD HAVE FIGURED OUT THE SPECIFIC AMOUNTS SO RECEIVED A ND DEPOSITED IN THE BANK. I AM PINED TO NOTE THAT THE ADDL. CIT PASSED THE PENALTY ORDER IN A MOST CASUAL AND STEREOTYPE MANNER. THE ASSESSMENT O RDER PASSED BY THE ITO WARD 3(1), ETAH WAS NOT TAKEN COGNIZANCE OF. TH E ADDL. CIT WHO SEEMS TO BE IN NON-AGREEMENT WITH THE ASSESSMENT OR DER SHOULD HAVE TAKEN THE REMEDIAL ACTION IN PROPOSING THE CASE U/S . 263 OF THE ACT BEFORE THE CIT, ALIGARH AS AT THAT MOMENT THE CASH WAS NOT BARRED BY LIMITATION. HOWEVER, NO SUCH ACTION WAS TAKEN BY HIM AND AT THE SAME TIME HE PAID NO HEED TO THE AOS FINDINGS IN THE ASSESSMENT ORDE R. THUS, THE AO HAD DONE MORE DISSERVICE TO THE REVENUE BY CLOSING HIS EYES ON ITOS ACTION AND PROCEEDINGS TO IMPOSE PENALTY WITHOUT POINTING OUT THE SPECIFICS. HAD THERE BEEN CASH AMOUNTS RECEIVED BY THE APPELLA NT FROM HER HUSBAND WHICH WERE OTHER THAN THOSE DEPOSITED IN TH E BANK ACCOUNT, THE ITA NO. 186 & 187/AGRA/2013 5 SAME COULD HAVE BEEN ESTABLISHED THROUGH THEIR SPEC IFIC UTILIZATION. THE APPELLANT HAS RELIED UPON VARIOUS DECISIONS OF HON BLE COURTS WHICH ARE MENTIONED IN WRITTEN SUBMISSION OF THE APPELLANT. T HE AO IN HIS REMAND REPORT WAS NOT IN A POSITION TO POINT OUT THE ENTRI ES RELATING TO RS.8 LAC ALLEGED BY ADVANCE BY THE APPELLANTS HUSBAND. HENC E, THE AO WAS NOT JUSTIFIED IN IMPOSING PENALTY U/S. 271D WITHOUT POI NTING OUT SPECIFIC AMOUNT TOTALING TO RS.8 LAC. THE SAME IS DIRECTED T O BE DELETED. THE GROUND NO. 1 TO 4 OF APPEAL ARE ALLOWED. 4. THE GROUND NO.5 OF APPEAL IS GENERAL IN NATURE AND REQUIRES NO SEPARATE ADJUDICATION. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 6. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT THE HUSBAND OF ASSESSEE ACCEPTED GIVING OF CASH LOAN AND REPAYMENT OF LOAN THROUGH BEARER CHEQUES. THEREFORE, PENALTY WAS RIGHTLY IMPOSED. ON THE OTHE R HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FILED COPY OF ASSESSMENT ORDER DATED 28.01.2009 AND COPY OF BA NK ACCOUNT IN THE PAPER BOOK AND SUBMITTED THAT THERE WERE NO CASH LOAN TAKEN BY THE ASSESSEE OR REPAID LOAN IN CASH, THEREFORE, PENALTY WAS RIGHTLY CANCELLED IN THE MAT TER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE AO FRAMED ASSESSMENT U/S. 143(3)/148 ON DATED 28.01.2009, COPY OF WHICH IS FILED AT PAGE 12 OF THE PAPER BOOK . AO TOOK UP THE MATTER WITH REGARD TO DEPOSIT OF RS.22,30,000/- IN THE ACCOUNT OF THE ASSESSEE, WHICH WAS EXPLAINED TO BE TOTAL SALES OF TOBACCO MADE BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER APPEAL. NO BOOKS OF ACCOUNT WERE PRODUCED, THEREFORE, THE AO R EJECTED BOOK RESULTS U/S. 145 OF ITA NO. 186 & 187/AGRA/2013 6 THE IT ACT AND DIRECTED TO APPLY PROFIT RATE OF 5% AND COMPUTED THE BUSINESS INCOME AT RS.1,11,500/-. IT IS ALSO NOTED IN THE ASSESSMEN T ORDER THAT THE TOBACCO WAS PURCHASED THROUGH DALAL BY ARRANGING THE FUNDS. ENT IRE DEPOSIT MADE BY THE ASSESSEE IN HER BANK ACCOUNT WAS, THUS, CONSIDERED AS SALE P ROCEEDS OF ASSESSEE. COPY OF BANK ACCOUNT OF THE ASSESSEE WAS ALSO FILED WHICH SUPPOR TS THE CLAIM OF THE ASSESSEE. NOTHING IS POINTED OUT BY THE AO AS TO HOW THE ASSE SSEE HAS TAKEN CASH LOAN OF RS.8,00,000/- FROM HER HUSBAND AND HOW THE LOAN OF RS.7,19,000/- WAS RETURNED THROUGH BEARER CHEQUES. IN FACT, THERE WAS NO LOAN TAKEN IN CASH OR REPAID IN CASH. THUS, THE ASSESSEE HAS RIGHTLY CONTENDED THAT THE B ANK ENTRIES WOULD NOT HAVE TWO CHARACTERS I.E., OF SALES OR OF LOAN. ONCE THE AO A CCEPTED THE ENTIRE BANK DEPOSITS TO BE SALE PROCEEDS OF THE ASSESSEE AND NO OTHER AMOUNT I S POINTED OUT, IT IS DIFFICULT TO BELIEVE THAT THE ASSESSEE HAS ACCEPTED ANY CASH LOA N FROM HER HUSBAND. FURTHER, THE STATEMENT OF HUSBAND OF ASSESSEE IS REFERRED TO IN THE PENALTY ORDER, WHICH CLARIFIES THAT HUSBAND OF THE ASSESSEE HAS GIVEN AN ANSWER TH AT DURING THE WHOLE YEAR, HE HAS GIVEN RS.8,00,000/- FOR THE BUSINESS PURPOSE, BUT H IS STATEMENT IS NOT CORROBORATED THROUGH ANY EVIDENCE OR MATERIAL. THE ASSESSEE AT T HE ASSESSMENT SAGE EXPLAINED THAT TOBACCO WAS PURCHASED THROUGH DALAL AFTER ARRANGING FUNDS. THE AO, THEREFORE, MIGHT HAVE BEEN CONFUSED WITH REGARD TO SUCH STATEMENT OF HUSBAND OF ASSESSEE. THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD CORRECTLY HELD THAT THERE IS NO VIOLATION OF PROVISIONS OF LAW FOR LEVY OF PE NALTY U/S. 271D OF THE ACT. THE DEPARTMENTAL APPEAL HAS NO MERIT. THE SAME IS ACCOR DINGLY DISMISSED. ITA NO. 186 & 187/AGRA/2013 7 ITA NO. 187/AGRA/2013 : (271E): 8. THE LD. CIT(A) CANCELLED THE PENALTY FOR ALLEGED REPAYMENT OF LOAN OF RS.7,19,000/-. FACTS ARE SAME AS ARE CONSIDERED IN ITA NO. 186/AGRA/2013 IN WHICH WE HAVE HELD THAT THERE WERE NO TAKING OF CASH LOAN OR REPAYMENT AS IS ALLEGED BY THE AO. THEREFORE, FOLLOWING THE REASONS FOR DECISION I N ITA NO. 186/AGRA/2013, WE DISMISS THIS DEPARTMENT APPEAL AS WELL. IN THE RESU LT, THE APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY