Vijaykumar G. Mehta(HUF), Surat V. The Income tax Officer,Ward-2(2), Surat

ITA 1890/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9740 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 01-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHUBNESH KULSHRESTHA
• Keywords: Unexplained cash credit; Opportunity of being heard; Set aside
• Section: 271(1)(c); 143(3); 274; 68

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M VIJAYKUMAR G. MEHTA (HUF) 1031, TEXTILE TOWER, RING ROAD, SURAT. VS. INCOME-TAX OFFICER, WARD 2(2), SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI HARDIK VORA, AR RESPONDENT BY:- SHRI BHUBNESH KULSHRESTHA, DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUND :- (1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN LEVYING PENALTY OF RS.21,777/- U/S 271(1) (C) OF THE IT ACT, 1961. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT OR DER IN THIS CASE UNDER SECTION 143(3) WAS PASSED ON 14.11.2006 MAKIN G AN ADDITION OF RS.1,00,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT . THE ADDITION WAS CONFIRMED IN APPEAL AND THE MATTER WAS NOT PURSUED FURTHER. IN THE COURSE OF PENALTY PROCEEDINGS AO NOTICED THAT NOBODY ATTEN DED NOR ANY WRITTEN SUBMISSION WAS FILED. IN THIS REGARD WE REFER TO FI RST PARA FROM THE ORDER OF LD. AO. ITA NO.1890/AHD/2010 ASST. YEAR :2004-05 ITA NO.1890/AHD/2010 ASST. YEAR 2004-05 2 IN THIS CASE PENALTY NOTICE U/S 274 R.W.S. 271(1)( C) OF THE IT ACT WAS ISSUED AND SERVED ON THE ASSESSEE ALONG WITH ASSESS MENT ORDER DATED 14/11/2006. THE ASSESSEE WAS REQUIRED TO GIVE EXPLA NATION FOR NOT LEVYING PENALTY U/S 271(1)(C) OF THE I.T. ACT WITHI N 7 DAYS FROM THE DATE OF SERVICE OF NOTICE. HOWEVER, NOBODY ATTENDED THE OFF ICE OF THE UNDERSIGNED NOR SENT ANY WRITTEN SUBMISSION. IN ORDER TO GIVE N ATURAL JUSTICE ONE MORE OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSE E BY SENDING ANOTHER NOTICE DATED 9/3/2009 REQUIRING THE ASSESSEE TO EXP LAIN AS TO WHY PENALTY SHOULD NOT BE IMPOSED IN HIS CASE ON 16.3.2009. NO REPLY WAS RECEIVED FROM THE ASSESSEE NOR ANYBODY ATTENDED ON THE APPOI NTED DATE. UNDER THE CIRCUMSTANCES, THE PENALTY ORDER IS BEING PASSED ON MERITS PRESUMING THAT HE DOES NOT HAVE ANY OBJECTION IN THE PROPOSED PENALTY PROCEEDINGS. THE AO ACCORDINGLY PROCEEDED TO DISPOSE OF THE PENA LTY PROCEEDINGS ON MERIT. REGARDING THE FACTS OF THE CASH CREDIT LD. A O MENTIONED AS UNDER :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VE RIFICATION OF BANK STATEMENT SUBMITTED, IT IS NOTICED BY THE AO THAT T HERE WERE CASH DEPOSITS OF RS.50,000/- EACH ON 7/7/2003 & 8/7/03 IN THE BAN K ACCOUNT NO.3960 MAINTAINED BY THE ASSESSEE. THE AO ASKED TO THE ASS ESSEE VIDE ORDER SHEET ENTRIES DATED 21/06/06 & 07/072006 TO FURNISH NECESSARY EVIDENCES REGARDING CASH DEPOSITS. IN RESPONSE TO THE SAME, T HE ASSESSEE DID NOT SUBMIT THE NECESSARY EVIDENCE TO PROVE THE SOURCE O F CASH DEPOSITED IN THE BANK ACCOUNT, AGAIN, VIDE LETTER DATED 20/10/20 06, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE CASH CREDIT OF RS .100,000/- SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT WITHIN THE ME ANING OF SECTION 68 OF THE IT ACT AND ADDED BACK TO THE TOTAL INCOME. IN R ESPONSE TO WHICH THE ASSESSEE VIDE LETTER DATED 6/11/2006 STATED THAT TH E AMOUNT OF RS.50,000/- EACH DEPOSITED ON 7/7/2003 & 8/7/2003 WERE FROM THE CASH BALANCE OUT OF HIS CAPITAL AND PAST SAVINGS. THE ASSESSEE WAS A GAIN VIDE ORDER SHEET ENTRY DATED 8//11/2006 ASKED TO FURNISH THE NECESSA RY EVIDENCES FROM WHOM THE CASH HAS BEEN RECEIVED SUCH AS IDENTITY OF THE PERSONS ALONG WITH NAME AND ADDRESSES AND THEIR CONFIRMATIONS. IN RESPONSE TO THE SAME, THE ASSESSEE ASKED TIME OF THREE DAYS TIME TO SUBMIT THE EVIDENCES. HOWEVER, THE ASSESSEE MISERABLY FAILED TO FURNISH T HE DETAILS, SUCH AS, THE SOURCE OF CASH DEPOSIT WITH NECESSARY EVIDENCES, ID ENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE PERSONS FROM WHOM THE CASH WAS CLAIMED TO HAVE BEEN RECEIVED. UNDER THE CIRCUMSTANCES, THE CA SH DEPOSITS OF ITA NO.1890/AHD/2010 ASST. YEAR 2004-05 3 RS.100,000/- APPEARING IN THE BANK ACCOUNT NO.3960 WAS ADDED TO THE TOTAL INCOME U/S 68 OF THE IT ACT. THE AO THUS NOTICED THAT ASSESSEE FAILED TO FURNISH EVIDENCE, IN RESPECT OF IDENTITY OF THE CREDITOR, CREDITWORTHINESS AND GENU INENESS OF THE TRANSACTIONS. HE ACCORDINGLY LEVIED THE MINIMUM PEN ALTY OF RS.21,777/-. 3. THE LD. CIT(A) CONFIRMED THE PENALTY BY HOLDING THAT ASSESSEE HAS FAILED TO DISCHARGE THE BURDEN. NO EXPLANATION WAS FURNISHED BEFORE THE AO AND WHATEVER WAS FURNISHED BY HIM WAS NOT SUBSTA NTIATED. HE MENTIONED THAT IN THE ASSESSMENT PROCEEDINGS ASSESS EE CLAIMED THAT SUM OF RS.1 LAKH REPRESENTED HIS CASH BALANCE OUT OF PA ST SAVINGS BUT IT WAS NOT SUPPORTED BY ANY EVIDENCE. IN THE APPELLATE PRO CEEDINGS IT WAS CLAIMED THAT THIS SUM WAS RAISED FROM THE DEBTORS B UT IT WAS ALSO NOT SUPPORTED BY ANY EVIDENCE AS TO HOW THE DEBTS HAD A RISEN AND DEBTORS HAD PAID BACK. THERE WAS NO NEXUS BETWEEN THE DEPOSIT I N THE BANK ACCOUNT ALLEGED RECEIPTS FROM THE DEBTORS. 4. BEFORE US, THE LD. AR SUBMITTED THAT QUANTUM AD DITION HAS BEEN SET ASIDE TO THE FILE OF AO FOR GIVING FRESH OPPORT UNITY OF BEING HEARD AS PER TRIBUNALS ORDER IN ITA NO.4445/AHD/2007 FOR AS ST. YEAR 2004-05 DATED 30.7.2010:- 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AG, IT IS NOT IN DISPUTE THAT THE ASSESSEE MADE EXPLANATION BEFORE THE AO THAT CASH W AS DEPOSITED IN THE BANK ACCOUNT FROM THE CASH BALANCE OUT OF HIS CAPITAL AN D PAST SAVINGS. SUCH STATEMENT COULD NOT BE PROVED THROUGH ANY EVIDENCE OR MATERIA L. THE ASSESSEE HOWEVER, TAKEN DIFFERENT SUBMISSIONS BEFORE THE LEARNED CI T[A) THAT THE AMOUNTS WERE RECEIVED FROM THE DEBTORS OF THE EARLIER YEARS WHICH IS CLARIFIED FROM THE EARLIER YEARS BALANCE SHEET AND THE BALANCE S HEET OF THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LEARNED CIT(A) IF WAS NOT SATISFIED WITH THE EARLIER EXPLANATION OF THE ASSESSES, HO COULD HA VE CONSIDERED THE FRESH SUBMISSION ON THE MATTER, HOWEVER, WHEN FRESH SUBMISSIONS HAS BEEN CONSIDERED, THE LEARNED CIT(A) SHOULD HAVE GIVEN A SPECIFIC FINDING ON THE ISSUE. NOW, THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A} THAT THE DEPOSI TS IN THE BANK ACCOUNT ARE ON ITA NO.1890/AHD/2010 ASST. YEAR 2004-05 4 ACCOUNT OF RECEIPT FROM DEBTORS, COPY OF THE CASH B OOK IS SLED IN THE PAPER BOOK TO SHOW THAT ON THE DATE OF DEPOSIT CASH WAS AVAILABLE WITH THE ASSESSEE TO MAKE THE DEPOSIT IN THE BANK ACCOUNT- THEREFORE, MATTER REQU IRES RECONSIDERATION AT THE LEVEL OF THE AO BECAUSE THIS POINT WAS RAISED FOR T HE FIRST TIME AND HAS NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW. WE ACCORDINGLY , SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FIL E OF THE AO WITH DIRECTION TO RE- DECIDE THIS ISSUE BY GIVING REASONABLE SUFFICIE NT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PRODUCE C OMPLETE BOOKS OF ACCOUNT BEFORE THE AO FOR HIS PERUSAL AND CONSIDERATION. THE ASSES SEE SHALL ALSO FILE SUFFICIENT EVIDENCE TO SHOW THAT THE AMOUNTS WERE REC EIVED BACK FROM DEBTORS. WITH THIS OBSERVATION, THIS GROUND OF APP EAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SINCE THE QUANTUM IS SET ASIDE THE PENALTY IS ALSO REQUIRED TO BE SET ASIDE. 5. THE LD. DR ON THE OTHER HAND, RELIED ON THE ORDE RS OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. SINCE THE QUANTUM IS RESTORED TO THE AO, WE RESTORE THE PENALTY PROCEEDINGS TO THE AO FOR BEING DECIDED AFR ESH AFTER DECIDING THE ISSUE REGARDING QUANTUM ADDITION . THE APPEAL OF TH E ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 17/9/10 SD/- SD/- (BHAVNESH SAINI) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R AHMEDABAD, DATED : 17/9/10 MAHATA/- ITA NO.1890/AHD/2010 ASST. YEAR 2004-05 5 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 27/8/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.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 DICTATING 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 ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..