Deputy Commissioner of Income-tax, V. Shri Khot Arun Pandurang, Kolhapur

ITA 19/PUN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88912 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-12-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 03-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.19/PN/2014 (ASSESSMENT YEAR : 2010-11) DY. COMMISSIONER OF INCOME TAX, ICHALKARANJI CIRCLE, ICHALKARANJI. . APPELLAN T VS. SHRI KHOT ARUN PANDURANG, 9/109, SAMRAT ASHOK NAGAR, SHAHAPUR ROAD, ICHALKARANJI. PAN : AHKPK0620R . RESPONDENT DEPARTMENT BY : SHRI RAJESH DAMOR ASSESSEE BY : SHRI M. K. KULKARNI DATE OF HEARING : 17-12-2014 DATE OF PRONOUNCEMENT : 21-01-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 04.10.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 18.0 4.2013 PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, REVENUE HAS ASSAILED THE ORDER O F THE CIT(A) WHEREBY PENALTY LEVIED U/S 271(1)(C) OF THE ACT AMOUNTING T O RS.10,86,417/- HAS BEEN DELETED. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE I S AN INDIVIDUAL, WHO IS ENGAGED IN THE BUSINESS OF CONTRACTING FOR CRANE SE RVICES AS ALSO FABRICATION WORK, ETC.. THE BUSINESS OF CONTRACTING FOR CRANE SERVICES IS CARRIED OUT UNDER THE NAME AND STYLE OF M/S NEW MUMBAI CRANE SERVICES , ICHALKARANJI AND THE FABRICATION WORK IS CARRIED OUT UNDER THE NAME AND STYLE OF M/S BOMBAY WELDING WORKS. FOR ASSESSMENT YEAR 2010-11, ASSESS EE FILED A RETURN OF ITA NO.19/PN/2014 INCOME DECLARING TOTAL INCOME OF RS.41,79,080/- WHI CH WAS SUBJECT TO A SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT DATED 20. 12.2012 AND THE TOTAL INCOME WAS DETERMINED AT RS.88,43,250/-. SUBSEQUEN TLY, THE ASSESSING OFFICER HELD THE ASSESSEE GUILTY OF CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT VIDE ORDER DATED 18.04.2013. THE ASSESSING OFF ICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT IN RELATION TO THE FOLLOWING T WO ADDITIONS MADE IN THE ASSESSMENT PROCEEDINGS, NAMELY, (I) RS.26,93,766/- ON ACCOUNT OF UNEXPLAINED CREDITS U/S 68 OF THE ACT; AND, (II) RS .8,22,146/- ON ACCOUNT OF SUPPRESSED JOB WORK RECEIPTS. THE ASSESSING OFFICE R LEVIED A PENALTY EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED O N SUCH ADDITIONS, WHICH CAME TO RS.10,86,417/-. 4. ON AN APPEAL PREFERRED BY THE ASSESSEE, THE CIT( A) HAS CANCELLED THE PENALTY IMPOSED BY THE ASSESSING OFFICER, AGAINST W HICH REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE P OINTED OUT THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, ENQUIRY LETTERS U /S 133(6) OF THE ACT WERE ISSUED TO VARIOUS CREDITORS SHOWN BY THE ASSESSEE I N THE ACCOUNT BOOKS OF THE TWO PROPRIETARY CONCERNS AND ON THAT BASIS AN ADDIT ION OF RS.26,93,766/- WAS MADE. THE SAID ADDITION WAS RIGHTLY SUBJECT TO PEN ALTY U/S 271(1)(C) OF THE ACT SINCE THE SAID AMOUNT OF CREDITS WERE NOT PROVED. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE, THE CIT(A) HAS ERRED I N DELETING THE PENALTY WITH RESPECT TO THE SAID AMOUNT. WITH REGARD TO THE PEN ALTY LEVIED ON ACCOUNT OF SUPPRESSED RECEIPTS OF RS.8,22,146/-, IT IS POINTED OUT THAT THE VERIFICATION EXERCISE CARRIED OUT BY THE ASSESSING OFFICER REVEA LED THAT THE RECEIPTS TO THE AFORESAID EXTENT WERE NOT ACCOUNTED FOR BY THE ASSE SSEE IN THE BOOKS OF ACCOUNT. THE LD. DEPARTMENTAL REPRESENTATIVE POINT ED OUT THAT THE CIT(A) HAS NOT PASSED ANY SPECIFIC REASON FOR DELETING PEN ALTY ON THE SAID SUM. ITA NO.19/PN/2014 ACCORDING TO HIM, THE FALSITY IN THE INCOME DECLARE D FROM JOB RECEIPTS STOOD ESTABLISHED TO THE EXTENT OF RS.8,22,146/-. IN THI S MANNER, THE ORDER PASSED BY THE CIT(A) IS SOUGHT TO BE ASSAILED BY THE LD. DEPA RTMENTAL REPRESENTATIVE BEFORE US. 6. ON THE OTHER HAND, THE LD. REPRESENTATIVE FOR TH E RESPONDENT-ASSESSEE VEHEMENTLY POINTED OUT THAT THE CIT(A) MADE NO MIST AKE IN DELETING THE PENALTY INASMUCH AS OUT OF 24 PERSONS TO WHOM ENQUI RY LETTERS WERE ISSUED U/S 133(6) OF THE ACT, ONLY 5 PERSONS DID NOT RESPO ND AND IN OTHER CASES THE CREDITORS CONFIRMED THE TRANSACTIONS THOUGH THERE W AS SOME DIFFERENCES IN AMOUNTS. IN ANY CASE, IT IS POINTED OUT THAT NO CA SE OF ANY FALSITY WAS ESTABLISHED HAVING REGARD TO THE ENQUIRIES CONDUCTE D BY THE ASSESSING OFFICER. EVEN WITH REGARD TO THE ADDITION OF RS.8,22,146/- O N ACCOUNT SUPPRESSED RECEIPTS OF JOB WORK, THE LD. REPRESENTATIVE POINTE D OUT THAT IT WAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE TOTAL AMOUNT RECEIVABLE FROM THE SAID PARTY WAS HIGHER EVEN AFTER CONSIDERING THE UNACCOU NTED BILLS OF RS.8,22,146/-. ACCORDING TO THE LD. REPRESENTATIVE, THE EXPLANATIO N OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND IT CANNOT BE THE SOLE REASON FOR THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE CONTEXT OF THE PRESENT CONTROVERSY, WE HAVE ALSO PERUSED THE A SSESSMENT ORDER PASSED U/S 143(3) OF THE ACT DATED 20.12.2012 (SUPRA) WHER EIN DETAILED DISCUSSION HAS BEEN CARRIED OUT BY THE ASSESSING OFFICER WITH RESPECT TO THE ENQUIRIES MADE U/S 133(6) OF THE ACT IN RELATION TO THE SUNDR Y CREDITORS APPEARING IN THE ACCOUNT BOOKS OF ASSESSEES TWO PROPRIETARY CONCERN S, NAMELY, M/S NEW MUMBAI CRANE SERVICES AND M/S BOMBAY WELDING WORKS. AS AN ANNEXURE TO THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS TAB ULATED THE NAME OF THE CREDITORS TO WHOM LETTERS WERE ADDRESSED AND THEIR RESPONSES. WE FIND THAT IN MAJORITY OF THE CASES CONFIRMATIONS WERE RECEIVED F OR WHICH NO ADDITION WAS ITA NO.19/PN/2014 MADE. IN SOME OF THE CASES WHERE CONFIRMATION WAS RECEIVED BUT THE CREDITORS DID NOT INDICATE THEIR INCOME-TAX PAN NUM BERS, THE ASSESSING OFFICER STILL TREATED THE SAID CREDIT BALANCES AS UNEXPLAIN ED. IN SOME OTHER CASES, THE AMOUNT CONFIRMED BY THE CREDITOR DID NOT TALLY WITH THE AMOUNT SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT AND IN SUCH CASES ALSO THE ADDITIONS HAVE BEEN MADE. IN OUR CONSIDERED OPINION, THE RESULT O F THE VERIFICATION EXERCISE CARRIED OUT BY THE ASSESSING OFFICER MAY BE A GOOD GROUND FOR MAKING THE IMPUGNED ADDITION, SO HOWEVER, IN ORDER TO INVITE T HE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT SOMETHING MORE IS REQU IRED. NOTABLY, THERE IS NO CREDITOR, WHO HAS DENIED OF HAVING ANY TRANSACTION WITH THE ASSESSEE. EVEN IN CASES WHERE CONFIRMATIONS HAVE BEEN RECEIVED BUT TH E CREDITORS DID NOT FURNISH THEIR INCOME-TAX PAN NUMBERS, NO FALSITY CA N BE ESTABLISHED WITHOUT THERE BEING ANY FURTHER ADVERSE EVIDENCE ON RECORD. THEREFORE, IN OUR CONSIDERED OPINION, THE RESULT OF THE VERIFICATION EXERCISE CARRIED OUT BY THE ASSESSING OFFICER BY ISSUANCE OF LETTERS U/S 133(6) OF THE ACT CAN AT BEST BE TAKEN TO BE A CASE WHERE ASSESSEE HAS FAILED TO SUB STANTIATE THE CREDITS APPEARING IN THE BOOKS OF ACCOUNT, WHICH MAY LEAD T O ADDITION U/S 68 OF THE ACT, BUT CERTAINLY IT DOES NOT SHOW THAT THE CREDIT BALANCES IN QUESTION HAVE BEEN FOUND TO BE FALSE. NON-SUBSTANTIATION OF A CL AIM IS NOT THE SAME THING AS A CASE WHERE A CLAIM IS FOUND TO BE FALSE. IT IS O NLY IN THE LATTER CASES THAT THE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT AR E ATTRACTED. THEREFORE, IN THIS BACKGROUND OF THE MATTER, WE FIND THAT THE CIT (A) DID NOT MAKE ANY MISTAKE IN DELETING THE PENALTY LEVIED U/S 271(1)(C ) OF THE ACT WITH RESPECT TO THE ADDITION OF RS.26,93,766/- MADE ON ACCOUNT OF U NEXPLAINED CREDITORS. THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED ON THIS ASPE CT. 8. NOW, WITH RESPECT TO THE OTHER LIMB OF RS.8,22,1 46/- WHICH REPRESENTS SUPPRESSED JOB WORK RECEIPTS. IN THIS CONTEXT, THE ASSESSING OFFICER HAS MADE AN ELABORATE DISCUSSION IN PARA 5 TO 5.1 OF THE ASS ESSMENT ORDER. THE SAID DISCUSSION REVEALS THAT ASSESSEE WAS FOUND TO HAVE ISSUED 11 JOB WORK BILLS TO ITA NO.19/PN/2014 M/S GEODESIC TECHNIQUES PVT. LTD., WHICH WERE FOUND TO HAVE BEEN SUBSEQUENTLY CANCELLED. THE ASSESSING OFFICER MADE ENQUIRIES U/S 133(6) OF THE ACT WITH M/S GEODESIC TECHNIQUES PVT. LTD. AND FOUND THAT THE SAID CONCERN ADMITTED THE JOB WORK CHARGES PAYABLE TO TH E ASSESSEE WHICH INCLUDED THE AMOUNT 11 BILLS, WHICH THE ASSESSEE HA D NOT ACCOUNTED FOR. ON THIS BASIS, THE ASSESSING OFFICER TREATED THE TOTAL OF SUCH 11 BILLS OF RS.8,22,146/- AS SUPPRESSED RECEIPTS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE AFORESAID VERIFICATION EXERCISE CARRIED OUT BY THE ASSESSING OFFICER REVEALS THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME QUA THE SUM OF RS.8,22,146/- AND IN OUR VIEW, THE A SSESSING OFFICER WAS JUSTIFIED IN LEVYING PENALTY WITH RESPECT TO THE SA ID SUM. AS A CONSEQUENCE, WE THEREFORE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE PENALTY IMPOSED U/S 271(1)(C) OF TH E ACT TO THE EXTENT OF THE ADDITION OF RS.8,22,146/- MADE ON ACCOUNT OF SUPPRE SSED JOB WORK RECEIPTS. TO THE SAID EXTENT, THE REVENUE SUCCEEDS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2015. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 21 ST JANUARY, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE