United Motorcycles, Srinagar V. The Income Tax Office, Srinagar

ITA 190/ASR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7743 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-06-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Wrong claim
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A NO. 190/(ASR)/2016 ASSESSMENT YEAR: 2001-02 PAN: AABFU4674R UNITED MOTORCYCLES, RESIDENCY ROAD, SRINAGAR. VS. INCOME TAX OFFICER, WARD-3 (3), SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSIONS RESPONDENT BY: SH. RAHUL DHAWAN (D. R.) DATE OF HEARING: 21.08.2017 DATE OF PRONOUNCEMENT: 31.10.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LD. CIT(A), JAMMU DATED 23.12.2015 FOR ASST. YEAR: 2001-02. 2. THE ONLY GRIEVANCE RAISED BY ASSESSEE IS IN THIS APPEAL IS THE ACTION OF LD. CIT(A) BY WHICH HE HAS CONFIRMED THE PENALTY OF RS.65,029/- WHICH WAS IMPOSED BY ASSESSING OFFICER U/S 271(1)(C ) OF THE ACT. 3. AT THE TIME OF HEARING IT WAS NOTICED THAT THE A SSESSEE HAD FILED WRITTEN SUBMISSIONS AND HAS ALSO REQUESTED TO CONSI DER THE WRITTEN SUBMISSIONS IN DECIDING THE APPEAL OF THE ASSESSEE. IN THE WRITTEN SUBMISSIONS, THE LD. AR SUBMITTED THAT DURING ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.16 5893/- AS UNEXPLAINED CASH CREDIT AND THE APPEAL OF THE ASSES SEE BEFORE LD. CIT(A) ITA NO. 190(ASR)/2016 ASSESSMENT YEAR: 2001-02 2 WAS ALSO DISMISSED AND BEFORE HON'BLE ITAT ALSO THE APPEAL OF THE ASSESSEE WAS DISMISSED DUE TO NON PROSECUTION AND T HEREFORE THE ASSESSING OFFICER INITIATED AND IMPOSED PENALTY U/S 271(1)(C) OF THE ACT. THE LD. AR SUBMITTED THAT THE SAID AMOUNT OF RS.165 893/- WAS REFLECTED IN THE BALANCE SHEET AND DURING ASSESSMENT PROCEEDI NGS, THE ASSESSEE HAD MAINTAINED THAT THE AMOUNT DOES NOT TANTAMOUNT TO CASH CREDITS AND RATHER IT WAS AN ADDITIONAL CAPITAL INTRODUCED BY THE PARTNERS AND CREDITED IN THEIR CAPITAL ACCOUNTS. IT WAS ALSO SUB MITTED THAT DURING ASSESSMENT PROCEEDINGS, THE PARTNERS WERE SUMMONED AND THEY ACCEPTED THAT THE AMOUNT WAS INTRODUCED BY THEM BEI NG RECEIVED FROM THEIR MOTHERS AS GIFT. THE LD. ASSESSING OFFICER DI D NOT SUMMON THE PERSONS GIVING GIFTS AND FAILED TO RECORD STATEMENT IN TERMS OF SECTION 131 OF THE INCOME TAX ACT. IT WAS SUBMITTED THAT DURING COURSE OF PENALTY PROCEEDINGS, THE COUNSEL OF THE ASSESSEE PROVIDED N AMES OF THE PERSONS WHICH HAD GIFTED THE AMOUNTS TO PARTNERS WHICH WAS LATER ON INDUCTED BY THEM IN THE FIRM AND THEREFORE AS THE ASSESSEE HAD PROVIDED THE NAMES OF PERSONS MAKING GIFTS AND PARTNERS HAD ALSO GOT RECO RDED THEIR STATEMENTS BEFORE ASSESSING OFFICER WITH REGARD TO SUCH RECEIP TS AND THEREFORE THE PENALTY WAS NOT IMPOSABLE AS THE ASSESSEE HAD PROVI DED COMPLETE PARTICULARS AND NO INACCURATE PARTICULARS OF INCOME WERE FILED. 4. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDERS OF AUTHORITIES BELOW. ITA NO. 190(ASR)/2016 ASSESSMENT YEAR: 2001-02 3 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH OUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT DURING ASSESSMENT PR OCEEDINGS THE ADDITION OF RS.1,65,893/- WAS MADE TO THE INCOME OF ASSESSEE BEING UNEXPLAINED CASH CREDITS AND THEREFORE THE ASSESSIN G OFFICER PASSED ORDER U/S 271(1)(C) FOR FURNISHING OF INACCURATE PA RTICULARS OF INCOME. WE FIND THAT THE AMOUNT OF RS.1,65,893/- AS RECEIVED B Y THE FIRM WAS NOT CASH CREDITS AND RATHER IT WAS ADDITIONAL CAPITAL I NTRODUCED BY THE PARTNERS OF THE FIRM AND THE EXPLANATION WAS THAT T HEY HAD RECEIVED THE SAME FROM THEIR OLD AGED MOTHERS. THE ASSESSING OFF ICER IN THE PENALTY ORDER HIMSELF HAS MENTIONED THIS FACT AT PAGE 1 OF HIS ORDER. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD EXPLAINED THAT THE AMOUNTS INTRODUCED AS PARTNERS CAPITAL WAS RECEIVED FROM T HEIR MOTHERS AND HAD ALSO PROVIDED THE NAMES OF THE MOTHERS AND HAD SUBM ITTED THAT OLD LADIES HAD ACCUMULATED THIS AMOUNT AND BEING ILLITE RATE HAD NEVER OPENED BANK ACCOUNT AND HAD GIVEN THE SAME AS GIFTS AND THEREFORE THE AMOUNTS CREDITED IN THE CAPITAL ACCOUNTS GOT EXPLAI NED. THESE EXPLANATIONS FURNISHED BY ASSESSEE DURING ASSESSMEN T PROCEEDINGS AND PENALTY PROCEEDINGS ARE SUFFICIENT AND PLAUSIBLE EX PLANATION REGARDING THE SOURCE OF SUCH CREDITS IN THE CAPITAL ACCOUNTS. THE AUTHORITIES BELOW HAS WRONGLY HELD THE SAME TO BE CASH CREDITS INSTEA D OF ADDITIONS TO CAPITAL. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILE VS. CIT 249 ITR 125 HAD HELD THAT IF THE ASSESSEE G IVEN AN EXPLANATION WHICH UNPROVED BUT NOT DISAPPROVED THAT IS NOT ACCE PTED LEVY OF PENALTY IN THE ABSENCE OF PROOF ACCEPTABLE TO REVENUE CANNO T BE EQUIPPED FOR ITA NO. 190(ASR)/2016 ASSESSMENT YEAR: 2001-02 4 WILLFUL DEFAULT. IN THE PRESENT CASE, THE ASSESSEE HAD PROVIDED THE NAMES FROM WHOM GIFTS WERE RECEIVED AND ASSESSING OFFICER WAS AT LIBERTY TO SUMMON THESE PERSONS AND RECORD THEIR STATEMENTS FO R CREDITWORTHINESS AND WITHOUT SUMMONING THESE PERSONS, THE LEVY OF PE NALTY BY ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH LAW. IN THE PRES ENT CASE, THE ASSESSING OFFICER CAME TO KNOW ABOUT THE ADDITIONAL CAPITAL INTRODUCED BY THE ASSESSEE FROM THE COPY OF BALANCE SHEET ITSE LF WHERE THE ASSESSEE ITSELF HAD DECLARED TO HAVE RECEIVED ADDITIONAL CAP ITAL FROM PARTNERS AND THEREFORE ASSESSEE HAD NOT FURNISHED INACCURATE PAR TICULARS OF INCOME. MERELY BECAUSE THE ASSESSING AUTHORITIES DID NOT AC CEPT THE EXPLANATION OF THE ASSESSEE DOES NOT MEAN THAT ASSESSEE HAD FUR NISHED INACCURATE PARTICULAR OF INCOME. THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF CIT AHEMDABAD VS. RELIANCE PETRO PRODUCTS PVT. L TD. IS SQUARELY APPLICABLE, WHERE THE HON'BLE SUPREME COURT HAD HEL D THAT ANY WRONG CLAIM MADE BY ASSESSEE DOES NOT NECESSARILY MEANS T HAT ASSESSEE HAD CONCEALED PARTICULARS OF INCOME. THEREFORE IN VIEW OF THE ABOVE, WE DELETE THE PENA LTY SUSTAINED BY LD. CIT(A). 6. IN NUTSHELL, THE APPEAL FILED BY ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2017 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.10.2017. /GP/SR. PS . ITA NO. 190(ASR)/2016 ASSESSMENT YEAR: 2001-02 5 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER