Shri Tushar Hasmukhbhai Soni, Petlad V. The Income Tax Officer, Ward -1, Anand

ITA 2045/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8358 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI TUSHAR HASMUKHBHAI SONI, PROP. SAINATH JEWELLERS, CHPWAD, KANSARA BAZAR, PETLAD - 388001 PAN: AZTPS6277K (APPELLANT) VS THE ITO, WARD - 1 , ANAND (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: S H RI SUNIL TALATI , A.R. DATE OF HEARING : 12 - 03 - 2 018 DATE OF PRONOUNCEMENT : 27 - 04 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEM BER : - THIS ASSESSEE S APPEAL FOR A.Y. 2005 - 06 , ARIS ES FROM ORDER OF THE CIT(A) - 4, VADODARA DATED 01 - 05 - 2015 , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - YOUR APPELLANT BEING DISSATISFIED WITH THE ORDER PASSED BY THE HON'BLE CIT(A) - 4, BARODA IN APPEAL NO. CAB/4 - 294/2014 - 15 DATED 01.05.2015 CONFIRMING THE PENALTY OF RS.125042/ - LEVIED BY THE AO BY INVOKING THE PROVISIONS OF SECTION 271(1 )(C) OF THE ACT. Y OUR APPELLANT PRESENTS THIS APPEAL AGAINST THE SAID ORDER ON THE FOLLOWING AMONGST OTHER GROUNDS: - 1. THE ORDER PASSED BY THE HON'BLE CIT (A) IS BAD IN LAW, CONTRARY TO LEGAL PRONOUNCEMENTS AND SAME BE QUASHED. THE ADDITIONS/DISALLOWANCES MADE ARE UNWARRAN TED AND SAME BE DELETED NOW. I T A NO . 2045 / A HD/20 15 A SSESSMENT YEAR 2005 - 06 I.T.A NO. 2045 /AHD/ 2015 A.Y. 2005 - 06 PAGE NO . TUSHAR H SONI VS. ITO 2 2. THE HON'BLE CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 1,25, 042/ - LEVIED BY THE AO U/S. 271(1 )(C) ON THE TAX PAYABLE ON THE FOLLOWING ADDITIONS MADE BY HIM AGGREGATING TO RS.10,88,010/ - : I) CASH CREDIT RS.3,76,502/ - II) DIFFERENCE IN ST OCK VALUATION RS.5,61,508/ - III) DISCLOSED INCOME RS.1,50,000 / - RS.10,88, 010/ - YOUR APPELLANT SUBMITS THAT THE NECESSARY DETAILS AS CALLED FOR BY THE AO HAVE BEEN SUBMITTED FROM TIME TO TIME AND IT IS THEREFORE SUBMITTED THAT THE APPELLANT HAS NEITHER CONCEALED ANY INCOME NOR FILED ANY INACCURATE PARTICULARS OF INCOME. IT IS TH EREFORE SUBMITTED THAT THE PENALTY INITIATED BY THE AO IS UNJUST AND UNCALLED FOR AND SAME BE DELETED NOW. 3. THE HON'BLE CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY ON SO CALLED UNEXPLAI NED CASH CREDIT OF RS. 3,76,502/ - WITHOUT APPRECIATING THE FA CTS SUBMITTED BY THE APPELLANT. IT IS THEREFORE SUBMITTED THAT MERE ADDITION DOES NOT AMOUNT TO CONCEALMENT SO AS TO ATTRACT THE PROVISIONS OF SECTION 271(1 )(C) OF THE ACT. IT BE HELD SO NOW AND PENALTY LEVIED BY THE CIT (A) BE DELETED. 4. THE HON'BLE CIT (A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY ON VALUE OF DIFF ERENCE IN STOCK OF RS. 5,61,508/ - WITHOUT APPRECIATING THE FACTS SUBMITTED BY THE APPELLANT. IT IS THEREFORE SUBMITTED THAT ADDITIO N MADE ON ESTIM ATED BASIS WITHOUT APPRECIATING THE FACTS WOUL D NOT AMOUNT TO CONCEALMENT SO AS TO ATTRACT THE PROVISIONS OF SECTION 271(1 )(C) OF THE ACT. IT BE HELD SO NOW AND PENALTY LEVIED BY THE CIT (A) BE DELETED. 5. THE HON'BLE CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY ON D ISCLOSED INCOME OF RS. 1,50, 000/ - . YOUR APPELLANT SUBMITS THAT THE PENALTY LEVIED IS UNJUST AND UNCALLED AND THEREFORE BE DELETED NOW. 3. THE BRIEF FACTS IS THAT RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 31 ST OCTOBER, 2005 DECLARING TOTAL LOSS AT RS. 4 , 42 , 707/ - . THEREAFTER, ASSESSMENT U/S. 143(3) OF THE ACT WAS MADE ON 28 TH DECEMBER, 2007 ON TOTAL INCOME AT RS. 5 , 07 , 180/ - . IN THIS CASE, SURVEY U/S. 133 A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 14 TH MARCH, 2005 AND ON THE BASIS OF MA T ERIAL FOUND, THE ASSESSING OFFICER HAS MADE FOLLOWING ADDITION: - THE ASSESSING OFFICER MADE A DDITION OF RS. 3,76,502/ - AS CASH CREDIT U/S. 68 OF THE ACT. T HIS ADDITION WAS MADE ON THE GROUND THAT A SSESSE HAS FAILED TO PROVE THE GENUINENESS AND CRED IT WORTHINESS OF THE TRANSACTION AS PER CONDITION LAID DOWN U/S. 68 OF THE ACT. THE ASSESSING OFFICER HAS MADE OTHER ADDITION OF RS. 5 , 61 , 508/ - ON ACCOUNT OF DIFFERENCE IN STOCK. FURTHER, THE ASSESSING OFFICER HAD MADE ADDITION ON THE BASIS OF INCOME DI SCLOSED DURING THE COURSE OF SURVEY BY THE ASSESSEE OF RS. 1,50,000/ - . THEREAFTER, THE ASSESSING OFFICER HAS INITIATED I.T.A NO. 2045 /AHD/ 2015 A.Y. 2005 - 06 PAGE NO . TUSHAR H SONI VS. ITO 3 PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AND LEVIED PENALTY TO THE AMOUNT OF RS. 1 , 25 , 042/ - ON THE GROUND THAT ASSESSEE HAS CONCEAL ED PARTICULARS OF INCOME. 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER STATING THAT ASSESSEE HAS FAILED TO SUBSTANTIATE HIS CLAIM REGARDING SOURCE OF CREDIT AND WITH RE GARD TO INCOME ON WHICH THE ADDITION MADE BY THE ASSESSING OFFICER. DURING THE COURSE OF PENALTY PROCEEDINGS BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT QUANTUM ADDITION IN THE CASE OF THE ASSESSEE OF RS . 5 , 61 , 50 8 / - ON ACCOUNT OF SHORTAGE IN STOCK W AS RESTRICTED TO RS. 56 , 150/ - BY THE SMC BENCH VIDE ITA NO. 1804/AHD/2011 DATED 5 TH OCTOBER, 2016 . AND CONTENDED THAT THIS ADDITION WAS MADE ON ESTIMATED BASIS. F URTHER IN RESPECT OF ADDITION MADE U/S. 68 OF THE ACT, THE LD. COUNSEL HAS REFERRED VARIOUS J UDICIAL PRONOUNCEMENTS STATING THAT IT MIGHT BE A VALID POINT FOR MAKING ADDITION U/S. 68 OF THE ACT BUT IT COULD NOT LEAD TO LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. HE HAS ALSO CONTENDED THAT RS. 150,000/ WAS DISCLOSED AS BUSINESS INCOME WHICH WAS FULLY REFLECTED IN THE RETURN OF INCOME AND THERE WAS NO BASIS OF CONCEALMENT OF ANY PARTICULARS OF INCOME. HE HAS ALSO PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - FOR MAKING ADDITION MADE U/S 68 OF THE ACT : - A. NATIONAL TEXTILES VS. CIT [2001 ] 114 TAXMAN 203 (GUJ.) B. VIKRAM BHATIA VS. INCOME TAX OFFICER [2014] 47 TAXMANN.COM 365 (LUCKNOW - TRIB.) C. ACIT VS. MANISH ORGANICS INDIA LTD [2012] 17 TAXMANN.COM 25 (AHD. - TRIB.) ADDITION ON ESTIMATE BASIS: - A. NAVJIVAN OIL MILLS V S . CI T [2002] 124 TAXMAN 392 (GUJ.) B. INCOME TAX OFFICER VS. C. CHHOTALAL TEXTILES (P.)(LTD)[2006] 150 TAXMAN 33(MUM.)(MAG.) C. VIJAYKUMAR MAVJIBHAI DODIYA VS. ITO ITA NO.187/RJT/2017 D. ARYA HYBRIDS SEEDS LTD VS. DCIT ITA NO .291/PUN/2013 VOLUNTARILY DISCLO SED INCOME DURING SURVEY: - A. CIT VS SUREST CHANDRA MITTAL [2001] 119 TAXMAN 433(SC) B. CIT VS SAS PHARMACEUTICALS [2001] 11 TAXMAN.COM 207(DELHI) C. ACIT VS JUPITER DISTILLERY [2012] 23 TAXMAN .COM 303 (AHD - TRIB.) ON THE OTHER HAND, LD. DEPARTMEN TAL REPRESENTATIVE SUPPORTED THE ORDER OF LD. CIT(A). I.T.A NO. 2045 /AHD/ 2015 A.Y. 2005 - 06 PAGE NO . TUSHAR H SONI VS. ITO 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE DIFFERENCE IN STOCK WAS RESTRICTED TO RS. 56,150/ - BY THE SMC BENCH VIDE ITA NO. 1804/AHD/2011 DATED 5 TH OCTOB ER, 2016 AND AS PER FACTS ON RECORDS THE ADDITION WAS MADE ON ESTIMATED WITHOUT ESTABLISH ING THAT THERE WAS CONCEALMENT OF ANY PARTICULAR OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME. SIMILARLY RS.150,000/ WAS DISCLOSED AS BUSINESS INCO ME WHICH WAS FULLY REFLECTED IN THE RETURN OF INCOME AND THE ASSESSING OFFICER HAS NOT DEMONSTRATED ANY SPECIFIC MATERIAL TO ESTABLISH THAT THERE IS A CASE OF FURNISHING OF INACCURATE PARTICULAR OF INCOME OR CONCEA LMENT OF PARTICULAR OF INCOME. IN RESPE CT OF UNSECURED LOAN W E HAVE NOTICED THAT ASSESSEE HAS OBTAINED UNSECURED LOAN IN THE OF THE AMOUNT OF LESS THAN RS.20 , 000/ FROM 15 DEPOSITORS TOTALING TO THE AMOUNT OF RS. 3 , 76 , 502/ - . LOOKING TO THE SMALLNESS OF THE AMOUNT T HE ASSESSEE HAS FILED PAN NUMB ERS OF ALL THE DEPOSITORS BEFORE THE ASSESSING OFFICER . THE ASSESSING OFFICER HAS NOT DISPROVED THE GENUINENESS OF THE PAN NUMBER OF 15 DEPOSITORS WHO HA VE INDIVIDUALLY PROVIDED LOAN IN MEAGER RANGE OF AMOUNT AS REPORTED AT PAGE NUMBER 3 OF THE ASSESS MENT ORDER. WE OBSERVE FROM THE RECORD THAT IN ORDER TO TEST CHECK THE OTHER ASPECTS OF THE LOAN AMOUNT THE ASSESSING OFFICER HAS NEITHER DIRECTED THE ASSESSEE TO PRODUCE ANY OF SUCH DEPOSITORS NOR ISSUE ANY SUMMONS TO ANY OF SUCH PARTY . LOOKING TO THE AB OVE FACTS AND SMALLNESS OF THE AMOUNT WE CONSIDER THAT IT MIGHT BE VALID POINT FOR MAKING ADDITION U/S 68 OF THE ACT BUT NOT TO LEAD TO LEVY OF PENALTY U/S 271(1)(C) AS THE ASSESSING OFFICER HAS NOT CARRIED FURTHER BASIC STEPS AS ELABORATED SUPRA IN T HIS ORDER. IN VIEW OF THE ABOVE WE ARE NOT INCLINED WITH THE DECISION OF LD.CIT(A), THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF T HE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 27 - 04 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T.A NO. 2045 /AHD/ 2015 A.Y. 2005 - 06 PAGE NO . TUSHAR H SONI VS. ITO 5 AHMEDABAD : DATED 27 /04 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,