M/s. Ramesh Industries, Panchmahal V. The Income tax Officer, Ward-2, Godhra

ITA 209/AHD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2124 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1992-1993
• Appeal Filed On: 22-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: S J ACHARYA
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 209/AHD/2013 ASSESSMENT YEAR :1992-93 M/S. RAMESH INDUSTRIES, 1936, GIDC, HALOL. DISTRICT-PANCHMAHAL V/S . ITO WARD-2 GODHARA. PAN NO. AADFM8998M (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI S.J. ACHARYA, A.R. /BY RESPONDENT SHRI RAHUL KUMAR, SR. D.R. /DATE OF HEARING 20.03.2013 /DATE OF PRONOUNCEMENT 24.05.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF CIT(A)-IV, BARODA, DATED 04.12.20 12 FOR A.Y. 1992-93. 2. THE SOLE GROUND OF APPEAL OF THE ASSESSEE IS AGA INST CONFIRMING THE PENALTY BY THE LEARNED CIT(A)-IV, BARODA UNDER SECT ION 271(1)(C) OF THE I.T. ACT AT THE VALUE OF RS.1,67,932/-. THE LEARNED A.O. OBSERVED IN PENALTY ORDER THAT THE ASSESSEES RETURN INCOME AT RS.10,55,800/- THERE WERE ADDITION UNDER THE HEAD G.P. AT RS.1,43,751/- AND UNEXPLAINED CA SH CREDIT AT RS.8,33,000/-. ITA NO. 209/AHD/12 A.Y. 1992-93 PAGE 2 THE LEARNED AO IMPOSED PENALTY AT RS.1,67,932/-, I. E., 100 PER CENT TAX SOUGHT TO BE EVADED ON ADDITION OF RS.8,33,000/-. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) WHO CONFIRMED THE PENALTY BY OBSERVING THAT BEFORE THE CIT(A) IN QUAN TUM APPEAL FILED CONFIRMATION OF DEPOSITORS IDENTICAL AND STATEMENT OF A.O. WERE CONTRADICTORY. BEFORE THE AO AFFIDAVIT FURNISHED BY THE APPELLANT WERE FOUND TAILORED AND SOME OF THE DEPOSITORS WERE NOT PRODUCED BEFORE THE AO FOR VERIFICATION. THE ASSESSES SOURCE OF INCOME IS ALSO NOT FOUND SATISF ACTORY BY THE CIT(A), THEREFORE GENUINENESS OF THE TRANSACTION AND THE CR EDITWORTHINESS OF THE DEPOSITORS WERE NOT ESTABLISHED BY THE ASSESSEE IN QUANTUM APPEAL. HE FURTHER OBSERVED THAT SECTION 68 IS DEEMING PROVISI ON WHICH APPLIES WHEN THE ASSESSEES EXPLANATION ABOUT A CASH CREDIT FOUND IN HIS BOOKS IS REJECTED. IT IS NECESSARY FOR THE ASSESSEE TO PROVE, PRIMA FACIE, T HE TRANSACTION WHICH RESULTED IN A CASH CREDITOR IN HIS BOOKS OF ACCOUNT . THE APPELLANT HAD NOT SHIFTED HIS ONUS ON THE REVENUE BY PRODUCING THE EV IDENCE AT THE TIME OF QUANTUM APPEAL. HE MAINLY ESTABLISHED THE IDENTITY OF THE CREDITORS WHICH IS NOT TRUE TO THE GENUINENESS OF THE LOANS. EVEN MERE FILING OF CONFIRMATORY LETTERS ALSO DOES NOT DISCHARGE THE ONUS THAT LIES ON THE ASSESSEE. MERE FURNISHING OF THE PARTICULARS IS ALSO NOT ENOUGH. E VEN MERE PAYMENT BY THE ACCOUNT PAYEE CHEQUE IS ALSO NOT SACROSANCT NOR CAN IT MAKE A NON GENUINE TRANSACTION GENUINE. HE RELIED UPON VARIOUS CASES N ARRATED AT PAGE 14 OF HIS ORDER AND HELD THAT SECTION 68 OF THE ACT WOULD BE MADE A BASIS FOR IMPOSITION ITA NO. 209/AHD/12 A.Y. 1992-93 PAGE 3 OF PENALTY. HE FURTHER RELIED IN THE CASE OF JASHBHAI F PATEL VS. CIT(1982) 136 ITR 799 (PUNJAB) WHEREIN FALSE ENTRIES IN THE BOOKS OF ACCOUNT REGA RDING LOAN CREDITORS WERE FOUND, PENALTY WAS UPHELD. FURT HER AS PER THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF JASWANT SINGH RAJINDER SINGH VS. CIT (1980) TAXATION 57(1)-11 (ALL.) IT IS HELD THAT WHERE CASH CREDITS HAVE BEEN TREATED AS UNDISCLOSED INCOME PENALTY IS LEVIA BLE AND WAS ALSO UPHELD. THEREFORE, HE CONCLUDED THAT THE APPELLANT HAD FURN ISHED INACCURATE PARTICULARS OF INCOME. 4. NOW THE ASSESSED IS BEFORE US. LEARNED COUNSEL F OR THE APPELLANT CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPE AL) ERRED IN CONFIRMING THE PENALTY ORDER OF ASSESSING OFFICER ON THE ADDIT ION OF RS.8,33,000/- UNDER SECTION 68 OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT HONBLE ITAT AHMEDABAD HAD REDUCED THE AMOUNT OF ADDITION TO RS. 4,48,000/-, I,E, GIVEN RELIEF OF RS.38,5000/- IN THEIR QUANTUM APPEAL VIDE ITA NO.3090/AHD/2007 DATED 03.11.2009. BY MERE CONFIRMING THE ADDITION U NDER SECTION 68, PENALTY UNDER SECTION 271(1)(C) WOULD NOT FOLLOW AS NATURAL COROLLARY. THE AO HAD NOT ESTABLISHED CONSCIOUS PART OF THE CONCEALMENT OF TH E ASSESSEE. THERE IS A DISTINCTION BETWEEN UNSATISFACTORY EXPLANATION AND FALSE EXPLANATION. THE FALSE EXPLANATION ATTRACTS THE PENALTY WHILE ADDITI ON MADE ON THE BASIS OF UNSATISFACTORY EXPLANATION MAY NOT ATTRACT PENALTY. THE APPELLANT FILED CONFIRMATION NOTORIZED AFFIDAVIT OF 7-12 OF FARMERS , GRAM PANCHAYAT CERTIFICATES AND PRODUCED THE CASH CREDITORS BEFORE THE AO WHO HAS ITA NO. 209/AHD/12 A.Y. 1992-93 PAGE 4 CONFIRMED THE LOAN ADVANCED BY THEM TO THE APPELLAN T. IT IS FURTHER ARGUED THAT THE LEARNED ITO HAD NOT GIVEN CLEAR FINDING AS TO W HETHER ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE P ARTICULARS OF INCOME BY RELYING UPON THE JUDGMENT OF HONBLE GUJARAT HIGH C OURT IN THE CASE OF NEW SAROTHIA ENGINEERING CO. VS. CIT (2006) 282 ITR 642 (GUJ.) . HE RELIED IN THE CASE OF RAMCHANDRAN RAO VS. ITO-33 ITC 650 (HYD.) , S.L. GANERIWAL VS. ITO-48 ITD 11 (JP.), SASHI RAJ KAPOOR VS. ITO-3 8 ITD 249 OF HONBLE BOMBAY HIGH COURT AND CIT AND ANOTHER VS. ANWAR ALI (1970) 76 ITR 696 (SC) OF HONBLE SUPREME COURT . THE A.R. FURTHER SUBMITTED THAT IN THE PRESENT CASE MERE FACT IS THAT THE LEARNED AO HAS N OT BEEN SATISFIED WITH THE SUBMISSION AND RECORD PRODUCED BEFORE HIM BUT IT WO ULD NOT CONSTITUTE THAT ASSESSEE HAD CONSCIOUSLY CONCEALED HIS INCOME BY FU RNISHING INACCURATE PARTICULARS OF INCOME AND RELIED UPON IN THE CASE O F CIT VS. JALARAM OIL MILL (2002) 153 ITR 192 (GUJ.) . IN THE CASE OF CIT VS. NATIONAL TEXTILE 2001 249 ITR 145 (GUJ.). HONBLE HIGH COURT OF GUJARAT HELD THAT IN ORDER TO JUSTIFY LEVY OF PENALTY FOR ADDITION OF CASH CREDITS, THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT ASSESSEES INCOME AND THE CIRCUMSTANCE MU ST SHOW THAT THERE WAS CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACC URATE PARTICULARS OF INCOME; EXPLANATION-1 DOES NOT MAKE THE ASSESSMENT ORDER CO NCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE A SSESSEE. IF AN ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISP ROVED I.E., IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASO NABLE AND POSITIVE ITA NO. 209/AHD/12 A.Y. 1992-93 PAGE 5 INFERENCE THAT THE ASSESSEES CASE IS FALSE, THE EX PLANATION CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHO W THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE . HE REQUESTED TO DELETE THE PENALTY. AT THE OUTSET LEARNED D.R. RELIED UPON ON THE ORDER OF CIT(A) AND PRAYED TO UPHOLD THE ORDER OF CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LEARNED A.O. MADE ADDITION UNDER SECTION 68 OF THE ACT AT RS.8,33,000/- WHICH WAS REDUCED BY RS.3,85,000/- IN QUANTUM APPEAL. THE APPELLANT HAD FILED CONFIRMATION, AFFIDAVITS 7-12 O F FARMERS AND GRAM PANCHAYAT CERTIFICATES SOME OF THE CASH CREDITORS W ERE ALSO PRODUCED BEFORE THE AO FOR EXAMINATION. EVEN THEN, THE A.O WAS NOT SATISFIED ON EVIDENCE FILED BY THE APPELLANT IN QUANTUM APPEAL, THEREFORE, HE M ADE THE ADDITION UNDER SECTION 68 OF THE ACT AS CREDITWORTHINESS OF THE CA SH CREDITORS HAVE NOT BEEN FOUND PROVED BY THE APPELLANT, THEREFORE, COORDINAT E BANK HAD CONFIRMED THE ADDITION UNDER SECTION 68 OF THE IT ACT BUT AS HELD BY THE JURISDICTION OF HIGH COURT IN VARIOUS CASES PARTICULARLY IN CASE OF NATI ONAL TEXTILE (SUPRA) THAT THESE EVIDENCES MADE IT SUFFICIENT FOR ADDITION UND ER SECTION 68 OF THE I.T. ACT BUT ARE NOT SUFFICIENT FOR IMPOSING PENALTY UNDER S ECTION 271(1)(C) OF THE IT ACT. LEARNED AO HAS TO BRING SOME MATERIAL WHICH LE ADS TO REASONABLE CONCLUSION THAT THE AMOUNT IN FORM OF CASH CREDITS REPRESENTS THE ASSESSEES INCOME THERE MUST BE CONSCIOUS CONCEALMENT ON THE P ART OF THE APPELLANT OR ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCO ME. THEREFORE, WE HAVE ITA NO. 209/AHD/12 A.Y. 1992-93 PAGE 6 CONSIDERED VIEW IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY IMPOSED BY THE AO, CONFIRMED BY THE CIT(A) IS NOT J USTIFIED. ACCORDINGLY, WE REVERSE THE ORDER OF THE CIT(A). 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 24.05.2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY PRABHAT ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;