Pragnesh Trading Co., Sabarkantha V. The Income tax Officer,S.K.Ward-1, Himatnagar

ITA 2173/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85734 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-01-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Unexplained cash credit; Revised return
• Section: 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFOR E SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 2173 / AHD/ 20 1 0 (A SSESSMENT YEAR: 200 3 - 04 ) PRAGNESH TRADING CO., GOVINDNAGAR, MARKET YARD, BHILODA, DIST. SABARKANTHA. V/S I.T.O, S.K. WARD - 1, HIMATNAGAR (APPELLANT) (RESPONDENT) PAN: AACFP7239C APPELLANT BY : SHRI TUSHAR HEMANI, A.R. RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 27 - 01 - 2015 DATE OF PRONOUNCEMENT : 26 - 0 2 - 2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - VI, AHMEDABAD DATED 01.02.2010 FOR A.Y. 2003 - 04. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF WHOLESALE TRADING OF GRAINS AND PULSES. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2003 - 04 DECLARING TOTAL INCOME AT RS. NIL. THE RETURN WAS INITIALLY ITA NO 2173/AHD/2010 . A.Y. 2003 - 04 2 PROCESSED U/S. 143(1) ON 05.02.2004 RESULTIN G TO NIL INCOME. THEREAFTER THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE U/S. 148 AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3 ) R.W.S. 147 ON 20.12.2006 AND THE TOTAL INCOME WAS DETERMINED AT RS. 26,29,210/ - AS AGAINST THE RETURN INCOME OF RS. NIL INTERALIA BY MAKING ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF RS. 26,28,813/ - . ON THE AFORESAID ADDITION MADE U/S. 68 , A.O VIDE PENALTY ORDER DATED 23.03.2009 LEVIED PENALTY OF RS. 9,66,090/ - U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORD ER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 01.02.2010 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS; - 4. BEFORE US, LD. A.R. SUBMITTED THAT THOUGH VARIOUS GROUNDS HAVE BEEN RAISED BUT THE ONLY ISSUE IS WITH RESPECT TO LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 5. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER SUBMITTED THAT A.O LEVIED PENALTY ON THE ADDITION OF RS. 26,28,813/ - MADE U/S. 68 IN RESPECT OF SUNDRY CREDITORS OUTSTANDING AT THE END OF THE YEAR. HE SUBMITTED THAT THE A.O BY A SHOW CAUSE NOTICE DATED 14.12.2006 HAD CALLED FOR THE DETAILS OF THE SUNDRY CREDITORS AND BY THAT TIME THE ASSESSEE HAD ALREADY FILED THE REVISED RETURN OF INCOME ON 30.10.2006 AND THUS IT WAS A CASE WHERE BY THE ASSESSEE HAD OFFERED THE INCOME BEFORE DETE CTION BY THE DEPARTMENT BY FILING THE REVISED RETURN AND THEREFORE IN SUCH CASE NO PENALTY W AS LEVIA BLE. HE FURTHER SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT GIVEN A CLEAR FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME FOR WHICH HE POINTED TO PARA 5 OF THE PENALTY ORDER. HE THEREFORE ITA NO 2173/AHD/2010 . A.Y. 2003 - 04 3 SUBMITTED THAT PENALTY ORDER SHOULD CLEARLY STATE AS TO WHETHER THE PENALTY IS FOR CONCEALMENT OF INCOME OR FOR FURNISH ING OF INACCURATE PARTICULARS OF INCOME AND I N THE ABSENCE OF THE SAME, NO PENALTY CAN BE LEVIED U/S. 271(1)(C) AND FOR THIS P ROPOSITION HE RELIED ON THE DECISION IN THE CASE OF NEW SORATHIA ENGINEERING COMPANY VS. CIT 282 ITR 642 (GUJ.) AND THE DECISIONOF AHMEDABAD TRIBUNAL IN THE CASE OF JYOTI LTD. VS. ACIT ITA NO. 930 & 931/AHD/2008. THE LD. A.R. ALSO PLACED ON RECORD THAT ANN EXURE - B THE DETAILS OF DOCUMENTARY EVIDENCES IN RESPECT OF SUNDRY CREDITORS WHICH INDICATED THE DETAILS OF LEDGER ACCOUNT PURCHASE BILLS AND CONFIRMATIONS THAT WERE SUBMITTED BY THE ASSESSEE. HE THEREFORE SUBMITTED THAT SINCE THE ASSESSEE HAD FURNISHED THE DETAILS, THE INITIAL BURDEN CAST ON IT WAS DISCHARGED AND IT WAS FOR THE A.O TO CARRY OUT FURTHER INQUIRIES BASED ON THE DETAILS FURNISHED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT IN SPITE OF FILING OF VARIOUS EVIDENCES ASSESSEE SURRENDERED THE INCOME A ND FILED THE REVISED RETURN OFFERING THE SAID CREDITORS AS INCOME JUST TO BY PEACE OF MIND AND TO AVOID FURTHER LITIGATION. HE FURTHER SUBMITTED THAT NEITHER THE PURCHASES MADE FROM THE CREDITORS NOR THE CORRESPONDING SALES HAVE BEEN DOUBTED AND FURTHER TH E PAYMENTS HAVE BEEN MADE TO CREDITORS IN SUBSEQUENT YEARS. HE FURTHER SUBMITTED THAT QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE. SECTION 68 CREATES A LEGAL FICTION WHEREBY CASH CREDITS RECEIVED ARE DEEMED TO BE UNEXPLAINED FOR W ANT OF NECESSARY EVIDENCES AND CONSEQUENTLY ADDITION IS MADE U/S 68. HOWEVER, IT IS NECESSARY THAT WHEN ADDITION HAS BEEN MADE U/S 68 UNDER LEGAL FICTION PENALTY SHOULD BE LEVIED. HE THEREFORE SUBMITTED THAT MERELY BECAUSE ADDITION HAS BEEN MADE PENALTY CA NNOT BE LEVIED. HE ALSO RELIED ON THE DECISION IN THE CASE OF RELIANCE PETRO PRODUCTS REPORTED BY 322 ITR 58 (SC). HE THEREFORE SUBMITTED THAT PENALTY LEVIED BE ITA NO 2173/AHD/2010 . A.Y. 2003 - 04 4 DELETED. THE LD. D.R. ON THE OTHER HAND POINTED TO THE VARIOUS FINDINGS BY A.O AND LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, PENALTY U/S. 271(1)(C) HAS BEEN LEVIED ON THE ADDITIONS MADE U/S 68 OF HE ACT. SECTION 271(1)(C) EMPOWERS THE AO TO IMPOSE PENALTY ON AN ASSESSEE IN A CASE WH ERE (1) THERE IS CONCEALMENT OF INCOME OR (2) FURNISHING OF INACCURATE PARTICULARS OF INCOME MEANING THEREBY THAT THE AO CANNOT IMPOSE PENALTY IN CASE OF AN ASSESSEE MECHANICALLY MERELY ON THE GROUND OF ADDITION MADE OVER AND ABOVE THE INCOME DECLARED BY T HE ASSESSEE. FOR LEVY OF PENALTY THERE HAS TO BE EVIDENCE OR MATERIAL TO SHOW THAT THE ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME . I T ALSO A SETTLED LAW THAT PENALTY PROCEEDINGS ARE ENTIRELY DISTINCT FROM ASSESSMENT PROCEEDINGS AN D HOWSOEVER RELEVANT AND GOOD THE FINDINGS IN ASSESSMENT PROCEEDINGS MAY BE , THEY ARE NO T CONCLUSIVE AS FAR AS PENALTY PROCEEDINGS ARE CONSIDERED . IT IS ALSO WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITION MADE IN ASSESSMENT CAS E OF AN ASSESSEE IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULAR OF INCOME AND THAT CERTAIN DISALLOWANCES/ADDITIONS COULD LEGALLY BE MADE IN ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILIT IES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPONDERANCE OF PROBABILITIES AND THE REVENUE H AS TO PROVE THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT GENUINE. IN THE PRESENT CASE LD. AR HAS PLAC ED ON PAPER BOOK THE TABLE OF DOCUMENT ARY EVIDENCE FI L E D IN RESPECT OF SUNDRY CREDITORS LIKE LEDGER ACC OUNTS, PURCHASE BILLS, CONFIRMATIONS AND HAS THUS DISCHARGED THE INITIAL ONUS CAST UPON THE ASSESSEE . ON SUCH EVIDENCES FURNISHED NO INQUIRY WAS CONDUCTED BY AO. IT ITA NO 2173/AHD/2010 . A.Y. 2003 - 04 5 IS ALSO A FAC T THAT THE PURCHASES F R O M THE CREDIT ORS AND THE CORRESPONDING SALES HAVE NOT BEEN DOUBTED. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL TO CONTROVERT THE SUBMISSIONS OF ASSESSEE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT IN THE PRE SENT CASE PENALTY U/S. 271(1)(C) COULD NOT BE LEVIED AND THEREFORE DIRECT ITS DELETION. THUS THIS GROUND IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26 - 02 - 201 5 . SD/ - SD/ - (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEAL S) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD