Subshri Bio Energies Private Limited, Tiruchengode V. ACIT, Salem

ITA 2210/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1192 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI JT
• Assessee Lawyers: G BASKAR
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NO.2210/MDS/2012 ASSESSMENT YEAR : 2007-08 M/S SUBHASHRI BIO ENERGIES PVT. LTD SENGUTTAIKADU MUNJANUR POST TIRUCHENGODE 637 403 VS THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE I(1) SALEM [PAN AAHCS 5283 P] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. BASKAR, ADVOCATE RESPONDENT BY : SHRI T.N.BETGIRI, JT.CIT DATE OF HEARING : 14-03-2013 DATE OF PRONOUNCEMENT : 21-03-2013 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASS ESSEE AGAINST THE ORDER OF THE LD. CIT(A), SALEM, DATED 22.10.2012. 2. THE SOLE ISSUE RAISED BY THE ASSESSEE IN THIS APP EAL IS THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY OF ` 3,26,165/- U/S 271(1)(C) OF THE ACT. I.T.A.NO.2210/12 :- 2 -: 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS CLAIMED TO H AVE RECEIVED UNSECURED LOANS OF ` 64,01,693/- FROM S. DURAIRAJU (HUF). OUT OF THIS, ` 54,32,693/- WAS GIVEN BY THE SAID CREDITOR BY TRAN SFERRING THE DEPOSITS OF ` 50 LAKHS HELD IN INDIAN OVERSEAS BANK, SALEM, ALON GWITH INTEREST ON MATURITY. THE ASSESSEE FILED EVIDENCE IN SUPPORT OF THE SAME. THE BALANCE AMOUNT OF ` 9,69,000/- WAS STATED BY THE ASSESSEE TO HAVE BEEN RECEIVED IN CASH. ACCORDING TO THE ASSESSING OFFICER, NEITHER THE ASSESSEE NOR THE CREDITOR COU LD EXPLAIN THE SOURCE OF ` 9,69,000/-. THEREFORE, THE ASSESSING OFFICER ADDE D ` 9,69,000/- TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. 4. THE ASSESSEE ACCEPTED THE SAID ADDITION AND DID NO T APPEAL THEREAGAINST AS BECAUSE AFTER THE SAID ADDITION THE ASSESSING OFFICER COMPUTED THE INCOME OF THE ASSESSEE AT A LOSS OF ` 7,76,48,006/-. 5. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE U/ S 271(1)(C) OF THE ACT AND LEVIED A PENALTY OF ` 3,26,165/- BEING 100% TAX PROPORTIONATE TO THE ADDITION OF ` 9,69,000/- ON THE GROUND OF CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESS EE. I.T.A.NO.2210/12 :- 3 -: 6. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), W HO CONFIRMED THE LEVY OF PENALTY ON THE GROUND THAT TH E ASSESSEE FAILED TO SUBSTANTIATE THE EXPLANATION GIVEN BY HIM FOR CA SH LOAN AND THAT THE HON'BLE SUPREME COURT IN THE CASE OF UOI VS DHA RMENDRA TEXTILE PROCESSORS, 306 ITR 277, HAS HELD THAT EXPLANATION TO SECTION 271(1)(C) OF THE ACT INDICATES ELEMENT OF STRICT LI ABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULAR S OF INCOME WHILE FILING RETURN. 7. THE LD. A.R OF THE ASSESSEE ARGUED THAT FOR THE CA SH LOAN OF ` 9,69,000/-, THE ASSESSEE FILED COPY OF CONFIRMATI ON LETTER FROM THE CREDITOR AND ALSO A COPY OF REGISTERED PARTITION DE ED DATED 8.3.1985 TO PROVE THAT THE CREDITOR HAD 15.31 ACRES OF AGRICULT URAL LAND AT MUNJANUR VILLAGE, TIRUCHENGODE, IN SUPPORT OF HIS C ONTENTION THAT THE CASH LOAN OF ` 9,69,000/- WAS GIVEN BY THE CREDITOR FROM OUT OF H IS PAST ACCUMULATED AGRICULTURAL INCOME. THE ASSESSIN G OFFICER HAS NOT MADE ANY ENQUIRY OR BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE SAID EVIDENCE WAS FALSE OR THAT THE CREDITOR COULD NOT HAVE ADVANCED THE LOAN FROM OUT OF HIS AGRICULTURAL INCOME. HE F URTHER ARGUED THAT THE ASSESSING OFFICER HAS ACCEPTED THE CREDITWORTHI NESS WITH RESPECT TO ` 54,32,963/- WHICH ALSO PROVES THE CREDITWORTHINESS FOR ` 9,69,000/-. I.T.A.NO.2210/12 :- 4 -: 8. THE LD. DR FULLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 9. WE FIND THAT IN THE INSTANT CASE, ADDITION OF ` 9,69,000/- WAS MADE IN THE ASSESSMENT BY INVOKING THE PROVISIONS O F SECTION 68 OF THE ACT BECAUSE ACCORDING TO THE ASSESSING OFFICER, CRE DITWORTHINESS OF THE CREDITOR TO THAT EXTENT COULD NOT BE EXPLAINED BY T HE ASSESSEE OR BY THE CREDITOR. ON THE BASIS OF THIS ADDITION MADE U/S 68 ONLY THE PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED BY TH E ASSESSING OFFICER WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A). 10. IN OUR CONSIDERED VIEW, THE CONSIDERATIONS WHICH AP PLY IN A PENALTY PROCEEDING ARE DIFFERENT FROM THE CONSIDERA TIONS WHICH APPLY IN AN ASSESSMENT PROCEEDING. THE MERE INABILITY OF AN ASSESSEE TO SUBSTANTIATE HIS CLAIM MAY BE ENOUGH FOR MAKING THE ADDITION IN AN ASSESSMENT PROCEEDING BUT THE SAME CANNOT BE ENOUGH FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. WE FIND THAT I N THE INSTANT CASE, THE IDENTITY OF THE CREDITOR IS NOT IN DISPUTE INASMUCH AS THE ASSESSING OFFICER HIMSELF ACCEPTED LOAN OF ` 54,32,693/- OUT OF THE TOTAL LOAN OF ` 64,01,693/- FROM THE SAID CREDITOR AS GENUINE. FUR THER, IT IS ALSO OBSERVED THAT THE CREDITOR HAS ALSO DULY CONFIRMED THE ADVANCING OF ` 64,01,693/- INCLUDING ` 9,69,000/- IN CASH AS LOAN TO THE ASSESSEE. I.T.A.NO.2210/12 :- 5 -: 11. FURTHER, IN SUPPORT OF THE CLAIM OF ADVANCING OF LO AN TO THE ASSESSEE, DOCUMENT FOR POSSESSION OF AGRICULTURAL LAND BY THE CREDITOR WAS ALSO FILED BEFORE THE ASSESSING OFFICER. NO MA TERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE LOAN TO THE EXTENT OF ` 9,69,000/- WAS BOGUS OR FICTITIOUS. THE ADDITION WAS MADE ON THE GROUND THAT THE ASSESSING OFFICER WAS N OT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE ABOUT THE SOURCE O F ` 9,69,000/- BUT AT THE SAME TIME, THE ASSESSING OFFICER COULD NOT B RING ANY POSITIVE MATERIAL ON RECORD AFTER VERIFICATION TO SHOW THAT THE CREDITOR COULD NOT HAVE ADVANCED ` 9,69,000/- TO THE ASSESSEE. IN THESE CIRCUMSTANC ES, IN OUR CONSIDERED VIEW, LEVY OF PENALTY U/S 271(1 )(C) OF THE ACT IN RESPECT OF THE SAID AMOUNT OF ` 9,69,000/- IS NOT TENABLE. OUR ABOVE VIEW FINDS SUPPORT FROM THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF S.V.KALYANAM VS ITO[2010] 327 ITR 47 7(MAD) WHEREIN IT WAS HELD THAT ADDITION MADE UNDER A DEEMING PROV ISION LIKE SECTION 69, COULD NOT BE EXTENDED TO PENALTY PROVISION. IN THE INSTANT CASE, ADDITION WAS MADE U/S 68 WHICH IS A DEEMING PROVISI ON. THUS, DEEMING PROVISION CANNOT BE EXTENDED FOR LEVY OF PE NALTY. 12. FURTHER, WE FIND THAT THE LEVY OF PENALTY IS UNSUST AINABLE ALSO IN VIEW OF THE RECENT DECISION OF THE HON'BLE SUPRE ME COURT IN THE CASE I.T.A.NO.2210/12 :- 6 -: OF CIT VS RELIANCE PETROPRODUCTS PRIVATE LTD , 322 ITR 158, WHEREIN THE HON'BLE SUPREME COURT, AFTER TAKING INTO CONSID ERATION ITS EARLIER DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSO RS (SUPRA) HELD THAT MERELY BECAUSE AN ASSESSEE IS NOT ABLE TO SUB STANTIATE ITS CLAIM IN THE RETURN OF INCOME, DOES NOT AUTOMATICALLY MEA N THAT THE ASSESSEE IS GUILTY OF FURNISHING INACCURATE PARTICU LARS OF INCOME SO AS THE ASSESSEE CAN BE VISITED WITH PENALTY U/S 271 (1)(C) OF THE ACT. WE, THEREFORE, DELETE THE LEVY OF PENALTY OF ` 3,26,165/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. TH US, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 21 ST OF MARCH, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 21 ST MARCH, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR