Salem Automech (India) P Ltd., CHENNAI V. Addl. CIT, Salem

ITA 2307/CHNY/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5007 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 27-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 15-09-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A S SRIRAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.2307/MDS./2014 / ASSESSMENT YEAR : 2007-08 M/S.SALEM AUTOMECH (INDIA) P. LTD., 5/37,SALEM AUTOMECH COMPLEX, JAGIR AMMAPALAYAM, SALEM 636 302. VS. THE ACIT, RANGE-1, SALEM. [PAN AAHCS 4007 R ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.A.S.SRIRAMAN,ADVOCATE /RESPONDENT BY : MR.A.V.SREEKANTH, JCIT, D.R / DATE OF HEARING : 27 .03.2017 !' / DATE OF PRONOUNCEMENT : 12 .04 .2017 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY ASSESSEE , ITS GRIEVANCE IS THAT THE LD.CIT(A), SALEM-7, VIDE ORDER DATED NIL CONFIRMED THE PENALTY OF ITA NO.2307/MDS./2017 :- 2 -: ` 2,86,110/- LEVIED ON THE ASSESSEE UNDER SECTION.2 71(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE FACTS OF THE CASE ARE THAT IN COURSE OF ASS ESSMENT , IT WAS OBSERVED BY THE AO THAT ASSESSEE RECEIVED ` 8.5 LAKHS CASH FROM MR. M.V.SELLAMUTHU ON VARIOUS DATES. THE ASSESSEE HAS NOT PROPERLY EXPLAINED THE SOURCE OF THAT CREDI T. HENCE, THERE WAS AN ADDITION U/S.68 OF THE ACT. CONSEQUENTLY, ON COMPLETION OF ASSESSMENT, THE AO ISSUED PENALTY NOTICE UNDER SECT ION.271(1)(C) ON 22.12.2009. THE ASSESSEE MADE A PLEA BEFORE THE AO THAT MR. M.V.SELLAMUTHU IS ASSESSED TO INCOME-TAX FOR MORE T HAN 20 YEARS WITH PAN AIJPS 2959 R AND THOUGH THE COMPANY REQUES TED MR. M.V.SELLAMUTHU TO FURNISH DETAILS RELATING TO PERSO NAL STATEMENT OF AFFAIRS RECONCILING WITH THE CAPITAL ACCOUNT IN BUS INESS BOOKS OF ACCOUNT. BUT MR. M.V.SELLAMUTHU HAS EXPRESSED HIS I NABILITY TO SUBMIT THE SAME WITHIN THE TIME GIVEN BY THE AO ON THE REASON OF PRE-OCCUPATION IN SOME BUSINESS ENGAGEMENTS. HENCE, THE AO LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT B Y OBSERVING THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS AND CRE DIT WORTHINESS OF THE TRANSACTION BETWEEN THE ASSESSEE AND MR. M.V.SELLAMUTHU. HENCE, THE AO WAS OF THE OPINION TH AT THE ASSESSEE HAS NOT DISCHARGED THE PRIMARY BURDEN CAST UPON IT BY ITA NO.2307/MDS./2017 :- 3 -: FILING THE PROPER DOCUMENTS TO EXPLAIN THE CASH CRE DIT. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A ). ON APPEAL, THE LD.CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE AO. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE CONTENTION OF LD.A.R IS THAT ASSESSEE H AS RECEIVED AN AMOUNT OF ` 8.5 LAKHS FROM MR. M.V.SELLAMUTHU AND THE ASSESSEE HAS EXPLAINED THAT MR. M.V.SELLAMUTHU WAS ASSESSED TO TAX AND IF IT IS NOT REFLECTED IN HIS BOOKS OF ACCOUNTS OF THE CREDITOR, ASSESSEE CANNOT BE RESPONSIBLE FOR THE SAME AND FOR THE PURPOSE OF AVOIDING THE LITIGATION, THE ASSESSEE HAS ACCEPT ED THE ADDITION MADE IN THE ASSESSMENT, BUT THAT ITSELF CANNOT BE R EASONS FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. FU RTHER, THE ASSESSEE SUBMITTED THAT MERE NOT ACCEPTANCE OF EXPL ANATION OF THE ASSESSEE THAT IT SHALL NOT LEAD TO THE CONCLUSI ON THAT ASSESSEE CONCEALED IN PARTICULARS OF INCOME OR FURNISHING IN ACCURATE INCOME. FURTHER, LD.A.R RELIED ON THE JUDGEMENT OF THIS TRIBUNAL IN THE CASE OF MR.R.A.PALANISAMY VS. ITO IN ITA NO.1730/MDS./2015 VIDE ORDER DATED 06.04.2016. ITA NO.2307/MDS./2017 :- 4 -: 3.1 ADMITTEDLY, IN THIS CASE ASSESSEE HAS GIVEN EX PLANATION REGARDING ENTRY OF CASH CREDIT FOUND IN THE BOOKS O F ACCOUNT OF THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING AUTHORITY AS WELL AS LD.CIT(A). THE SUSTENANCE OF ADDITION MADE BY THE AUTHORITIES WAS NOT APPEALED B Y THE ASSESSEE ON THE REASON OF SMALLNESS OF AMOUNT AND T O AVOID LITIGATION. HOWEVER, FOR LEVYING OF PENALTY, THE A O HAS TO DISPROVE THE EXPLANATION GIVEN BY THE ASSESSEE AS NOT BONAF IDE OR FALSE. IN THE PRESENT CASE, THE ASSESSEE HAS GIVEN EXPLANA TION THAT THE ASSESSEE HAS RECEIVED THAT AMOUNT FORM MR. M.V.SELL AMUTHU WHICH WAS NOT ACCEPTED BY THE LOWER AUTHORITES. HO WEVER, IT WAS NOT DISPROVED THE CONTENTION OF THE ASSESSEE BY THE DEPARTMENT. HENCE, AS HELD BY THE KOLKATA HIGH COURT IN THE CAS E OF DURGA KAMAL RICE MILLS VS. CIT IN [2004] 265 ITR 25 (CAL) AND GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT IN [2001] 249 ITR 125 (GUJ), THERE IS A DIFFERENCE IN FACTS NOT PROVED AND FACTS DISPROVED. IT IS FURTHER HELD THAT PENALTY CAN BE LEVIED ONLY FOR THE LATTER. SIMILAR VIEW HAS BEEN TAKEN IN CIT VS. VIDYAGAURI NATVERLAL & ORS. REPORTED IN [1999] 153 CTR 546(GU J.). BEING SO, IN THE PRESENT CASE, THE EXPLANATION GIVEN BY T HE ASSESSEE NOT DISPROVED BY THE LD. ASSESSING OFFICER, AS SUCH THE RE IS NO ITA NO.2307/MDS./2017 :- 5 -: CONCLUSIVE EVIDENCE TO SHOW THAT ASSESSEE HAS CONCE ALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. AT THIS STAGE, LEVY OF PENALTY IS NOT PROP ER. ACCORDINGLY, THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT IS DELE TED. 4. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 12 TH APRIL, 2017, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 12 TH APRIL, 2017. K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF