The ITO, Ward-2(4), Surat V. M/s. Dharam Barrel, Surat

ITA 2362/AHD/2009

• Counselvise Citation: 236220514 RSA 2009
• Duration Of Justice: 4 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-09-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 07-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS SRDR
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI B. P. JAIN, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 2362/AHD/2009 A.Y: 2005-06 ITO, WARD-2(4), ROOM NO.119, IST FLOOR, AYAKAR BHAVAN MAJURAGATE, SURAT. VS M/S. DHARAM BARREL, PLOT NO.604/3, OPP. PROHIBITION OFFICE, GIDC, SACHIN, DIST. SURAT. PAN: AADFD 2159E (APPELLANT) (RESPONDENT) CO NO. 24/AHD/2013 (ARISING OUT OF ITA NO.2362/AHD/2009) A.Y: 2005-06 M/S. DHARAM BARREL, PLOT NO.604/3, OPP. PROHIBITION OFFICE, GIDC, SACHIN, DIST. SURAT. PAN: AADFD 2159E VS ITO, WARD-2(4), ROOM NO.119, IST FLOOR, AYAKAR BHAVAN MAJURAGATE, SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.C. MATHEWS, SRDR ASSESSEE(S) BY : SHRI M.K. PATEL, A.R. DATE OF HEARING : 24/09/ 2013 DATE OF PRONOUNCEMENT : 27/09/2013 O R D E R PER SHRI B.P. JAIN, ACCOUNTANT MEMBER : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LEARNED CIT(A)-II, SURAT, DATED 22.05.2009 FOR THE ASSESSME NT YEAR 2005-06. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF THE APP EAL, REPRODUCED AS UNDER: ITA NO.2362/AHD/2009 & CO NO. 24/AHD/2013 M/S. DHARAM BARREL. A.Y. 2005-06 - 2 - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)-II, SURAT HAS ERRED IN DELETING THE AO TO RE STRICT THE LEVY OF PENALTY TO RS.21,43,600/- AS AGAINST RS.42,60,153/- MADE BY A. O. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THAT ORDER OF THE ASSESSING OFFICER. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT( A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE E XTENT. 2. THE ASSESSEE IN THE CROSS OBJECTION HAS RAISED F OLLOWING GROUNDS, REPRODUCED AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) HAS GRIEVOUSLY ERRED IN CONFIRMING THE LEVY OF PENALTY U/S.271(1)( C) OF THE INCOME TAX ACT, 1961 IN RESPECT OF ADDITION OF CASH CREDIT OF RS.3, 00,000/-, DIFFERENCE OF BALANCE IN ACCOUNT M/S. PANWAR STILL OF RS.4,66,093 /- AND UNEXPLAINED CREDITORS OF RS.50,91,930/-. 2. THAT ON FACTS AND IN LAW THE ENTIRE PENALTY OUGH T TO HAVE BEEN DELETED AS PRAYED. 3. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE A NY GROUND(S) EITHER BEFORE OR IN THE COURSE OF THE HEARING OF THE APPEAL. 3. THE BRIEF FACTS IN THE REVENUES APPEAL AND THE CROSS OBJECTION OF THE ASSESSEE ARE THAT THE ASSESSMENT WAS FINALIZED UNDER SEC.143(3) OF THE ACT ON 27.12.2007 DETERMINING TOTAL INCOME AT RS.1, 20,35,500/- AFTER MAKING THE FOLLOWING ADDITIONS: (I) RS.32,37,280/- ON ACCOUNT OF UNEXPLAINED CAPI TAL INTRODUCED BY THE PARTNERS. (II) RS.18,05,000/- ON ACCOUNT OF UNEXPLAINED LOAN INTRODUCED UNDER SEC. 68 OF THE ACT. (III) RS.61,33,780/- ON ACCOUNT OF UNEXPLAINED SUN DRY CREDITORS. 3.1 THE ASSESSEE HAS FURNISHED IN ACCURATE PARTICUL ARS OF INCOME IN RESPECT OF AFORESAID ADDITIONS/DISALLOWANCES. THE A O HAD, THEREFORE, INITIATED AND LEVIED A PENALTY U/S. 271(1)(C) OF TH E ACT. THE AO HAD LEVIED A PENALTY U/S. 271(1)(C) OF THE ACT OF RS.42 ,60,153/- ON THE CONCEALED INCOME OF RS.1,16,42,153/- ON THE FOLLOWI NG GROUNDS. ITA NO.2362/AHD/2009 & CO NO. 24/AHD/2013 M/S. DHARAM BARREL. A.Y. 2005-06 - 3 - (A) DURING THE COURSE OF ASSESSMENT AND PENALTY PRO CEEDINGS, THE ASSESSEE HAD, ON BEING SPECIFICALLY REQUESTED FOR, NEITHER ATTENDED NOR HAD FURNISHED ANY POSITIVE OR CONSTRUCTIVE EVIDENCE S TO PROVE THE OUTSTANDING CREDITS SHOWN IN THE BOOKS OF ACCOUNT. (B) DURING THE COURSE OF ASSESSMENT AND PENALTY PROCEEDINGS, THE ASSESSEE HAD, ON BEING SPECIFICALLY REQUESTED FOR, NEITHER ATTENDED NOR HAD FURNISHED ANY POSITIVE OR CONSTRUCTIVE EVIDENCE S TO PROVE THE- 1. IDENTITIES AND CREDITWORTHINESS OF THE CREDITOR S AS WELL AS GENUINENESS OF LOAN TRANSACTION. 2. ANY PRESENT POSTAL ADDRESSES, PROOF ANY I.T. RET URNS/ BANK STATEMENT OF ANY OF THE OUTSTANDING CREDITORS. (C) IN ABSENCE OF CONFIRMATORY LETTERS OR PRESENT P OSTAL ADDRESSES OF THE SO CALLED CREDITORS OR OUTSTANDING SUNDRY CREDI TORS, NO INDEPENDENT ENQUIRIES COULD BE MADE TO VERIFY THE CREDIT WORTHI NESS OF THE CREDITORS AND GENUINENESS OF THE SO CALLED LOAN TRANSACTIONS/ TRANSACTIONS OF OUTSTANDING SUNDRY CREDITORS. (D) THE ASSESSEE HAD NEITHER ATTENDED DURING THE CO URSE OF ASSESSMENT OR PENALTY PROCEEDINGS NOR HAS FURNISHED ANY SUPPOR TING EVIDENCES WITH REGARD TO TRANSACTIONS AND OUTSTANDING SUNDRY CREDI TORS, WHICH ITSELF CLEARLY SHOWS THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER AND NO EVIDENCES TO ADDUCE TO PROVE THE SO CALLED LOAN TR ANSACTIONS AND TRANSACTIONS WITH OUTSTANDING SUNDRY CREDITORS AN D THEREBY THE ASSESSEE HAD CONSCIOUSLY AND DELIBERATELY FURNISHED INACCURA TE PARTICULARS OF INCOME WITHIN THE MEANING SECTION 271(1)(C) OF THE ACT. ITA NO.2362/AHD/2009 & CO NO. 24/AHD/2013 M/S. DHARAM BARREL. A.Y. 2005-06 - 4 - 3.2 ON APPEAL, THE LD. CIT(A) HAS RESTRICTED THE PE NALTY LEVIED BY AO U/S. 271(1)(C) OF THE ACT OF RS.42,60,153/ TO RS.21 ,43,600/- ON THE FOLLOWING GROUNDS: 1. ON APPEAL, AGAINST THE ADDITION MADE BY THE AO OF RS.1,16,42,153/- THE ADDITION WAS RESTRICTED TO RS. 53,58,023 VIDE APPELLATE ORDER NO.CAS/II/450/07-08 DATED. 26.11.20 08 IN THE QUANTUM APPEAL. 2. THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT OF RS. 42,60,153/- IS THEREFORE, RESTRICTED TO RS.21,43,600/- BASED ON TH E REDUCED CONCEALED INCOME AS PER QUANTUM APPELLATE ORDER DA TED 26.11.2008. 3.3 LEARNED CIT(A) HAS DIRECTED THE AO TO RESTRICT THE LEVY OF SUCH PENALTY TO THE UNEXPLAINED CASH CREDIT OF RS.3 LACS AND RS.4,66,093/- AND IN RESPECT UNEXPLAINED AND NON VERIFIABLE CREDITORS TO THE TUNE OF RS.50,91,930/-. 4. LEARNED COUNSEL FOR THE ASSESSEE, MR. M.K. PATEL , AT THE OUTSET, INVITED OUR ATTENTION TO THE DECISION OF ITAT AHMED ABAD D BENCH IN ITA 502/AHD/2009 AND ITA 566/AHD/2009, DATED 06.01. 2012 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 , WHEREIN WITH RESPECT TO THE PARTNERS CAPITAL AMOUNTING TO RS.32 ,37,280/-, THE ITAT HAS DELETED THE ADDITION AT PAGES 4 TO 9 OF ITS ORDER I N PARAGRAPH 4 TO 7. LEARNED COUNSEL HAS FURTHER INVITED OUR ATTENTION A T PAGE 15 WITH REGARD TO CASH CREDIT OF RS.15,05,000/- WHERE THE REVENUES A PPEAL HAS BEEN DISMISSED BY THE ITAT. THE ADDITION OF RS.1,50,000/ - IN CASE OF MR. MATHEW HAS BEEN CONFIRMED AT PAGE 15 PARAGRAPH 14.5 OF THE ORDER OF THE ITAT AND WITH REGARD TO THE ADDITION OF RS.50,000/- IN THE CASE OF M/S. ITA NO.2362/AHD/2009 & CO NO. 24/AHD/2013 M/S. DHARAM BARREL. A.Y. 2005-06 - 5 - PARTH COMPUTERIZED WEIGH BRIDGE, THE MATTER WAS SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION AND RS.1 LAC IN THE C ASE OF MR. S.K. GUPTA WAS ALSO SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION AT PAGE 15 PARAGRAPH 14.5 OF ITATS ORDER. HE HAS ALSO INVITED OUR ATTENTION AT PAGES 15 TO 17 AND 17 TO 21 WITH RESPECT TO THE ADVANCES FROM CUSTOMER AND NON VERIFIABLE CREDITOR AMOUNTING TO RS.4,66,093/- AND RS.50,91,930/-, RESPECTIVELY, WHERE THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE, MR. M.K. PATEL, PRAYED TO CANCEL THE PENALTY AND DISMIS S THE REVENUES APPEAL WITH REGARD TO THE QUANTUM ADDITION IN THE C ASE OF PARTNERS CAPITAL ACCOUNT AND CASH CREDIT ACCOUNT MENTIONED H EREINABOVE. HE ALSO PRAYED TO CANCEL THE PENALTY FOR SET ASIDE THE MATTERS TO THE FILE OF THE AO SINCE THE ISSUE IS NO MORE IN EXISTENCE AND, THE REFORE, NO PENALTY CAN STAND IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE. 5. LEARNED DR, ON THE OTHER HAND, AGREED TO THE ARG UMENTS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE WITH REGARD TO THE ADDITIONS DELETED BY THE ITAT OR DEPARTMENTS APPEAL DISMISSED BY THE ITAT IN ASSESSEES OWN CASE IN QUANTUM ORDERS BEING ITA NOS.502/AHD/20 09 AND 566/AHD/2009 (SUPRA). LEARNED D.R. FURTHER ARGUED T HAT THE MATTER WITH REGARD TO THE SET ASIDE ISSUE BE ALSO SET ASIDE INS TEAD OF CANCELLING THE PENALTY. HE FURTHER ARGUED THAT THE PENALTY WITH RE GARD TO RS.1,50,000/- WHICH HAS BEEN CONFIRMED BY THE ITAT SHOULD BE CONF IRMED SINCE NO DETAILS HAVE BEEN PLACED ON RECORD BY THE ASSESSEE BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE THIS BENCH. ITA NO.2362/AHD/2009 & CO NO. 24/AHD/2013 M/S. DHARAM BARREL. A.Y. 2005-06 - 6 - 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS, THE PARTNERS CAPITAL AND CASH CR EDITS OF RS.32,37,280/- AND RS.18,05,000/-, THE LEARNED CIT(A) IN QUANTUM H AS ALLOWED THE RELIEF TO THE ASSESSEE AND THE ITAT D BENCH AHMEDABAD IN ITA NO.502/AHD/2009 AND 566/AHD/2009 (SUPRA) DISMISSED THE APPEAL OF THE REVENUE WITH REGARD TO THESE TWO CONDITIONS. THEREF ORE, WHEN THE BASIS OF THE ADDITION DOES NOT EXIST, THEN NO PENALTY CAN SU BSIST. AS REGARDS, THE MATTERS HAS BEEN SET ASIDE TO THE FILE OF THE AO WI TH REGARD TO THE M/S. PARTH COMPUTERIZED WEIGH BRIDGE AMOUNTING TO RS.50, 000/-, WITH REGARD TO MR. S.K. GUPTA AMOUNTING TO RS.1 LAC, ADVANCES F ROM CUSTOMER RS.4,66,093/- AND NON VERIFIABLE CREDIT BALANCE TO RS. 50,91,930/-, THE MATTER HAS BEEN SET ASIDE TO THE FILE OF THE AO IN QUANTUM BY THE ITAT D BENCH AHMEDABAD IN ITS ORDER DATED 06.01.2012 ( SUPRA) AND THEREFORE, THE ADDITIONS ON THE DATE OF ORDER OF TH E ITAT AHMEDABAD, DATED 06.01.2012 (SUPRA) CANNOT SURVIVE. THE ARGUME NT MADE BY LEARNED DR THAT THE MATTER SHOULD BE SET ASIDE TO THE FILE OF THE AO WITH REGARD TO THE PENALTY AS WELL IS NOT ACCEPTED. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE AS MENTIONED HEREINABOVE, THE AO IS DIRECTED TO CANCEL THE PENALTY WITH REGARD TO PARTNERS CAPITAL, CASH CREDIT, ADVANCES FROM CUSTOMER AND NON VERIFIABLE CREDIT AS MENTIONED HER EINABOVE EXCEPT THE PENALTY WITH REGARD TO MR. MATHEW FOR A CASH CREDI T OF RS.1,50,000/-. THE AO IS FREE TO LEVY THE PENALTY WITH REGARD TO SET A SIDE THE MATTER ON THE DECISION IN QUANTUM BUT ACCORDING TO LAW. AS REGARD S, THE PENALTY ON THE CASH CREDIT OF RS.1,50,000/- REGARDING TO MR. MATHE W NO DETAILS HAVE BEEN FURNISHED BY THE ASSESSEE BEFORE ANY OF THE AUTHORI TIES BELOW OR EVEN BEFORE US AND THEREFORE, IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, THE ASSESSEE HAS CONCEALED THE INCOME AND FURNISHED INA CCURATE PARTICULARS OF ITA NO.2362/AHD/2009 & CO NO. 24/AHD/2013 M/S. DHARAM BARREL. A.Y. 2005-06 - 7 - INCOME AND THEREFORE, WE FIND NO INFIRMITY IN THE O RDER OF THE LEARNED CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE AO IN LEVYING THE PENALTY WITH REGARD TO THE CASH CREDIT OF RS.1,50,0 00/- RELATING TO MR. MATHEW AND THE SAME IS HEREBY CONFIRMED. ACCORDINGL Y, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- (KUL BHARAT) ( B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBE R AHMEDABAD; DATED 27/09/2013 PRABHAT KR. KESARWANI, SR.P.S. TRUE COPY COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A)-III, AHMEDABAD 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, (DY./ASSTT.REGISTRAR) ITAT, AHMEDABAD