ITO, Gurgaon V. M/s. Surender Kumar Prop., Gurgaon

ITA 2396/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73991 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 02-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 18-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Keywords: Unexplained cash credit; Difference of opinion
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .2396/DEL/2012 2396/DEL/2012 2396/DEL/2012 2396/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2004 2004 2004 2004- -- -05 0505 05 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -1(3), 1(3), 1(3), 1(3), GURGAON. GURGAON. GURGAON. GURGAON. VS. VS. VS. VS. SHRI SURENDER K SHRI SURENDER K SHRI SURENDER K SHRI SURENDER KUMAR, UMAR, UMAR, UMAR, PROP. M/S SHRI KRISHNA FLOUR MILLS, PROP. M/S SHRI KRISHNA FLOUR MILLS, PROP. M/S SHRI KRISHNA FLOUR MILLS, PROP. M/S SHRI KRISHNA FLOUR MILLS, HAILY MANDI, HAILY MANDI, HAILY MANDI, HAILY MANDI, GURGAON. GURGAON. GURGAON. GURGAON. PAN : PAN : PAN : PAN : AKMPK1306M. AKMPK1306M. AKMPK1306M. AKMPK1306M. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. RENUKA JAIN GUPTA, SR.DR. RESPONDENT BY : SHRI VIJAY KUMAR GUPTA, ADVOCATE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LEARNED CIT(A), FARIDABAD DATED 17 TH FEBRUARY, 2012 FOR THE AY 2004- 05. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AGAINST TH E CANCELLATION OF PENALTY OF ` 3,51,406/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 . 3. THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THE CASH CREDIT OF ` 10,36,000/- IN THE ACCOUNTS OF THE ASSESSEE IN THE NAME OF THE FOLLOWING THREE PERSONS :- (I) MRS. URMILA DEVI : ` 2,82,700/- (II) SHRI KRISHAN KUMAR : ` 3,76,600/- (III) SHRI INDERJEET RAJPURA : ` 3,76,700/- ---------------- ` 10,36,000/- ---------------- ITA-2396/DEL/2012 2 4. THE ASSESSEE HAD FURNISHED THE AFFIDAVIT OF THE CREDI TORS AND THE CREDITORS WERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER BUT HE WAS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE CREDITOR S AND THE GENUINENESS OF THE TRANSACTIONS. ACCORDINGLY, HE MADE THE ADDITION OF ` 10,36,000/- FOR UNEXPLAINED CASH CREDIT UNDER SECTIO N 68 WHICH WAS SUSTAINED BY THE LEARNED CIT(A) AS WELL AS THE ITAT. T HE ASSESSING OFFICER ALSO LEVIED PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO ` 3,51,406/- ON THE ABOVE ADDITION OF CASH CREDIT. ON APPEAL, THE LEARNED CIT(A) CANCELLED THE PENALTY. HENCE, THIS A PPEAL BY THE REVENUE. 5. AT THE TIME OF HEARING BEFORE US, LEARNED DR ARGU ED AT LENGTH. SHE STATED THAT ALL THE CREDIT IS BY CASH AND THE CRED ITORS ARE NOT ASSESSED TO INCOME TAX. THAT THOUGH THE CREDITORS APPEA RED BEFORE THE ASSESSING OFFICER BUT THEY WERE UNABLE TO ESTABLISH T HE SOURCE FROM WHERE THE AMOUNT WAS PAID. THE CREDITORS HAVE NO SOUR CE OF INCOME EXCEPT AGRICULTURAL INCOME. IN VIEW OF THE ABOVE, SHE SUBMITTED THAT THE ASSESSING OFFICER HAD RIGHTLY LEVIED THE PENALTY UN DER SECTION 271(1)(C) AND THE LEARNED CIT(A), WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE, CANCELLED THE PENALTY. THE ORDER OF LEARNED CIT(A) SHOULD BE REVERSED AND THE PENALTY SHOULD BE AFFIRMED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HA ND, STATED THAT THE CREDITORS HAVE FURNISHED THE AFFIDAVIT AFFIR MING THE DEPOSIT OF THE MONEY WITH THE ASSESSEE. THEY ALSO APPEARED BEFORE THE ASSESSING OFFICER AND FURTHER AFFIRMED THE MONEY ADVANC ED BY THEM. ALL THE CREDITORS HAVE AGRICULTURAL INCOME AND THE E VIDENCE OF THE LANDHOLDING AND THE SALE OF AGRICULTURAL PRODUCE WAS DULY PRODUCED BEFORE THE ASSESSING OFFICER. THAT EVEN THE ITAT IN IT S ORDER DATED 18 TH DECEMBER, 2009 IN QUANTUM APPEAL IN PARAGRAPH 5.1 H AS OBSERVED ITA-2396/DEL/2012 3 NO DOUBT, THE SOURCE OF INCOME IS THERE WITH THE CRED ITORS BUT IT DOES NOT CONCLUSIVELY PROVE THAT THE AMOUNT HAS COME FROM THAT SOURCE. THE NEXUS BETWEEN THE SOURCE AND THE CASH CREDIT IS TO BE ESTABLISHED. THAT ONCE THERE IS A SOURCE OF INCOME IN THE HAND S OF THE CREDITORS, THE ASSESSEE HAS DULY DISCHARGED THE ONUS WHICH LAY UPON HIM. THERE IS NO REQUIREMENT THAT THERE SHOULD BE NE XUS BETWEEN THE SOURCE AND THE CASH CREDIT. HOWEVER, AT PRESENT, IT IS ONLY THE PENALTY APPEAL AND, FOR THE PURPOSE OF PENALTY, THE ASSESSEE HAS DULY FURNISHED THE EXPLANATION OF THE CASH CREDIT BY SUBMIT TING THE AFFIDAVITS OF THE CREDITORS AND PRODUCING THE CREDITO RS BEFORE THE ASSESSING OFFICER. SUCH EXPLANATION HAS NOT BEEN FOUND TO BE FALSE. MERELY BECAUSE THE ASSESSING OFFICER AND THE APPELLATE A UTHORITIES WERE NOT SATISFIED ABOUT THE CREDITWORTHINESS OF THE CR EDITORS, IT CANNOT BE SAID THAT THERE IS ANY CONCEALMENT OF INCOME BY TH E ASSESSEE. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LEARNED C IT(A) SHOULD BE SUSTAINED. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE LEARN ED CIT(A) DISCUSSED THE LEGAL POSITION AS WELL AS THE FACTS OF THE C ASE AND THEREAFTER CONCLUDED AS UNDER:- WHEN THE CREDITORS HAVE ADMITTED HAVING ADVANCED LO ANS TO THE APPELLANT AND THE AO HAS NOT ESTABLISHED THAT T HE LOANS SO RECEIVED WERE ACTUALLY THE CONCEALED INCOME OF ASSESSEE, THE ASSESSEE CANNOT BE PENALIZED U/S 271(1)(C) MERELY BECAUSE AN ADDITION HAS BEEN MADE UNDER THE DEEMING PROVISIONS OF SECTION 68 OF THE ACT. AS REGAR DS DISALLOWANCES OUT OF VARIOUS EXPENSES, THERE HAS BEEN A BONAFIDE DIFFERENCE OF OPINION BETWEEN THE AO AND T HE APPELLANT AS TO THE ALLOWABILITY OR OTHERWISE OF SUCH EXPENSES AND NOTHING TO CONCLUDE THAT THE APPELLANT FURNISHED INACCURATE PARTICULARS OF HIS INCOME. HENC E, NO PENALTY CAN BE LEVIED ON ADDITION/OTHER DISALLOWANCE S MADE BY THE AO. KEEPING IN VIEW THE ABOVE FACTUAL AND ITA-2396/DEL/2012 4 LEGAL POSITION, THE PENALTY OF RS.3,51,406/- LEVIED B Y THE AO IS NOT SUSTAINABLE AND CONSEQUENTLY, THE PENALTY ORDER PASSED BY THE AO IS CANCELLED. ALL THE GROUNDS OF APPE AL TAKEN UP BY THE APPELLANT ARE ALLOWED. 8. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES AN D THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ABO VE FINDING OF THE LEARNED CIT(A). THE ASSESSEE HAS FURNISHED THE AFFIDAVIT OF THE CREDITORS. THE CREDITORS WERE ALSO PRODUCED BEFORE TH E ASSESSING OFFICER. THEY HAVE ADMITTED TO HAVE ADVANCED THE M ONEY TO THE ASSESSEE. THEY HAVE ALSO PRODUCED EVIDENCE WITH REGARD TO THE SOURCE OF INCOME IN THEIR HANDS. MERELY BECAUSE THE ASSESSING O FFICER OR APPELLATE AUTHORITIES WERE NOT SATISFIED WITH THE SOURC E OF INCOME, IT CANNOT BE SAID THAT THE ASSESSEE EITHER FURNISHED INACC URATE PARTICULARS OR CONCEALED THE INCOME. ON THESE FACTS, THE ASSESSEES CASE DOES NOT FALL WITHIN THE MISCHIEF OF EXPLANATION (1) TO SECTION 271(1)(C) BECAUSE THE ASSESSEE OFFERED AN EXPLANATION WI TH REGARD TO CASH CREDIT WHICH WAS NOT FOUND TO BE FALSE BY THE ASSESSI NG OFFICER OR THE LEARNED CIT(A) AND THE ASSESSEE ALSO SUBSTANTIATED THE EXPLANATION BY PRODUCING THE CREDITORS WHO ADMITTED HAVING ADVAN CED THE MONEY TO THE ASSESSEE. IN VIEW OF THE ABOVE, WE UPHOLD THE O RDER OF LEARNED CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . DECISION PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY, 2014. SD/- SD/- ( (( (I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 03.01.2014 VK. ITA-2396/DEL/2012 5 COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -1(3), GURGAON. 1(3), GURGAON. 1(3), GURGAON. 1(3), GURGAON. 2. RESPONDENT : SHRI SURENDER KUMAR, SHRI SURENDER KUMAR, SHRI SURENDER KUMAR, SHRI SURENDER KUMAR, PROP. M/S SHRI KRISHNA FLOUR MILLS, PROP. M/S SHRI KRISHNA FLOUR MILLS, PROP. M/S SHRI KRISHNA FLOUR MILLS, PROP. M/S SHRI KRISHNA FLOUR MILLS, HAILY MANDI, GURGAON. HAILY MANDI, GURGAON. HAILY MANDI, GURGAON. HAILY MANDI, GURGAON. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR