The ITO, Ward-2(4), Surat V. Shri Purshottam H.Madan, Ahmedabad

ITA 2398/AHD/2011

• Counselvise Citation: 239820514 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 22-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: UMAIDSINGH BHATI AR
• Keywords: Unexplained cash credit
• Section: 37(1); 68; 28; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .. , , BEFORE SHRI BEFORE SHRI G.D. AGARWAL,VICE PRESIDEN T (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2398/AHD/2011 ( / ASSESSMENT YEAR : 2005-06) THE ITO WARD-2(4) SURAT / VS. SHRI PURSHOTTAM H.MADAN A-71, LAV KUSH APARTMENT OPP. JAY AMBE NAGAR THALTEJ DRIVE-IN-ROAD, AHMEDABAD ! '# ./ ./ PAN/GIR NO. : ACPHM 2556 Q ( !% / APPELLANT ) .. ( &'!% / RESPONDENT ) !%(' / APPELLANT BY : SHRI M.K. SINGH, SR.DR &'!%)(' / RESPONDENT BY : SHRI UMAIDSINGH BHATI, AR * +) ,# / DATE OF HEARING 16/03/2015 -./0 ) ,# / DATE OF PRONOUNCEMENT 27/03/2015 '/ O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT (CIT(A) IN SHORT) DATED 04/07/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2005-06. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A)-II, SURAT HAS ERRED IN DELETING THE PENAL TY IMPOSED ITA NO.2398/AHD /2011 ITO VS. SHRI PURSHOTTAM H.MADAN ASST.YEAR 2005-06 - 2 - U/S.271(1)(C) OF THE I.T.ACT OF RS.8,73,748/- ADDIT ION MADE ON ACCOUNT OF UNEXPLAINED CREDIT U/S.68 OF THE I.T.ACT AS THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCES OR DETAILS IN SUPPO RT OF HIS CLAIM. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. [3] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) MAY BE SET-ASIDE AND THAT OF ASSESSING OFFICER MAY BE RESTORED TO TH E ABOVE EXTENT. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.144 R.W.S.143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS FRAMED VIDE ORDER DATED 17/12/2007, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT AMOUNTING TO RS.16,45,726/- AND UNEXPLAINED CREDITORS U/S.68 OF THE ACT AMOUNTING TO RS.26,10,087/-. THE AO WHILE MAKING THE ASSESSME NT HAD ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. AGAI NST THE ADDITION, THE MATTER TRAVELLED UPTO THE STAGE OF THIS TRIBUNAL (I TAT B BENCH AHMEDABAD) AND THE TRIBUNAL IN ITA NO.1568/AHD/200 9(BY ASSESSEE) AND ITA NO.1711/AHD/2009 (BY REVENUE) FOR AY 2005-0 6, ORDER DATED 16/12/2011, WAS PLEASED TO ALLOW THE GROUND RAISED BY THE ASSESSEE AGAINST THE IMPUGNED ADDITION. MEANWHILE, ON THE B ASIS OF THE CONFIRMATION OF ADDITION MADE BY THE LD.CIT(A), THE AO LEVIED PENALTY U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.8,73,748/- . THE PENALTY SO LEVIED WAS CHALLENGED BEFORE THE LD.CIT(A), WHO AFT ER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALLOWED THE APPEAL BY C ANCELLING THE PENALTY ITA NO.2398/AHD /2011 ITO VS. SHRI PURSHOTTAM H.MADAN ASST.YEAR 2005-06 - 3 - ORDER. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NO W THE REVENUE IS IN APPEAL BEFORE US. 3. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE POINTED OUT THAT IN QUANTUM PROCEEDING, THIS TRIBUNAL IN ITA NO.1568/AH D/2009 FOR THE AY 2005-06 IN ASSESSEES OWN CASE, THE ISSUE AGAINST A DDITION U/S.41(1) OR U/S.68 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE, HE SUBMITTED THAT EVEN OTHERWISE ALSO, THE PENALTY WOU LD NOT SURVIVE IN VIEW OF THE ORDER DATED 16/12/2011 IN ITA NO.1568/AHD/20 09. 3.1. ON THE CONTRARY, LD.SR.DR SUPPORTED THE ORDER OF THE AO. HOWEVER, HE DID NOT CONTROVERT THE SUBMISSION OF LD .AR FOR THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THIS TRIBUNAL IN QUANTUM PROCEEDINGS I N ITA NO.1568/AHD/2009 IN ASSESSEES OWN CASE HAS HELD AS UNDER:- THESE ARE THE SALIENT FEATURES FOR THE APPLICATION OF SEC.41(1) OF THE ACT. IF WE ACCEPT THE ARGUMENT AS RAISED FROM T HE SIDE OF THE REVENUE, THEN THE INTENTION FOR WHICH THE PROVISION S OF SECTION 41(1) OF THE IT ACT WERE INTRODUCED SHALL BE DEFEAT ED. IN CASE ANY LIABILITY IS IN DOUBT, WHICH PERTAINS TO THAT VERY FINANCIAL YEAR, OR THE ASSESSEE IS UNABLE TO ESTABLISH THE GENUINENESS OF THE EXPENDITURE, THEN THE SAME CAN BE DISALLOWED UNDER THE GENERAL PROVISIONS OF THE STATUTE I.E. SECTION 37(1) OF THE IT ACT OR LIKEWISE ANY OTHER PROVISION WHILE COMPUTING THE PROFITS & G AINS U/S 28 OF THE IT ACT. BUT AS FAR AS APPLICABILITY OF SECTION 41 (1) OF THE IT ACT IS CONCERNED, THE SAME IS TO BE APPLIED IN THOSE CA SES WHERE A BENEFIT HAD ALREADY BEEN TAKEN OR A DEDUCTION WAS C LAIMED AND SUBSEQUENTLY IT WAS FOUND THAT THE SAID BENEFIT WAS NO MORE ITA NO.2398/AHD /2011 ITO VS. SHRI PURSHOTTAM H.MADAN ASST.YEAR 2005-06 - 4 - PERMISSIBLE, THEN IN THAT SITUATION THE SAID ALREAD Y AVAILED BENEFIT IS DEEMED TO BE THE PROFIT OF THE ASSESSEE. AS FAR AS THE ASCERTAINMENT OF THE LIABILITY IS CONCERNED, WE ARE OF THE VIEW THAT THERE SHOULD BE EITHER REMISSION OF THE LIABILITY B Y THE CONCERNED CREDITOR OR THAT THERE WAS NO HOPE LEFT TO MAKE THE IMPUGNED PAYMENT AND THE LIABILITY HAD COME TO AN END. HOWEV ER, IN THE PRESENT CASE THE ASSESSEE AS WELL AS THOSE CREDITOR S HAS AFFIRMED THE EXISTENCE OF THE LIABILITY. REQUISITE CERTIFICA TES IN THIS REGARD ARE ALSO ON RECORD. RATHER, THE AO HAS MADE THE IMP UGNED ADDITION MERELY ON THE BASIS OF THE DIFFERENCE SHOW N IN THE BALANCE SHEET IN THE OUTSTANDING OPENING BALANCE AND THE CL OSING BALANCE OF THE CURRENT LIABILITIES. THE SAID BASIS WAS PATE NTLY WRONG FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE IT ACT . WE, THEREFORE, HELD THAT THE IMPUGNED ADDITION WAS WRONGLY MADE EI THER U/S 68 OR U/S 41(1) OF THE IT ACT. THIS GROUND OF APPEAL OF T HE ASSESSEE IS ALLOWED. 4.1. IN VIEW OF THE ABOVE DECISION, THE PENALTY DOE S NOT SURVIVE, HENCE THE GROUND OF REVENUES APPEAL IS REJECTED. 5. GROUND NOS.2 & 3 ARE GENERAL IN NATURE WHICH RE QUIRE NO INDEPENDENT ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 27 TH DAY OF MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 27/ 03 /2015 4,..* , .*../ T.C. NAIR, SR. PS ITA NO.2398/AHD /2011 ITO VS. SHRI PURSHOTTAM H.MADAN ASST.YEAR 2005-06 - 5 - !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. !% / THE APPELLANT 2. &'!% / THE RESPONDENT. 3. 567 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-II, SURAT 5. 9 :&*67 , ,670 , 5 / DR, ITAT, AHMEDABAD 6. : <= + / GUARD FILE. ! / BY ORDER, ' 9& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 20.3.2015 (DICTATION-PAD 4 - PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..23.3.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.27.3.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.3.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER