M/s. Gurukrupa Agencies, Hubli V. DCIT, Hubli

ITA 242/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0566 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-10-2009
• Assessment Year: 1997-1998
• Appeal Filed On: 20-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: V CHANDRASHEKAR
• Keywords: Unexplained cash credit; Agreed addition
• Section: 271(1)(c); 143(3); 133A; 143(1); 147; 68

Judgement Text

ITA NO.242/B/09 1 IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH BANGALORE BENCH BANGALORE BENCH BANGALORE BENCH B BB B , BANGALORE , BANGALORE , BANGALORE , BANGALORE BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI GEORGE GEORGE K, JUDICIAL MEMBER GEORGE GEORGE K, JUDICIAL MEMBER GEORGE GEORGE K, JUDICIAL MEMBER GEORGE GEORGE K, JUDICIAL MEMBER AND AND AND AND SHRI SHRI SHRI SHRI A. MOHAN ALANKAMONY A. MOHAN ALANKAMONY A. MOHAN ALANKAMONY A. MOHAN ALANKAMONY, A , A, A , ACCOUNTANT MEMBER CCOUNTANT MEMBER CCOUNTANT MEMBER CCOUNTANT MEMBER ITA NO.242/BAN G/2009 (ASSESSMEN T YEAR 1997-98) M/S GURUKRUPA AGENCIES, P.B NO.74, KOPPIKAR ROAD, HUBLI-580 020. APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), NAVANAGAR, HUBLI. RESPONDENT APPELLANT BY : SHRI V CHANDRASHEKAR RESPONDENT BY : SMT. V.S SREELEKHA O R D E R O R D E R O R D E R O R D E R PER PER PER PER GEORGE GEORGE GEORGE GEORGE GEORGE GEORGE GEORGE GEORGE K KK K, , , , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER : : : : THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), HUBLI DATED 14.10.2008. THE CIT(A)S ORDER EMANATES FROM THE ORDER OF THE DCIT LEVYING PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSMENT YEAR CONCERNED IS 1997-9 8. 2. SEVEN GROUNDS ARE RAISED IN THIS APPEAL. ALL TH E GROUNDS RELATES TO SOLITARY ISSUE, NAMELY WHETHER CIT(A) IS JUSTIFIED IN CONFIR MING THE LEVY OF PENALTY U/S 271(1)(C) AMOUNTING TO RS.54,500/-. BRIEF FACTS, NECESSARY FOR THE DISPOSAL OF THE CAS E ARE AS FOLLOWS: ITA NO.242/B/09 2 3. THE ASSESSEE FIRM DEALS IN PHARMACEUTICAL PRODU CTS AND ONE OF THE LEADING CONCERNS IN HUBLI, DHARWAD, WITH THREE OTHE R SISTER CONCERNS. A SURVEY U/S 133A WAS CONDUCTED ON 24.09.2002 AT THE BUSINES S PREMISES OF THE ASSESSEE FIRM ALONG WITH ITS OTHER SISTER CONCERNS. DURING THE COURSE OF SURVEY PROCEEDINGS, CERTAIN DISCREPANCIES IN STOCK AND CER TAIN CASH CREDITS WERE FOUND. TO COVER UP THE DEFICIENCY/DISCREPANCIES DETECTED A T THE TIME OF SURVEY THE ASSESSEE FIRM VOLUNTARILY CAME FORWARD TO DECLARED A SUM OF RS.47,22,500/- OF WHICH A SUM OF RS.39,61,500/- WAS OFFERED FOR TAXAT ION FOR THE ASST. YEAR 2002-03 AND BALANCE OF RS.7,61,000/- IS OFFERED FOR ASST. Y EAR 2003-04 ON ACCOUNT OF UNEXPLAINED CASH CREDITS ALLEGED DEPOSITS PERTAIN ING TO THE FOLLOWING ASST. YEARS. ASST. YEAR DEPOSITS (RS.) ------------------------------------------------ -------- 1997-98 1,32,500 1998-99 65,000 1999-00 1,60,000 2000-01 3,31,000 2001-02 14,00,900 2002-03 18,72,100 2003-04 7,61,000 -------------- TOTAL 47,22,500 -------------- 4. FOR THE CONCERNED ASST. YEAR, THE ASSESSEE FILED RETURN OF INCOME ON 29.10.97 DECLARING AN INCOME OF RS.6,24,210/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT ON 5.11.97. LATER, 148 NOTICE WAS ISSUED, AND ASST. U/S 143(3) READ WITH SEC. 147 OF THE ACT WAS COMPLETED ON 24.3.05, DETERMINING TOTAL INCOME OF RS.26,35,855/-. ITA NO.242/B/09 3 5. IN THE SAID ASST., THE AO NOTED THAT CASH CREDIT S/DEPOSITS ARE FOUND IN THE NAME OF VARIOUS PERSONS IN THE QUANTUM OF RS.15,000 /- IN EACH CASE. IT WAS FURTHER HELD BY THE AO THAT THE AMOUNT OUTSTANDING AS ON 31.3.97 IS RS.61,55,000/- AND CONSIDERING TOTAL DEPOSITS AS ON 31.3.96 AT RS.57,11,850/-, THE DIFFERENCE OF RS.4,43,150/- (RS.61,55,000 - RS. 57,11,850) WAS CONSIDERED AS UNEXPLAINED CASH CREDITS FOR THE CONCERNED ASST. YE AR. 6. FOR THE SAKE OF CLARITY, THE FINDING OF THE AO I S REPRODUCED BELOW: THE OTHER IMPORTANT ISSUE IN THIS CASE IS ABOUT T HE CASH CREDITS FOUND IN THE QUANTUM OF RS.15,000/- IN EACH CASE IN THE FORM OF DEPOSITS FROM VARIOUS PERSONS WHICH IS SHOW N TO THE EXTENT OF RS.61,55,000/- AS ON 31.3.1997. THIS FIGURE OF LIABILITY SHOWN IN THE FORM OF DEPO SITS AS ON 31.3.1996 WAS AT RS.57,11,850/-. THUS, IT IS EVIDE NT THAT THERE IS AN INCREASE OF RS.4,43,150/- IN THE PRESENT FINANCIAL YEAR. DURING THE COURSE OF SURVEY ACTION, THE RECORDS RELATING TO TH E DEPOSITS WERE VERIFIED. IT WAS NOTICED THAT THE ASSESSEE WAS UNA BLE TO PROVE THE DEPOSITS AND OFFERED A SUM OF RS.1,32,000/- FOR TAX ATION FOR ASST. YEAR 2002-03. AS THE CASH CREDITS ARE PERTAINING T O THE FINANCIAL YEAR ENDING ON 31.3.97, IT IS NOT PROPER TO BRING T O TAX THE INCOME OF THIS YEAR IN THE DIFFERENT ASST. YEAR I.E FOR THE A .Y 2002-03 AS DECLARED BY THE ASSESSEE. THE AO FURTHER HELD : AS STATED EARLIER, THE MATURITY AMOUNT IS DISTRIB UTED IN CASH ONLY. THERE ARE NO APPLICATION FORMS FROM THE DEPOSITORS FOR HAVING RECEIVED THE DEPOSITS. DURING THE COURSE OF SURVEY , ONE BOOK WAS FOUND WHEREIN, IN MOST OF THE CASES THERE IS NO SI GNATURE OR ADDRESS OF THE APPELLANT/DEPOSITOR IS MENTIONED. A NOTHER IMPORTANT ITA NO.242/B/09 4 ASPECT TO DOUBT THE GENUINENESS OF THE FACT IS THAT THE INTEREST ON THESE DEPOSITS IS CREDITED TO A FEW SB ACCOUNTS I.E THE DEPOSITS ARE BUNCHED TOGETHER AND A SINGLE PAYMENT OF INTEREST O F THESE BUNCHED DEPOSITS ARE CREDITED INTO ONE BANK ACCOUNT . IN THE CIRCUMSTANCES, THE GENUINENESS OF THE MANY OF SUCH SMALL DEPOSITOR IN QUESTION IS NOT VERIFIABLE. TO COVER UP THIS DEFECT THE ASSESSEE HAS VOLUNTARILY AGREED TO OFFER FOR TAXATI ON THE DEPOSITS TO THE EXTENT OF RS.47.22 LAKHS IN SURVEY ACTION PERTA INING TO THE DIFFERENT YEARS AS MENTIONED IN PARA 6. 7. ON FURTHER APPEAL, THE CIT(A) IN RESPECT OF CASH CREDITS ADDITION UPHELD ACTION OF THE AO TO THE EXTENT OF RS.1,32,500/- U/S 68 OF THE ACT. ON FURTHER APPEAL TO THE TRIBUNAL, THE TRIBUNAL REMANDED THE M ATTER TO AO (ITA NO.154 TO 157/06 DATED 9.6.06). THE REASON FOR REMANDING THE MATTER BY THE TRIBUNAL TO AO WAS ON ACCOUNT OF UNDERTAKING OF THE ASSESSEE TO SATISFACTORILY EXPLAIN EACH OF THE DEPOSITS/CASH CREDITS. THE ASSESSEE COULD N OT PRODUCE ANY CREDITABLE EVIDENCE AND THE ASSESSEE VIDE ITS LETTER DATED 1.2 .07 STATED THAT CASH CREDIT/DEPOSITS OF RS.1,32,500/- AND INTEREST THERE ON OF RS.3,623/- COULD BE BROUGHT TO TAX. ACCORDINGLY ASSESSMENT WAS COMPLET ED ON 6.3.07 U/S 143(3) READ WITH SEC. 254 OF THE INCOME-TAX ACT, BY BRINGI NG TO TAX RS.1,36,123/- AND PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT. 8. THE VARIOUS OBJECTIONS RAISED BY THE ASSESSEE AG AINST THE PENALTY PROCEEDINGS WERE REJECTED BY THE DCIT AND HE LEVIED PENALTY OF RS.54,500/- BEING MINIMUM PENALTY. THE FINDINGS/CONCLUSION OF THE DICT IN HIS PENALTY ORDER ARE SUMMARIZED AS BELOW : 1) ADDITION MADE IN THE ASSESSMENT WAS NOT MERELY A N ESTIMATED BASIS OR FOR BONAFIDE OMISSION. IT WAS BASED ON RE AL FACT, WHICH THE ITA NO.242/B/09 5 ASSESSEE COULD NOT PRODUCE THE DEPOSITORS FOR VERIF ICATION AND AS SURRENDERED FOR THE DIFFERENT ASST. YEAR. 2) THE ASSESSEE-FIRM IS EXPECTED TO TAKE CARE TO DI SCLOSE ITS INCOME FULLY IN THE RETURN OF INCOME WHEN IT WAS GI VEN AN OPPORTUNITY BY WAY OF ISSUE OF NOTICE U/S 148. HEN CE, THE RETURN OF INCOME FILED WAS ERRONEOUS AND CONTAINED ITS PARTIC ULARS OF INCOME CONCEALED TO THE EXTENT BROUGHT TO TAX. 3) THE ASSESSEE-FIRM HAS NOT BEEN ABLE TO DISCHARGE ITS PART OF THE BURDEN SATISFACTORILY. 4) IT IS BROUGHT OUT ABOVE CLEARLY THAT THE CONCEAL MENT WAS ATTRIBUTABLE TO THE ASSESSEE-FIRM. 5) THE ASSESSEE FIRMS ACTION IN NOT DISCLOSING THE NON-GENUINE DEPOSITS IN THE RETURN OF INCOME CANNOT BE SAID TO BE BONAFIDE WITHOUT INTENT TO EVADE TAX. 9. THE CIT(A) ON APPEAL BY THE ASSESSEE CONFIRMED T HE PENALTY ORDER. THE CIT(A) DECIDED THE MATTER AGAINST THE ASSESSEE FOR THE REASON THAT THERE WAS NO AGREED ADDITION FOR THE CONCERNED ASST. YEAR BUT IT PERTAINS TO THE ASST. YEARS 2002-03 AND 2003-04. THE LEARNED CIT(A) ALSO RELIE D ON THE LATEST DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UNION OF I NDIA AND OTHERS VS. DHARMENDRA TEXTILES PROCESSORS AND OTHERS, 306 IT R 277. 10. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFOR E US. THE LEARNED AR REITERATED THE SUBMISSION MADE BEFORE THE AUTHORITI ES BELOW. PER COUNTER, THE LEARNED DR RELIED ON THE DECISION OF THE MADRAS HIG H COURT IN THE CASE OF ITA NO.242/B/09 6 KAMAL BASHA VS DCIT 316 ITR 58 AND SUPPORTED THE FINDINGS OF THE AUTHORITIES BELOW : 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE AO IN THE ORIGINAL ASST. O RDER HAS NOTED DEPOSITS/CASH CREDITS ARE IN THE NAME OF THE VARIOUS PERSONS AND THESE DEPOSITS IN AGGREGATE AMOUNTS TO RS.61,55,000/- AS ON 31.3.97. IT IS FUR THER NOTED BY THE AO DEPOSITS ARE IN THE QUANTUM OF RS.15,000/- IN EACH CASE. THE CASH CREDITS/DEPOSITS ARE DISBELIEVED FOR FOLLOWING REASONS. 1) MATURITY AMOUNT IS DISTRIBUTED IN CASH ONLY. 2) THERE ARE NO APPLICATION FORMS FROM THE DEPOSITO RS FOR HAVING RECEIVED THE DEPOSITS. 3) IN MOST OF THE CASES, THERE WAS NO SIGNATURE OR ADDRESS OF THE DEPOSITORS. 4) INTEREST ON THESE DEPOSITS ARE BUNCHED TOGETHER AND CREDITED IN ONE S.B ACCOUNT. 12. THE ASSESSEES PLEA AGAINST THE PENALTY IMPOSED WAS THAT DEPOSITORS HAVE CHANGED ADDRESS OR EXPIRED AND EVEN THOSE WHO WERE TRACED WERE RELUCTANT TO APPEAR AND CONFIRM THE DEPOSITS. AS N OTED EARLIER DEPOSITS/CASH CREDITS ARE IN THE NAME OF VARIOUS PERSONS. THE AS SESSEE HAS NOT EVEN PRODUCED A SINGLE DEPOSITORS CONFIRMATION NOR THEIR ADDRESS. IN THIS CASE, THE AO HAS CATEGORICALLY FOUND THAT CASH/DEPOSITS ARE NON GENUINE AND ASSESSEE HAS NOT BEEN ABLE TO DISLODGE THE SAME IN THE PENALTY P ROCEEDINGS. THE ASSESSEE HAS ALSO CONTENTED THAT THESE DEPOSITS/CASH CREDITS ARE REPAID. HOWEVER, NO EVIDENCE HAS BEEN PRODUCED TO SUBSTANTIATE THE ABOV E STATEMENT OF THE ITA NO.242/B/09 7 ASSESSEE. IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS CONCEALED INCOME BY FURNISHING INACCUR ATE PARTICULARS IN THE RETURN OF INCOME FURNISHED RELATING TO ASST. YEAR 1997-98. 13. BEFORE CONCLUDING, IT IS NECESSARY TO DISCUSS THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M. M GUJAMAGADI, 290 ITR 168, SINCE HEAVY RELIANCE WAS PLACED BY LEARNED AR ON TH E SAME. IN THAT CASE, IT HAS BEEN CATEGORICALLY FOUND BY THE HONBLE HIGH COURT WHEN ASSESSEE WAS ASKED TO SUBSTANTIATE THE CLAIM, THE ASSESSEE MADE ATTEMPTS TO PRODUCE THE CREDITORS TO BE EXAMINED BY THE ITO. IN THE INSTANT CASE AS NOT ED EARLIER, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE ADDRESS OF ANY OF THE DEPOSITORS. WE ARE OF THE VIEW THAT NO HONEST EFFORTS WERE MADE BY THE ASSESS EE TO PRODUCE THE CREDITORS BEFORE THE AO. ON THE CONTRARY, THE FINDING OF THE AO CATEGORICALLY POINTED OUT TO THE FACTS THAT THESE DEPOSITS ARE NON GENUINE AND T HESE FINDINGS HAVE NOT BEEN DISLODGED IN THE PENALTY PROCEEDINGS. ANOTHER IMPO RTANT ASPECT IS FOR THE CONCERNED ASSESSMENT YEAR (1997-980) THE ASSESSEE HAS NOT AGREED FOR ANY ADDITION U/S 68 OF THE ACT. 14. MOREOVER, THE HONBLE SUPREME COURT IN THE LAT EST JUDGMENT OF UNION OF INDIA AND OTHERS VS. DHARMENDRA TEXTILES PROCESSORS AND OTHERS 306 ITR 277 PAGE-302, HAS HELD AS FOLLOWS : THE EXPLANATIONS APPENDED TO SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 INDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE P ARTICULARS WHILE FILING THE RETURN. THE OBJECT BEHIND THE ENA CTMENT OF SEC. 271(1)(C) READ WITH THE EXPLANATIONS INDICATES THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF RE VENUE. THE ITA NO.242/B/09 8 PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MATTER OF PROSECUTION U/S 276C. 15. FOR THE ABOVE SAID REASONS, WE ARE OF THE VIEW THAT THE ORDERS OF THE AUTHORITIES BELOW IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE 30TH OCT, 20 09. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - ( (( (A. MOHAN ALANKAMONY A. MOHAN ALANKAMONY A. MOHAN ALANKAMONY A. MOHAN ALANKAMONY) ) ) ) ( (( (GEORGE GEORGE K) GEORGE GEORGE K) GEORGE GEORGE K) GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED : 30/10/09 VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF, ITAT, NEW DELHI. BY ORDER ASST. REGISTRAR, ITAT, BANGAL ORE.