Supreme Steel & General Mills, New Delhi V. DCIT, New Delhi

ITA 2612/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97273 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 16-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RASHMITA JHA ACIT
• Keywords: Income from undisclosed sources
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM ITA NO.2612 & 2599/DEL/2013 ASSESSMENT YEARS : 2007-08 & 2006-07 SUPREME STEEL & GENERAL MILLS, B-23, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI. PAN: AABFS1576L VS. DCIT, CENTRAL CIRCLE-5, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE DEPARTMENT BY : SMT. RASHMITA JHA, ACIT, DR DATE OF HEARING : 16.09.2015 DATE OF PRONOUNCEMENT : 18.09.2015 ORDER PER R.S. SYAL, AM: THESE TWO APPEALS BY THE ASSESSEE RELATE TO THE AS SESSMENT YEARS 2006-07 AND 2007-08. SINCE THESE APPEALS HAVE BEEN TAGGED, WE ARE DISPOSING THEM WITH A COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.2612&2599/DEL/2013 2 2. FIRST, WE TAKE UP THE APPEAL FOR ASSESSMENT YEAR 2007-08, WHICH IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 28.3.2013 PURSUANT TO THE ASSESSMENT ORDER PASSED U/S 143(3). IN THIS APP EAL, THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITION OF RS.15,25 ,000/- AS INCOME FROM UNDISCLOSED SOURCES TAXABLE U/S 68 OF THE ACT. 3. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE A SSESSEE RECEIVED HUGE CASH AMOUNT WHICH WAS SUBSEQUENTLY DEPOSITED IN ITS BANK ACCOUNT. THESE CASH RECEIPTS WERE MAINLY FROM TWO PARTIES, N AMELY, M/S GR OVERSEAS P. LTD. RS.7,25,000/- AND M/S GR MECHANI CAL WORKS LTD. RS.8,00,000/-. THE AO OBSERVED THAT THE ASSESSEE W AS NOT HAVING ANY FRESH BUSINESS DEALINGS WITH THESE TWO PARTIES AND THE PAYMENTS WERE SHOWN TO HAVE BEEN RECEIVED IN CASH AGAINST THE OLD OUTSTANDING BALANCES. THE ASSESSEE WAS CALLED UPON TO FURNISH COMPLETE ADDRESS OF THESE PARTIES. FROM THE DETAILS PROVIDED BY THE AS SESSEE, INFORMATION U/S 133(6) WAS CALLED FOR FROM THESE PARTIES. THE LETT ERS SENT TO THESE PARTIES WERE NOT RECEIVED BACK UNSERVED. ON 19.12.2009, T HE AO RECEIVED A REPLY FROM ONE OF THE PARTIES, NAMELY, M/S GR OVERS EAS P. LTD. STATING ITA NOS.2612&2599/DEL/2013 3 THAT THE OLD BALANCE WAS STILL OUTSTANDING AND NO A MOUNT WAS PAID TO THE ASSESSEE. THE AO HAS RECORDED IN THE ASSESSMENT O RDER THAT THE ASSESSEE WAS OFFERED AN OPPORTUNITY TO CROSS-EXAMIN E THE SAID PARTY, WHICH WAS DECLINED BY THE LD. AR VIDE ORDER SHEET E NTRY DATED 29.12.2009. IN SPITE OF REPEATED OPPORTUNITIES, TH E ASSESSEE COULD NEITHER PRODUCE THESE PARTIES NOR WAS IN A POSITION TO SHOW HOW CASH OF RS.15.25 LAC WAS RECEIVED FROM THEM. THIS LED TO TH E MAKING OF ADDITION OF RS.15.25 LAC. THE LD. CIT(A) OBSERVED THAT SIMI LAR ADDITION WAS MADE FOR THE ASSESSMENT YEAR 2006-07, WHICH WAS CON FIRMED BY HIM AND THE SAME ALSO CAME TO BE APPROVED BY THE TRIBUNAL. HE, THEREFORE, UPHELD THE ADDITION SO MADE BY THE AO. THE ASSESSE E IS AGAINST THE SUSTENANCE OF ADDITION. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE AS SESSEE CLAIMED TO HAVE RECEIVED A SUM OF RS.15.25 LAC FROM M/S GR OVERSEAS P LTD., AND M/S GR MECHANICAL WORKS LTD. THOUGH THE ASSESSEE STATED THAT SUCH AMOUNT ITA NOS.2612&2599/DEL/2013 4 WAS RECEIVED IN CASH, BUT, WHEN THE AO CONDUCTED IN QUIRY FROM M/S G.R. OVERSEAS P. LTD., THE PARTY REPORTED NOT TO HA VE MADE ANY PAYMENT TO THE ASSESSEE. NO FURTHER EVIDENCE WAS FILED BY THE ASSESSEE TO CONTROVERT THE CONTENTION ADVANCED BY THIS PARTY. AS PER THE AO, THE ASSESSEE EVEN DECLINED AN OPPORTUNITY OF CROSS EXAM INATION GIVEN TO IT. THESE FACTS INDICATE THAT THERE IS NO COGENT MATERI AL EVIDENCING THE RECEIPT OF A SUM OF RS.15.25 LAC FROM THESE TWO PAR TIES. IT IS FURTHER OBSERVED THAT SIMILAR POSITION PREVAILED IN THE IMM EDIATELY PRECEDING ASSESSMENT YEAR, THAT IS, 2006-07. IN SUCH EARLIE R YEAR ALSO, THE ASSESSEE RECEIVED CASH SUMS IN SIMILAR CIRCUMSTANCES FROM TH REE PARTIES, ONE OF WHICH IS, M/S G.R. OVERSEAS PVT. LTD. THE AO MADE THE ADDITION AND THE TRIBUNAL HAS FINALLY UPHELD THE ADDITION BY OBS ERVING THAT THE DENIAL BY GR OVERSEAS P. LTD. OF MAKING ANY CASH PAYMENT T O THE ASSESSEE, CLINCHED THE ISSUE. SINCE THE FACTS AND CIRCUMSTAN CES OF THE INSTANT YEAR ARE, MUTATIS MUTANDIS , SIMILAR TO THOSE OF THE PRECEDING YEAR, RESPECTFU LLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORD ER CONFIRMING THE ADDITION OF RS.15.25 LAC. ITA NOS.2612&2599/DEL/2013 5 5. IN THE RESULT, THE APPEAL IS DISMISSED. 6. NOW WE ESPOUSE THE SECOND APPEAL FOR THE ASSESSM ENT YEAR 2006- 07, WHICH IS AGAINST THE CONFIRMATION OF PENALTY I MPOSED BY THE AO U/S 271(1)(C) OF THE ACT. WE FIND THAT THE TRIBUNAL HAS ELABORATELY DISCUSSED THE FACTUAL MATRIX OF THE CASE AND CAME TO THE CONC LUSION THAT M/S GR OVERSEAS P. LTD., DENIED HAVING MADE CASH PAYMENT T O THE ASSESSEE AND M/S NASIR AHMAD & SONS AND ZABAR AHMAD & SONS NEITH ER FILED ANY CONFIRMATIONS NOR THEIR POSTAL ADDRESS WAS FURNISHE D BY THE ASSESSEE, WHICH LED THE TRIBUNAL TO THE CONCLUSION THAT: THE ASSESSEES EXPLANATION WAS NOT SATISFACTORY. THEREAFTER, A PENALTY OF RS. 12,50,090 WAS IMPOSED BY THE AO U/S 271(1)(C) OF THE ACT, WHICH CAME TO B E UPHELD IN THE FIRST APPEAL. THE ASSESSEE IS AGGRIEVED AGAINST THE SUST ENANCE OF SUCH PENALTY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE WANT TO MAKE IT CLEAR THAT ASSESSMENT PROCEEDINGS ARE DISTINCT FROM PENALTY PR OCEEDINGS. IN THE LIKE MANNER, THE PARAMETERS FOR IMPOSITION OF PEN ALTY ARE NOT COMMON ITA NOS.2612&2599/DEL/2013 6 BUT DIFFERENT FROM THE CONFIRMATION OF ADDITION. T HE MERE FACT THAT AN ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL IN QUAN TUM PROCEEDINGS DOES NOT IPSO FACTO LEAD TO THE CONFIRMATION OF PENALTY. IF THIS HAD BEEN POSITION, THEN THERE WAS NO NEED TO HAVE SEPARATE P ENALTY PROCEEDINGS. A PENALTY CAN BE IMPOSED IF THE AO MAKES OUT A CASE O F CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME BY THE ASSESSEE. WHERE AN ASSESSEE TENDERS AN EXPLANATION WHICH REMA INS UNPROVED, IT CANNOT BE CONSIDERED AS A CASE OF CONCEALMENT. IF, HOWEVER, THE EXPLANATION GIVEN BY THE ASSESSEE IS SPECIFICALLY D ISPROVED BY THE AO, THEN, IT LEADS TO THE IMPOSITION OF PENALTY. THE H ONBLE GUJARAT HIGH COURT IN NATIONAL TEXTILES VS. CIT (2001) 249 ITR 125 (GUJ.) , HAS HELD THAT IN ORDER TO JUSTIFY LEVY OF PENALTY FOR ADDITI ON OF CASH CREDITS, THE EXPLANATION TENDERED BY THE ASSESSEE MUST BE DISPRO VED. DELETING THE PENALTY SO IMPOSED, THE HONBLE HIGH COURT HELD THA T IT WAS NOT A CASE OF IMPOSITION OF PENALTY. THE HONBLE CALCUTTA HIGH CO URT IN DURGA KAMAL RICE MILLS VS. CIT (2004) 265 ITR 25 (CAL) , RELYING ON NATIONAL TEXTILES 249 ITR 125 (GUJ) , HAS HELD THAT THERE IS A DIFFERENCE IN `FACTS NOT PROVED' AND `FACTS DISPROVED'. IT FURTHER HELD THAT PENALTY CAN BE ITA NOS.2612&2599/DEL/2013 7 LEVIED ONLY FOR THE LATTER. SIMILAR VIEW HAS BEEN T AKEN IN CIT VS. VIDYAGAURI NATVARLAL & ORS (1999) 153 CTR (GUJ) 546 . 8. TURNING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEES CONTENTION ABOUT THE BROUGHT FORWARD BALANCES OF TH ESE THREE PARTIES HAS NOT BEEN DISPUTED. THIS SHOWS THAT THE ASSESSEE, I N FACT, MADE SALES TO THEM IN EARLIER YEARS AND THE AMOUNT WAS RECEIVABLE . IT IS OUT OF SUCH BROUGHT FORWARD BALANCES, THAT THE ASSESSEE CLAIMS TO HAVE RECEIVED THE AMOUNT IN QUESTION. IN SO FAR AS THE RECORDING BY T HE AO THAT THE ASSESSEE WAS ALLOWED AN OPPORTUNITY TO CROSS EXAMIN E M/S G.R. OVERSEAS, WHICH WAS NOT AVAILED, WE FIND THAT THE I MPUGNED ORDER RECORDS THE ASSESSEES CONTENTION ON PAGE 4 THAT T HE : `ASSESSEE HAD SPECIFICALLY INSISTED THAT M/S G.R. OVERSEAS BE DIR ECTED TO APPEAR BEFORE THE ASSESSING OFFICER ALONG WITH ITS BOOKS OF ACCOU NTS SUCH THAT THE FACTUM OF ITS HAVING PAID THE CASH TO THE APPELLANT COULD BE ESTABLISHED FROM THE SCRUTINY OF THE BOOKS OF ACCOUNT. M/S G.R. OVERSEAS ABSTAINED FROM APPEARING BEFORE THE ASSESSING OFFICER AND SO MANAGED NOT TO PRODUCE ITS BOOKS OF ACCOUNT AND THE ASSESSING OFFI CER DID PRECIOUS ITA NOS.2612&2599/DEL/2013 8 LITTLE TO ENFORCE THE ATTENDANCE OF M/S G.R. OVERSE AS. FAILURE OF M/S G.R. OVERSEAS TO APPEAR BEFORE THE ASSESSING OFFICE R AFTER DENYING THE PAYMENT HAD A MOST CRUCIAL ANGLE WHICH THE ASSESSIN G OFFICER SIMPLISTICALLY IGNORED. THE ABOVE RECORDING AMPLY PROVES THAT THE ASSESSEE DID REQUIRE THE CROSS EXAMINATION OF M/S G .R. OVERSEAS, WHICH HAS EVENTUALLY NOT TAKEN PLACE. AS REGARDS THE OTH ER TWO PARTIES, THE ASSESSEE CONTENDED THAT THEY WERE SMALL PARTIES, WH OSE WHEREABOUTS WERE NOT ASCERTAINABLE. THIS HAS AGAIN NOT BEEN DEM OLISHED BY THE AO. THESE CIRCUMSTANCES NEED TO BE SEEN IN THE BACKDROP OF THE FACT THAT THE AMOUNTS WERE IN FACT, RECEIVABLE FROM THESE TRADE D EBTORS. THE ABOVE DISCUSSION DIVULGES THAT THE EXPLANATION GIVEN BY T HE ASSESSEE FOR RECEIPT OF THE AMOUNT FROM ITS OLD DEBTORS HAS NOT BEEN DIS PROVED BY THE AO. THOUGH THE ASSESSEE COULD NOT SATISFACTORILY EXPLAI N THE RECEIPT OF CASH FROM THESE THREE PARTIES, THE FACT THAT THIS AMOUNT WAS ACTUALLY RECEIVABLE, WHICH WAS CLAIMED TO HAVE BEEN RECEIVE D DURING THE YEAR, GOES TO SHOW THAT THE EXPLANATION OF THE ASSESSEE A BOUT THE RECEIPT OF SUCH AMOUNT WAS A POSSIBLE ONE ALBEIT NOT SATISFACTORY. THE TRIBUNAL HAS ALSO NOTICED IN THE QUANTUM ORDER THAT: IT WAS OBLIGATORY ON ITS PART ITA NOS.2612&2599/DEL/2013 9 TO PRODUCE THE PARTIES OR GIVE THEIR PROPER ADDRESS ES TO THE DEPARTMENT. IT FURTHER OBSERVED THAT: IT FAILED TO DISCHARGE I TS BURDEN CAST BY SECTION 68. THE ABOVE OBSERVATIONS OF THE TRIBUNAL ALONG WITH THE POSITION AS DISCUSSED ABOVE, MAKES IT CLEAR THAT THOUGH THE ADD ITION U/S 68 WAS PROPERLY MADE AS HAS ALSO BEEN CONFIRMED BY THE TRI BUNAL BECAUSE OF UNSATISFACTORY EXPLANATION GIVEN BY THE ASSESSEE IN SUPPORT OF THE RECEIPT OF THE AMOUNTS, BUT, IT IS NOT A GOOD CASE FOR IMPO SITION OF PENALTY BECAUSE IT RELATES TO LACK OF TENDERING EXPLANATION TO THE SATISFACTION OF THE AO AND NOT DISPROVING THE CONTENTION OF THE ASS ESSEE ABOUT THE GENUINENESS OF RECEIPTS. WE, THEREFORE, ORDER FOR THE DELETION OF PENALTY. 9. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.09.201 5. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 18 TH SEPTEMBER, 2015. DK ITA NOS.2612&2599/DEL/2013 10 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.