Shri Kiritbhai Ratansingh Mankadia, Baroda V. Income Tax Officer, Ward-3(1), Baroda

ITA 2613/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8517 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

ITA NO.2613 / AHD 201 4 ASSESSMENT YEAR : 2007 - 08 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SM C BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR , A CCOUNTANT MEMBER ] ITA NO. 2613/AHD/2014 ASSESSMENT YEAR: 2007 - 08 KIRITBHAI RATANSINGH MANKADIA ... .. APPELLANT PROP. OF AMAR BOREWE LL, AT & PO UDALPUR TAL. SAVLI, BARODA - 391121 [PAN : ALWPM 3982 Q ] VS. INCOME TAX OFFICER WARD 3(1), BARODA. .RESPONDENT APPEARANCES BY : SUNIL TALATI, FOR THE APPELLANT PRASOON KABRA, FOR THE RESPONDENT DATE OF CON CLUDING THE HEARING : 05. 07 . 2017 DATE O F PRONOUNCING THE ORDER : 25 . 09. 2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 6 TH JUNE, 2014, PASSED BY THE LEARNED CIT(A) - II, BARODA , CONFIRMING PENALTY OF RS.1,71,920/ - IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER ), FOR THE ASSESSMENT YEAR 2007 - 08 . 2. ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCES : - 1. THE ORDER PASSED BY THE HON BLE COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW, CONTRARY TO LEGAL PRONOUNCEMENTS AND SAME BE QUASHED. 2. THE HON BLE CIT(A) - II, BARODA HAS ERRED IN CONFIRMING THE PENALTY OF RS.1,71,920/ - BY INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE AC T WITHOUT APPRECIATING THE FACTS AND LEGAL DECISIONS AS SUBMITTED BY ITA NO.2613 / AHD 201 4 ASSESSMENT YEAR : 2007 - 08 PAGE 2 OF 4 YOUR APPELLANT. YOUR APPELLANT SUBMITS THAT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE NOT APPLICABLE IN THE CASE OF YOUR APPELLANT AND HENCE THE PENALTY LEVIED BY THE AO AND CONF IRMED BY CIT(A) - BAORDA BE DIRECTED TO BE DELETED. 3. BRIEFLY STATED , THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS ENGAGED IN THE BOR E WELL BUSINESS. DURING TH E COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS T HE ASSESSING OFFICER NOTICED TH A T TH ER E ARE CASH LOAN DEPOSITS FROM 35 PARTIES AGGREGATING TO RS.6,2 8 ,470 / - . HE SOUGHT TO VERIFY IDENTI T Y , GENUINENESS AND CREDITWORTHINESS O F THESE PARTIES. WHILE THE ASSESSING OFFICER WAS READY TO RECO R D STATEMENT OF SOME OF THE CREDITORS , SUMMONS ISSUED T O MANY OF THESE PERSONS ALSO CAME BACK UN - SERVED. IT WAS ALSO NOTED THAT MOST OF THE INDIVIDUAL TRANSACTIONS WERE BETWEEN RS.19,000/ - TO RS.19,900/ - AND WERE IN CASH. HOWEVER, HAVING NOTED THAT MOST OF THE BORROWINGS WERE OF THE SIMILAR MOUNTS AND THAT T H E RE WAS NO EXPLANATION FOR THE TRANSACTIONS AND THERE W A S THUS FAILURE IN ELEMENT OF GENUINENESS OF THESE AMOUNTS WHICH WERE THUS TREATED AS UNEXPLAINED CREDITS. THE MATTER TR A VEL L ED RIGHT UPTO THIS T RIBUNAL BUT WITHOUT ANY RELIEF TO THE ASSE SSEE. IT WA S IN THIS BACKDROP AND ON THESE FACTS THAT THE PENALTY WAS IMPOSED BY THE ASSESSING OFFICER FOR CONCEALMENT OF INCOME. ASSESSEE DID CAR R Y THE GRIEVANCE BEFORE THE LEA RNED CIT ( A ) BUT THE LEARNED CIT ( A ) CONFIRMED THE AC T ION OF THE A SSESSING OFFICER AND OBSE RVED A S FOLLOWS 3.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. IT IS A CASE WHERE THE ASSESSEE HAS TAKEN LOANS, IN CASH, FROM 35 PERSONS DURING THE YEAR, EACH FOR RS.19,500/ - APPRO XIMATELY I.E. LESS THAN RS.20,000/ - . UPON ENQUIRY BY THE ASSESSING OFFICER, THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY OF 9 PERSONS AND CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION FOR THE REMAINING 26. IN THE ASSESSMENT ORDER, THE ASSESSING OF FICER HAS BROUGHT OUT THAT THE PRIMARY ONUS OF PROOF ON THE ASSESSEE, HAS NOT BEEN DISCHARGED BY HIM. FAILING WHICH THE ASSESSING OFFICER HAS RIGHTLY ADDED ITA NO.2613 / AHD 201 4 ASSESSMENT YEAR : 2007 - 08 PAGE 3 OF 4 THE IMPUGNED SUM U/S. 68 OF THE INCOME - TAX ACT. THE LEARNED AUTHORIZED REPRESENTATIVE CLAIMING THAT SINCE 19 OF THESE DEPOSITORS APPEARED IN RESPONSE TO SUMMONS THEIR DEPOSITS SHOULD NOT BE ADDED, IS NOT ACCEPTABLE. NONE OF THESE PERSONS COULD PROVE THEIR CREDIT WORTHINESS OR THE GENUINENESS OF THE TRANSACTION. HENCE, THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY THE LD. CIT(A). DURING THE PROCEEDINGS BEFORE ME ALSO , THE APPELLANT COULD NOT FURNISH ANY EVIDENCE TO SUGGEST THAT HE HAS FURNISHED REASONABLE EXPLANATION BEFORE THE ASSESSING OFFICER ABOUT THE CREDIT WORTHINESS OF THE LENDERS. IN THE SUB MISSIONS FILED BEFORE ME, THERE IS NO DISCUSSION ON THE FACTS OF THE CASE AND GENUINENESS OF THE INDIVIDUAL INSTANCE OF LOANS. THERE ARE REFERENCES TO THE DECISIONS OF HIGH COURTS AND TRIBUNAL WHICH DO NOT LAY DOWN ANY UNIVERSAL LAW APPLICABLE TO ALL ASSES SEES WITHOUT CONSIDERATION OF FACTS OF EACH CASE. I AM NOT INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT IT IS NOT A FIT CASE TO LEVY PENALTY U/S 271(L)(C) OF THE ACT AND CONFIRM THE ORDER PASSED BY THE ASSESSING OFFICER. THE SOLE GROUND TAKEN BY THE APPELLANT FAILS. 4. ASSESSEE IS NOT SATISFIED EVEN IN FURTHER APPEAL. 5. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. AS THE RELAT E D QUANT UM ADDITION HAVE ALSO BEEN CONFIRMED BY THE T RIBUNAL , I REFRAIN FROM MAKING ANY OBSERVATION WHICH MAY BE CONSTRUED IN SUPPORT OF THE ASSESSEE S CLAIM ON MERITS BUT WHAT IS G LARING IS THAT THERE WAS EXPLANATION OF THE ASSESS EE WHICH WAS A REASONABLE EXPLANA TION THOUGH NOT ACCEPT E D THAT IN MANY OF THE CASE CREDITORS CAME FORWARD TO CONFIRM THE TRANSACTIONS . THE AMOUNT OF BORROWING IS SO SMALL THAT A TRANSACTION CANNOT BE REJECTED BEING NOT GENUINE MERELY ON GROUND THAT THE LENDE R DID NOT HAVE ME A NS TO GIVE T HIS KIND OF AMOUNT. YET, WHILE UPHOLDING THE IMPUGNED PENALTY, THE LEARNED CIT(A) H A S OBSERVED, AS EXTR A CT E D ABOVE, THAT TH E ASSESSEE DID NOT FURNISH REASONABLE EXPLANATION ABOUT TH E CREDITWORTHINESS OF THE LEND E RS. THIS APPROACH CANNOT MEET MY APPROVAL. AT THE COST OF REPETITION, WHILE I AM NOT R E ALLY CONCERN ED AS TO WHETHER OR NOT A QUANTUM ADDITION CAN BE MADE ON THE TOTALITY OF CIRCUMSTANCES WHICH HAS B E EN DECIDED A GAINST THE ITA NO.2613 / AHD 201 4 ASSESSMENT YEAR : 2007 - 08 PAGE 4 OF 4 ASSESSEE BY THE T RIBUNAL . A NY WAY, IT IS CERTAINLY NOT A FIT CASE FOR IMPOS ITION OF PENALTY ON THE GROUND T HAT MEANS TO LEND RS.20,000/ - WERE NOT DEMONSTRATED. I, THEREFORE, DEEM IT FIT AND PROPER TO DELETE THE IMPUGNED PENALTY. ASSESSEE GETS T HE RELIEF ACCORDINGLY. 7. IN THE RESULT, APPEAL IS ALLOWED . PRONOUNCED IN THE OPEN C OURT TODAY ON THE 25 TH DAY OF SEPTEMBER , 2017. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) AHMEDABAD, THE 25 TH DAY OF SEPTEMBER , 2017 COPIES TO: (1) THE APPELLANT (2) TH E RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD