Goyal Knitfab Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(2), Surat

ITA 2745/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1886 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 05-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: SURESH KABARA
• Keywords: Unexplained cash credit; Set aside
• Section: 192; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE DR. O. K. NARAYANAN, VP AND SHRI BHAVNESH S AINI, JM) ITA NOS.2745/AHD/2009 A. Y.: 2004-05 GOYAL KNITFAB PVT. LTD. , BLOCK NO.505, N. H. 8, PALSANA, SURAT PA NO. AABCG 3803 B VS THE INCOME TAX OFFICER, WARD 1(2), AAYAKAR BHABAN, MAJURA GATE, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SURESH KABARA, AR RESPONDENT BY SMT. NEETA SHAH, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I, SURAT DATED 26-0 8-2009 FOR THE ASSESSMENT YEAR 2004-05, CHALLENGING THE LEVY OF PE NALTY U/S 271 (1) (C) OF THE INCOME TAX ACT. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. 3. BRIEFLY, THE FACTS OF THE CASE LEADING TO IMPOSI TION OF THE PENALTY ARE THAT THE ASSESSEE RECEIVED LOAN AMOUNTS FROM SHRI K RISHAN KUMAR KAUSHIK, KRISHAN KUMAR KAUSHIK (HUF) AND SMT. SANGE ETA KAUSHIK IN A SUM OF RS.6,00,000/-. NOTICES WERE ISSUED TO THE DE POSITORS AND IN RESPONSE THERETO THEY FILED THE REQUISITE DETAILS B EFORE THE AO. STATEMENT OF SHRI KRISHAN KUMAR KAUSHIK WAS ALSO RECORDED IN WHICH HE ACCEPTED GIVING LOANS ON BEHALF OF THE DEPOSITORS. THE AO AF TER ANALYZING THE MATERIAL ON RECORD AND STATEMENT RECORDED U/S 131 O F THE INCOME TAX ITA NOS.2745/AHD/2009 GOYAL KNITFAB PVT. LTD. 2 ACT NOTICED THAT CERTAIN CASH HAVE BEEN DEPOSITED P RIOR TO GIVING THE LOANS AS SUCH THE SOURCE OF THE DEPOSITS IS NOT PRO VED. THE CREDITWORTHINESS OF THE DEPOSITORS WAS ACCORDINGLY DISBELIEVED. THE CASH CREDITS IN A SUM OF RS.5,50,000/- WAS DISBELIEVED. HOWEVER, IN THE CASE OF KRISHAN KUMAR KAUSHIK BENEFIT OF RS.50,000/- WAS GIVEN. PENALTY WAS ACCORDINGLY IMPOSED BY SEPARATE ORDER. THE LEARNED CIT(A) CONFIRMED THE PENALTY US 271(1) (C) OF THE INCOME TAX ACT ON THE UNEXPLAINED CASH CREDITS AND THE INTEREST PAID ON THE ABOVE CASH CRE DITS. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE FILED NECESSARY DETAILS BEFORE THE AO AND THE DEPOS ITORS CONFIRMED GIVING THE LOANS TO THE ASSESSEE. ADDITION U/S 68 OF THE I NCOME TAX ACT IS A DEEMING PROVISION. IN THE CASE OF THE ASSESSEE ONLY CREDITWORTHINESS IS IN DISPUTE. THEREFORE, IT IS NOT A FIT CASE TO HOLD TH AT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. HE HAS, THEREFORE, SUBMITTED THAT PENALTY SHOULD NO T BE IMPOSED IN THIS CASE AND RELIED UPON THE DECISION OF THE HONBLE GU JARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS CIT 249 ITR 125 (G UJ) IN WHICH IT WAS HELD THAT NO POSITIVE EVIDENCE THAT EXPLANATION W AS FALSE. NOTHING ON RECORD TO SHOW CASH CREDITS CONSTITUTED INCOME OF T HE ASSESSEE. PENALTY NOT TO BE IMPOSED. ON THE OTHER HAND, LEARNED DR R ELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE THE ASSESSEE FAILED TO PROVE GENUINE CASH CREDITS, THEREFORE, AD DITION WAS RIGHTLY MADE AND RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF INDUS VALLEY PROMOTERS LTD. REPORTED IN 305 ITR 202 (DEL) AND THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF POWER PETRO PRODUCTS LTD. 301 ITR 228 IN WHICH ADDITIONS U/S 68 OF THE INCOME TAX ACT WERE CONFIRMED BECAUSE THE ASSESSEE FAILED TO PROVE THE INGREDIENTS OF SECTION 68 OF THE INCOME TAX ACT. ITA NOS.2745/AHD/2009 GOYAL KNITFAB PVT. LTD. 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN THE CASE OF THE ASSESSEE, IT IS ADMITTED FACT THAT ALL REQUISITE DETAILS WERE FILED AT THE ASSESSMENT STAG E TO PROVE GENUINE CREDITS. THE AO ALSO PARTLY ACCEPTED THE CREDITWOR THINESS OF SHRI KRISHAN KUMAR KAUSHIK BECAUSE ADDITION WAS NOT MADE OF R.50,000/-. THE CREDITORS HAVE CONFIRMED THE TRANSACTIONS WITH THE ASSESSEE REGARDING GIVING OF THE LOANS. THEREFORE, THEIR IDE NTITY IS NOT IN DISPUTE. THE GENUINENESS OF THE CREDITS WAS DISBELIEVED BECA USE THE CREDITORS COULD NOT PROVE THEIR CREDITWORTHINESS. IT WOULD, T HEREFORE, PROVE THAT WHATEVER POSSIBLE EVIDENCE WAS IN THE POWER AND POS SESSION OF THE ASSESSEE WERE PRODUCED BEFORE THE AO AND THE CREDIT ORS ALSO CONFIRMED GIVING LOANS TO THE ASSESSEE. THEREFORE, IT IS A CA SE OF NON-PROVING THE CREDITWORTHINESS OF THE CREDITORS ONLY. THEREFORE, IT IS A CASE WHERE THERE WAS NO CIRCUMSTANCE TO LEAD TO A REASONABLE AND POS ITIVE INFERENCE THAT THE EXPLANATION THAT CASH CREDITS WERE ARRANGED AS TEMPORARY LOANS WAS FALSE. THE FACTS AND CIRCUMSTANCES RATHER PROVE THA T THE ASSESSEE OBTAINED LOANS FROM THESE THREE PERSONS THOUGH TECH NICALLY THEIR CREDITWORTHINESS COULD NOT BE PROVED. EVEN IF, THE ASSESSEE DID NOT PREFER APPEAL ON QUANTUM WOULD NOT PROVE THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. THEREFORE, IMPOSITION OF PENALTY WOULD NOT BE JUSTIFIED IN THE ABOVE CASE. WE ALSO RELY UPON THE RECENT DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF M/S. RAJASTHAN SPINNING & WEAVING MILLS (2009) TIO L -63 IN WHICH IT WAS HELD THAT ON EVERY DEMAND PENALTY IS NOT AUTOMA TIC. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS JALARAM OI L MILLS 253 ITR 192 (GUJ) CONFIRMED THE ORDER OF THE TRIBUNAL IN WHICH THE TRIBUNAL HAS RECORDED THE FINDING OF FACT THAT ON REJECTION OF T HE CASH CREDITS IT WAS NOT POSSIBLE TO STATE WITH CERTAINITY THAT THE SAID SUM WOULD BE CONCEALED INCOME OF THE ASSESSEE IN THE YEAR UNDER CONSIDERAT ION. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS C. J. RATHN ASWEAMI 223 ITR 5 (MAD) HELD THAT SINCE THERE WAS NO ADMISSION THAT C ASH CREDITS ITA NOS.2745/AHD/2009 GOYAL KNITFAB PVT. LTD. 4 REPRESENTED UNDISCLOSED INCOME OF THE ASSESSEE, PEN ALTY WOULD NOT BE JUSTIFIED. 6. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED AB OVE AND MORE PARTICULARLY WHEN THE ASSESSEE COMPLIED WITH ALL TH E REQUIREMENTS OF THE AO IN FILING THE DETAILS OF THE LOANS AND PRODUCTIO N OF THE DEPOSITORS FOR EXAMINATION BEFORE THE AO IN WHICH THE DEPOSITORS C ONFIRMED GIVING LOANS TO THE ASSESSEE, WE ARE OF THE VIEW THAT IT IS NOT A CASE TO HOLD THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCO ME OF FILED INACCURATE PARTICULARS OF INCOME. THERE IS ALSO NO POSITIVE EV IDENCE ON RECORD TO SHOW THAT IT WAS CONCEALED INCOME OF THE ASSESSEE O R THAT THE ASSESSEE HAS ARRANGED FALSE LOANS. IN THIS VIEW OF THE MATTE R, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENA LTY U/S 271 (1) ( C ) OF THE INCOME TAX ACT. 7. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-12-2009 SD/- SD/- (DR. O. K. NARAYANAN) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 10-12-2009 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD