Kusa Apat, Keonjhar V. DCIT, Sambalpur

ITA 276/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65148 (ITAT-CUTTACK)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 12-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: P R MOHATY
• Keywords: Unexplained cash credit
• Section: 68; 27

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 276/CTK/2012 / ASSESSMENT YEAR 2007 - 08 KUSA APAT, AT/P.O.GUALI, BARBIL, DIST. KEONJHAR, PAN: AFYPA 4721 M - - - VERSUS - DY.COMMISSIONER OF INCOME - TAX, CIRCLE 1( 1), SAMBALPUR, ORISSA. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.R.MOHATY, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / DATE OF HEARING: 12.09.2012 / DATE OF PRONOUNCEMENT: 30.10.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DT.28.2.2012 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRM ING PENALTY OF 2,35,620 LEVIED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE I.T.ACT,1961 FOR THE ASSESSMENT YEAR 2007 - 08, ON THE FOLLOWING GROUNDS: 1. THAT THE LEARNED CITA HAS ERRED IN DISMISSING THE APPEAL OF THE ASSESSEE AND CONFIRMING THE ORDER OF T HE AO IMPOSING PENALTY U/S 271(1)(C) WHICH WAS ILLEGAL AND NOT BASED ON THE FACTS PLACED BEFORE HIM AND THE SAME SHOULD BE REJECTED AND THE APPEAL OF THE ASSESSEE BE ALLOWED IN DELETING THE PENALTY OF 2,35,620 IMPOSED BY THE AO ON THE FACTS AND UNDER T HE CIRCUMSTANCES OF THE CASE. I.T.A.NO. 276/CTK/2012 2 2. THAT THE LD. CITA HAS ERRED IN DISMISSING THE CONDONE PETITION FILED BY THE ASSESSEE FOR DELAY IN FILING THE APPEAL DUE TO GENUINE REASONS AND THE SAME SHOULD BE QUASHED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. 3. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UND ISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE DERIVES INCOME FROM RAISING OF IRON ORE AND TRANSPORTATION WORK. DURING THE COURSE OF SCRUTINY ASSESSMENT U/S.143(3) OF THE I.T.ACT, 1961, THE ASSESSING OFFICER FOUND THE ASSESSEE TO HAVE SHOWN UNS ECURED LOAN TO THE EXTENT OF 7,00,000. ON BEING ASKED TO EXPLAIN, THE ASSESSEE FURNISHED THE DETAILS OF NAMES AND COMPLETE ADDRESSES ALONG WITH IT PAN OF THE LOAN CREDITORS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT FURNISH DETAILS OF RETURN OF INCOME AND SOURCE OF INC OME OF THE LOAN CREDITORS AND THEREFORE, HE HELD THE ASSESSEE TO HAVE FAILED TO ESTABLISH THE LOAN CREDIT AND ADDED THE SAME TO THE TOTAL INCOME U/S.68 OF THE ACT. ON THIS BASIS, PENALTY U/S.271 (1)(C) OF THE ACT WAS LEVIED , AFTER HEARING THE ASSESSEE AN D CONSIDERING THE EXPLANATION OF THE ASSESSEE , L E V I E D P E N A L T Y OF 2,35,620 U/S.271(1)(C) OF THE ACT, BEING EQUIVALENT TO THE TAX SOUGHT TO BE EVADED. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A), WHO CONFIRMED THE LEVY OF PENALTY AND HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. I.T.A.NO. 276/CTK/2012 3 5. WE HA VE HEARD BOTH THE PARTIES AND CAREFULLY PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL. WE FIND THAT THE LEARNED CIT(A) HAS DISMISSED THE APPEAL FILED BEFORE HIM BOTH ON ACCOUNT OF DELAY AS WELL AS ON M ERIT. THE FILING OF APPEAL BEFORE THE LEARNED CIT(A) WAS DELAYED BY 28 DAYS, AGAINST THE ASSESSEES EXPLANATION OF ILLNESS OF THE ASSESSEE AT GUALI . HOWEVER, THE LEARNED CIT(A) DID NOT ACCEPT SUCH EXPLANATION OBSERVING THAT NO EVIDENCE TO THAT EFFECT WAS F URNISHED BY THE ASSESSEE AND THEREFORE, DID NOT CONDONE THE DELAY. IN THIS CASE, PENALTY IS LEVIED AND THE ASSESSEE COULD NOT HAVE TAKEN ANY RISK IN BELATED FILING OF THE APPEAL WITHOUT ANY CAUSE, WHICH CAUSE IT HAS STATED AS ILLNESS AT OUTSTATION. CONSIDE RING THE ISSUE FROM THIS ANGLE AND CONSIDERING THE REASON FOR THE DELAY, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE FILED BEFORE HIM ON THIS COUNT. NEW COMING TO THE MERITS OF THE PENALTY, WE FIND T HAT THE LEARNED CIT(A) HAS OBSERVED THAT THE FACT THAT THE ASSESSEE ACCEPTED THE ADDITION AND DID NOT CONTEST IN APPEAL IS INDICATIVE OF ITS GUILTY MIND. WE CANNOT SUPPORT SUCH OBSERVATION OF THE LEARNED CIT(A) BECAUSE ASSESSMENT PROCEEDINGS AND PENALTY P ROCEEDINGS ARE SEPARATE. MERE ADDITION U/S.68 IN THE ASSESSMENT, WHICH WAS NOT CONTESTED FURTHER, CANNOT BE A GROUND FOR JUSTIFYING LEVY OF PENALTY U/S.271(1)(C). IN THE PRESENT CASE PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LE ARNED CIT(A) ON THE ADDITION OF 7,00,000 MADE U/S.68 OF THE I.T.ACT. IN THE CASE OF NATIONAL TEXTILES V. CIT [2001] 249 ITR 125 (GUJ.) AS RELIED ON BY THE LEARNED AR OF THE ASSESSEE, IT IS HELD THAT THE PROVISIONS OF SECTION 68 PERMITTING THE ASSESSING OFFICER TO TREAT UNEXPLAINED CASH CREDIT AS INCOME ARE ENABLING PROVISIONS FOR MAKING CERTAIN ADDITIONS WHERE THERE IS FAILURE BY THE ASSESSEE TO GIVE AN I.T.A.NO. 276/CTK/2012 4 EXPLANATION OR WHERE THE EXPLANATION IS NOT TO THE SATISFACTION OF THE ASSESSING OFFICER. HOWEVER, THE ADDITION MADE ON THIS COUNT WOULD NOT AUTOMATICALLY JUSTIFY THE IMPOSITION OF PENALTY UNDER SECTION 27 1(1)(C) BY RECOURSE ONLY TO EXPLANATION 1 BELOW SECTION 271(1)(C). NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME AS WITH THE HYPOTHESIS THAT IT DOES. IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED, I.E., IT IS NOT ACCEPTED BUT CIRCUM - STANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CASE IS FALSE, THE EXPLANATION CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE . IN THE CASE OF CIT V. JALARAM OIL MILLS, HONBLE GUJARAT HIGH COURT (253 ITR 192),ON VERY MUCH SIMILAR FACTS AS IN THE PRESENT CASE ON HAND, HAS HELD THAT ON T HE BASIS OF THE ASSESSEE AGREEING TO HAVE THE CREDIT ENTRIES IN ITS BOOKS OF ACCOUNT TREATED AS ITS INCOME, BY VIRTUE OF THE PROVISIONS OF SECTION 68 OF THE ACT, THE SAID SUMS SHALL BE DEEMED TO BE INCOME OF THE YEAR UNDER CONSIDERATION. HOWEVER, DE HORS T HE SAID PROVISION, IT IS NOT POSSIBLE TO STATE WITH CERTAINTY THAT THE SAID SUMS WOULD BE 'CONCEALED INCOME' OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. M.M.GU JAMAGADI (290 ITR 168 ) HOLDING THAT MERELY BECAUSE ASSESSEE VOLUNTARILY AGREED FOR ADDITION OF CASH CREDITS AS HE WAS UNABLE TO SECURE THE ATTENDANCE OF THE CREDITORS TO SUBSTANTIATE HIS CLAIM VIS - - VIS - CASH CREDITS BEFORE THE ITO, IT CANNOT BE SAID THAT THE EXPLANATION OF THE ASSESSEE IS NOT BONA FIDE AND THEREFORE, PENALTY U/S.271(1)(C) IS NOT LEVIABLE. IN VIEW OF SUCH JUDICIAL PRONOUNCEMENTS, WE ARE OF THE CONSIDERED VIEW THAT IMPOSITION OF PENALTY I.T.A.NO. 276/CTK/2012 5 U/S.271(1)(C) OF THE I.T.ACT, 1961 IN THE INSTANT CASE IS NOT JUSTIFIED. WE MAY MENTION HERE THAT THE LEARNED CIT(A) HAS RELIED ON CERTAIN JUDICIAL PRONOUNCEMENTS AS MENTIONED IN PARAGRAPH 4.3 OF HIS ORDER, WHICH ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE THOSE DECISIONS RELATE TO ADDITION U/S.68 OF THE I.T.ACT AND NOT RELATING TO PENALTY U/S.271(1)(C) OF THE I.T.ACT. THEREFORE, IN VIEW OF THE ABOVE DISCUSSIONS, WE DO NOT FIND ANY MERIT IN THE IMPOSITION OF PENALTY U/S.271(1)(C) OF THE I.T.ACT IN THE INSTANT CASE AND AS SUCH, WE CAN CEL THE SAME BY SETTING ASIDE THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND BY ALLOWING THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 30.10.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : KUSA APAT, AT/P.O.GUALI, BARBIL, DIST. KEONJHAR, 2 / THE RESPONDENT: DY.COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), SAMBALPUR, ORISSA. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 276/CTK/2012 6 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 0 3.10.20123 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03.10.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 30.10.2012 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..