Navnit Kumar Sah, Bhubaneswar V. ITO, Ward-1(2), Bhubaneswar, Bhubaneswar

ITA 287/CTK/2014

• Counselvise Citation: 28722114 RSA 2014
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURI
• Assessee Lawyers: D PARIDA
• Keywords: Unexplained cash credit; Wrong claim
• Section: 133(6)

Judgement Text

1 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010 , , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK B ENCH, CUTTACK , . . , BEFORE SHRI SUNIL KUMAR YADAV, JM & SHRI B.P.JAIN, AM ./ ITA NO.287 /CTK/2014 ( ! ! ! ! / ASSESSMENT YEAR :2009-2010) NAVNIT KUMAR SAH, DUPLEX-21, BASANTA VIHAR TANKAPANI ROAD, BHUBANESWAR- 18 VS. ITO, WARD-1(2), BHUBANESWAR ' ./ # ./ PAN/GIR NO.AMJPS 6746 Q ( '$ / APPELLANT ) .. ( %&'$ / RESPONDENT ) ( * * * * /ASSESSEE BY : SHRI D.PARIDA * * * * /REVENUE BY : SHRI RABIN CHOUDHURI + ( / DATE OF HEARING : 27 TH MAY, 2015 -.! ( / DATE OF PRONOUNCEMENT 29 TH MAY,2015 / / / / / O R D E R PER B.P.JAIN(AM) THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD CIT(A)-1, BHUBANESWAR DATED 31.3.2014 FOR THE ASSESSMENT YEAR 2009-2010. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED BY THE LD CIT(A) IS ARBIT RARY, EXCESSIVE, CONTRARY TO FACTS AND BAD IN LAW. 2 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010 2. THAT THE LD CIT(A) HAS WRONGLY CONFIRMED THE PEN ALTY IMPOSED U/S.271(1)(C) OF THE I.T.ACT, 1961. 3. THAT THE LD AO HAS WRONGLY IMPOSED 100% PENALTY U/S.271(1)(C) ON TAX ON ADDITIONS MADE DUE TO DIFFERENCE IN SUNDRY CREDI TORS CONFIRMATION LETTER BALANCES AND THE APPELLANTS LEDGER ACCOUNT BALANCE S AMOUNTING TO RS.3,38,061/- WHEN THERE IS NO CONCEALMENT OF INCOM E NOR ANY FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE APPELLAN T AND WITHOUT APPRECIATING THE FACT THAT THE DIFFERENCES WERE DUE TO NON RECONCILIATION OF OLD BALANCES PERTAINING TO PREVIOUS YEARS. 4. THAT THE LD. A.O. HAS WRONGLY IMPOSED 100% PENAL TY U/S 271(1) ( C ) ON TAX ON ADDITIONS OF SUNDRY CREDITORS BALANCES AM OUNTING TO RS. 5,25,467/-DUE TO NON SUBMISSION OF CONFIRMATION LET TERS WHEN THERE IS NO CONCEALMENT OF INCOME NOR ANY FURNISHING OF INACCUR ATE PARTICULARS OF INCOME AND WITHOUT APPRECIATING THE FACT THAT THE C REDITORS MIGHT HAVE CHANGED THEIR PLACE OF BUSINESS KNOWN TO THE APPELL ANT. 5. THAT THE ID. A.O. IS ERRED IN LAW IN IMPOSING PE NALTY ON ADDITIONS MADE ON BOGUS/NON-GENUINE SUNDRY CREDITORS BALANCES WHILE A LLOWING THE PURCHASES MADE FROM THEM IN THE CURRENT YEAR AS WELL AS PREVI OUS YEARS. 6. THAT THE LD. A.O. HAS WRONGLY IMPOSED 100% PENAL TY U/S 271(1) ( C ) ON TAX ON ADDITION MADE TREATING THE AGRICULTURAL INCO ME SHOWN BY THE APPELLANT AS INCOME FROM OTHER SOURCES AMOUNTING TO RS.6 LAKHS WITHOUT APPRECIATING THE FACT THAT THE INCOME FROM AGRICULT URAL ACTIVITY HAS BEEN RECEIVED BY THE APPELLANT FROM ITS HUF SOURCES WHIC H IS EXEMPTED FROM TAX IN THE HAND OF THE MEMBER. 7. THAT THE LD. A.O. HAS WRONGLY IMPOSED 100% PENAL TY U/S. 271(1) ( C ) ON TAX ON ADDITION MADE BASING UPON THE INTEREST RECEN T SHOWN IN 26AS WITHOUT APPRECIATING THE FACT THAT THE 26AS HAS BEE N OVERLOOKED BY THE APPELLANT WHILE FILING THE RETURN OF INCOME AND THE RECEIPT WAS A BOOK ENTRY AND THE APPELLANT HAD NEVER CLAIMED THE TDS THEREON AMOUNTING TO RS.956/-. 8. THAT THE OTHER GROUNDS IF ANY WILL BE URGED AT T HE TIME OF HEARING.' 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A RETAIL TRADER IN ELECTRICAL GOODS/POWER PRODUCTS IN THE NAME AND STYLE OF M/S. STABILIZER HOUSE. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE, IN THE BALANCE S HEET, HAD CLAIMED LIABILITY TO THE 3 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010 TUNE OF RS.30,35,262/- UNDER THE HEAD SUNDRY CREDI TORS. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETA ILS WITH NAME AND COMPLETE POSTAL ADDRESS OF SUNDRY CREDITORS TOGETHER WITH CO NFIRMATION LETTERS. IN REPLY, THE ASSESSEE FURNISHED A LIST OF TWENTY PARTIES TO SUND RY CREDITORS OF RS.30,35,262/- TOGETHER WITH CONFIRMATION LETTERS. IN ORDER TO VE RIFY THE GENUINENESS OF THE CLAIM OF LIABILITY UNDER THE HEAD 'SUNDRY CREDITORS', NOTICE U/S 133(6) WAS ISSUED TO THIRTEEN PARTIES TO FURNISH THE LEDGER ACCOUNT COPY AND TO C ONFIRM THE BALANCE AS ON 31.03.2009. OUT OF THIRTEEN PARTIES TO SUNDRY CREDI TORS, FIVE PARTIES HAVE REPLIED TO THE NOTICE AND IN FOUR CASES NOTICE WAS RETURNED BACK B Y THE POSTAL AUTHORITY 'UNSERVED'. ON GOING THROUGH THE DETAILS FURNISHED BY THE ASSES SEE VIS-A-VIS THE CONFIRMATIONS RECEIVED FROM THE PARTIES, THE DISCREPANCIES IN THE BALANCES SHOWN AGAINST THE SUNDRY CREDITORS OF FOLLOWING PARTIES WERE NOTICED BY THE AO AS UNDER: SI.N 0. NAME & ADDRESS OF THE PARTY AMOUNT CLAIMED BY THE ASSESSEE AMOUNT CONFIRMED BY THE SUNDRY CREDITOR PARTY REMARKS- EXCESS CLAIM 1. M/S. PATRA ELECTRONICS, 1,46,940/- NIL 1,46,940/- 2. M/S. P.K. TRADING, 1,76,950 27,370 1,49,580/- 3. M/S. CAPITAL PHOTO SERVICES PVT. LTD. 44,095/- 2,554/- 41,541/- TOTAL 3,40,615 29,924 3,38,061 4 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010 FROM THE ABOVE TABLE, THE AO FOUND THAT THERE WAS D ISCREPANCY AT RS. 3,38,061/-. THEREFORE, HE ISSUED NOTICES TO THE PARTIES WHICH WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITY IS AS UNDER: SI.NO. NAME OF THE PARTY AMOUNT CLAIMED BY THE ASSESSEE 1. M/S. COMPUAGE INFOCOM LTD. 50,512/- 2. M/S. TCL INDIA HOLDINGS PVT. LTD. 2,92,322/- 3. M/S. BASE CORPORATION 87,633/- 4. M/S,. RISING ELECTRONICS 95,000/- TOTAL: RS.5,25,467/- THE DISCREPANCY AMOUNT AND THE LIABILITY CLAIMED FO R THE PARTIES TO UNSERVED NOTICE COMES TO RS.8,63,528/- (RS.3,38,061/- + RS.5,25,467/-). DURING ASSESSMENT PROCEEDINGS, VIDE SHOW-CAUSE NOTICE DATED 16 TH DECEMBER, 2011, THE LEDGER ACCOUNT COPIES TOGETHER WITH CONFIRMATION LETTERS OF PARTIE S TO DISCREPANCY AMOUNT WERE GIVEN TO THE ASSESSEE FOR RECONCILIATION. THE ASSESSEE WAS A LSO ASKED TO EXPLAIN AS TO WHY THE ABOVE DISCREPANCY OF RS.3,38,061/- AS FOUND IN SUND RY CREDITORS SHALL NOT BE TREATED AS BOGUS CLAIM OF LIABILITY AND AS TO WHY THE SAME SHA LL NOT BE ADDED TO THE TOTAL INCOME. TAKING INTO ACCOUNT THE UNSERVED NOTICE, THE ASSESS EE WAS ALSO ASKED TO PRODUCE THE ABOVE FOUR PARTIES FOR VERIFICATION VIDE THIS OFFIC E NOTICE DATED 16 TH DECEMBER, 2011. IN RESPONSE TO THE ABOVE SHOW-CAUSE NOTICE, THE A/R OF THE ASSESSEE APPEARED ON 5 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010 21.12.2011 AND FILED A PETITION SIGNED BY THE ASSES SEE BEFORE THE AO. THE RELEVANT PORTION OF THE PETITION IS AS UNDER. 'A) WITH REGARD TO THE FOLLOWING CREDITORS ON WHICH NOTICE IS SENT AND RETURNED TO YOUR OFFICE, I WILL PRODUCE THEM BEFORE YOUR HONOR FOR THE EXAMINATION. A) RISING ELECTRONICS, B) BASE CORPORATION LTD., C) COMPUGE INFOCORN LTD., D) TCL INDIA HOLDING PVT LTD. B) IN THE CASE OF CREDITORS WHOSE OUTSTANDING BALAN CE IS NOT IN CONFORRHITY WITH THE BALANCE CLAIMED BY ME, I WILL RECONCILE THE SAME AND SUBMIT THE SAME BEFORE YOUR HONOR VERY SOON.' 4. BEFORE THE AO, NOT A SINGLE PARTY TO THE UNSERVE D NOTICE WAS PRODUCED FOR VERIFICATION AND COULD NOT FURNISH ANY EXPLANATION. WITH REGARD TO DISCREPANCY OF AMOUNT OF SUNDRY CREDITORS, THE ASSESSEE STATED THA T THE DISCREPANCY WAS DUE TO NON- RECONCILIATION OF OLD BALANCES. HE FURTHER STATED T HAT THE DISCREPANCY AMOUNT AS FOUND, TO BE ADDED TO THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. AS ADMITTED AND CLARIFIED BY THE ASSESSEE, THE DISCREPANCY OF THE S UNDRY CREDITORS OF RS.3,38,061/- WAS DUE TO NON-RECONCILIATION OF PREVIOUS YEAR OLD BALA NCES AND ALSO ADMITTED TO INCLUDE THE DISCREPANCY AMOUNT OF RS.3,38,061/- TO THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS TOLD TO PRODUCE THE PARTIES TO UNSERVED NOTICE FOR VERIFICATION. THE ASSESSEE COULD NOT BE ABLE TO PR ODUCE THE ABOVE PARTIES TO SUNDRY CREDITORS FOR VERIFICATION AND ALSO FAILED TO FURNI SH ANY EXPLANATION IN THAT REGARD. IN VIEW OF THIS, THE CLAIM OF LIABILITY OF FOUR PARTIES UND ER THE HEAD SUNDRY CREDITORS OF RS.5,25,467/- WAS ALSO FOUND BOGUS/NON-GENUINE. DU RING THE YEAR UNDER CONSIDERATION, THE CLAIM OF LIABILITY AS MADE BY THE ASSESSEE UNDE R THE HEAD SUNDRY CREDITORS TO THE TUNE OF RS.8,63,528/- WAS FOUND BOGUS AND THEREFORE , THE SAME WAS TREATED AS 6 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010 UNEXPLAINED CREDIT IN THE BOOKS OF THE ASSESSEE FOR FINANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. IN VIEW OF THI S BACKDROP THAT THE ASSESSING OFFICER LEVIED THE PENALTY U/S.271(1)(C) OF THE ACT . 5. THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESS ING OFFICER. 6. THE LD COUNSEL FOR THE ASSESSEE ARGUED THAT THE ASSESSEE HAS PROVIDED ALL THE CONFIRMATORY LETTERS TO VERIFY THE GENUINENESS OF T HE CLAM OF LIABILITIES UNDER THE HEAD SUNDRY CREDITORS. NOTICES UNDER SECTION 133(6) W ERE ISSUED REGARDING THE DISCREPANCY SHOWN WITH RESPECT TO THIRTEEN PARTIES OF RS.3,38,0 61/- AND WITH RESPECT TO FIVE PARTIES OF RS.5,25,467/-. HE ARGUED THAT NOTICES WERE RETURNE D BACK WITH RESPECT TO FOUR PARTIES. HE ARGUED THAT ALL THE PURCHASES HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AND THEY HAVE NOT BEEN TREATED AS BOGUS AND IF THE NOTICES H AVE NOT BEEN SERVED, THE ASSESSEE CANNOT BE PENALIZED. MOREOVER, IT WAS EXPLAINED THA T THERE IS A DIFFERENCE IN THE OLD BALANCE WHICH IS UNDER RECONCILIATION. THIS EXPLAN ATION WAS SUBMITTED BEFORE BOTH THE AUTHORITIES BELOW. THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOME OR HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. TH EREFORE, NO PENALTY U/S.271(1(C) IS LEVIABLE. ACCORDINGLY, HE PRAYED TO CANCEL THE PEN ALTY LEVIED BY THE AO AND REVERSE THE ORDER OF THE LD CIT(A). 7. ON THE OTHER HAND, THE LD D.R. RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS PROVID ED THE CONFIRMATORY LETTERS OF 20 PARTIES, WHO ARE SUNDRY CREDITORS OF AN AMOUNT OF R S.30,35,262/-, WHICH HAS BEEN EXPLAINED BY THE ASSESSEE BEFORE BOTH THE AUTHORITI ES BELOW THAT THESE ARE OLD BALANCES WHICH ARE SUBJECT TO RECONCILIATION. THE GENUINE P URCHASES HAVE BEEN MADE AND NO 7 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010 FAULT ON THE SAME HAS BEEN POINTED OUT. THE RECEIP T OF NOTICE U/S.133(6) OF THE ACT BY THE SUNDRY CREDITORS CANNOT TENTAMOUNT TO CONCEALME NT OF PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. I N THE CIRCUMSTANCES AND FACTS OF THE CASE, THE AO IS NOT JUSTIFIED IN LEVYING THE PENALT Y U/S.271(1)(C) OF THE ACT AND, ACCORDINGLY, PENALTY SO LEVIED IS DIRECTED TO BE DE LETED. HENCE, WE REVERSE THE ORDER OF THE LD CIT(A) AND CANCEL THE PENALTY IMPOSED BY THE AO U/.S.271(1)(C) OF THE ACT. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 /05 /2015. SD/- SD/- ( ) (SUNIL KUMAR YADAV) ( . . ) (B.P.JAIN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 29/05/2015 B.K.PARIDA, SR. PS / / / / %( %( %( %( 2!( 2!( 2!( 2!( / COPY OF THE ORDER FORWARDED TO : / / / / / BY ORDER, SR. PRIVATE SECRETARY, , / ITAT, CUTTACK 1. THE APPELLANT : NAVNIT KUMAR SAH, DUPLEX-21, BASANTA VIHAR TANKAPANI ROAD, BHUBANESWA R- 18 2. THE RESPONDENT : NAVNIT KUMAR SAH, DUPLEX-21, BASANTA VIHAR TANKAPANI ROAD, BHUBANESWA R- 18 3. 3 ( ) / THE CIT(A), BHUBANESWAR 4. 3 / CIT , BHUBANESWAR. 5. 4 %( , / DR, ITAT, CUTTACK 6. 6 7+ / GUARD FILE. &( %( //TRUE COPY// 8 ITA NO.287 /CTK/2014 ASSESSMENT YEAR :2009-2010