Shri Nirmalkumar B.Kedia,HUF, Surat V. The Incoe tax Officer,Ward-2(4), Surat

ITA 3005/AHD/2010

• Counselvise Citation: 300520514 RSA 2010
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 07-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 02-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAY RAJ KUMAR
• Keywords: Bogus purchase; Unexplained cash credit
• Section: 68

Judgement Text

, , . .. . . .. . , , , , ! !! ! . .. . . .. .'#$ '#$ '#$ '#$ , % % % % & & & & IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SHRI A.K.GARODIA, A.M.) ! !! !. ITA NO. 3005/AHD./2010 : ' ()- 2004-05 SHRI NIRMALKUMAR B. KEDIA HUF, SURA T (,- /APPELLANT) -VS- (PAN : AABHN 1184R ) I.T.O., WARD-2(4), SURAT ( ./,- /RESPONDENT ) ,- 0 1 / APPELLANT BY : SHRI HARDIK VORA, A.R. ./,- 0 1 / RESPONDENT BY : SHRI JAYRAJ KUMAR, SR.D.R. 2'3 0 4% / DATE OF HEARING : 07/10/2011 5#( 0 4% / DATE OF PRONOUNCEMENT : 20/10/2011 / ORDER PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 16-08-2010 OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II, SUR AT CONFIRMING THE PENALTY OF RS.2,04,000/- LEVIED BY THE AO UNDER SECTION 271(1) (C) OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2005-2006. 2. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS AN H.U.F. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL LOSS AT RS. 11,26,333/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE AO ASKED THE ASSESSEE TO PRODUCE PURCHASE BILL AND NAME AND ADDR ESS OF THE SUPPLIER FOR PURCHASE DEBIT OF RS.6,20,783/-. THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THE SAME AND TOOK THE PLEA THAT THEY HAVE BEEN DESTROYED IN FLOO D IN THE MONTH OF AUGUST, 2006. THE AO DID NOT ACCEPT THIS ARGUMENT AND TREATED THE PURCHASE AS UNEXPLAINED. AO ALSO FOUND THAT THE ASSESSEE HAS SHOWN UNSECURED LO AN TO THE TUNE OF RS.1,44,550/- IN THE BALANCE SHEET AND ASKED THE ASSESSEE TO FURNISH CONFIRMATION OF UNSECURED ITA NO. 3005-AHD-09 2 CREDITORS. SINCE NO DETAILS WERE FURNISHED, THE AO ADDED THE AMOUNT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE I.T. ACT, 1961. 2.1 IN RESPECT OF BOTH THE AFORESAID ADDITIONS, THE AO ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T. ACT . 3. AGAINST THE AFORESAID TWO ADDITIONS, AN APPEAL W AS FILED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) DISMISSED THE SAME. THE ASSESSEE ACCEPTED THE ORDER OF THE LD. CIT(A) AND THE SAME HAS BECOME FINAL. 4. IN REPLY TO SHOW CAUSE NOTICE ISSUED BEFORE LEVY ING PENALTY UNDER SECTION 271(1)(C), THE ASSESSEE RAISED THE SAME CONTENTION WHICH WAS RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO DID NOT FIND THE SAME CONVINCING AND LEVIED THE PENALTY OF RS.2,04,000/- AS AGAINST RS.2,03,600/- B EING 100% OF TAX SOUGHT TO BE EVADED ON CONCEALED INCOME OF RS.6,10,800/- (BEING 300% OF TAX SOUGHT TO BE EVADED). 5. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO IN RESPECT OF BOTH THE AFORESAID ADDITION S ON THE GROUND THAT PENALTY IS EXIGIBLE UNDER EXPLANATION 1 OF CLAUSE (C) OF SUB-S ECTION (1) OF SECTION 271(1)(C). HE ACCORDINGLY CONFIRMED THE SAME. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, SHRI HARDIK VO RA, APPEARED ON BEHALF OF THE ASSESSEE AND REITERATED THE SUBMISSIONS MADE BEFORE BOTH THE DEPARTMENTAL AUTHORITIES BELOW. THE COUNSEL OF THE ASSESSEE POINTED OUT THAT THE ADDITION OF RS.6,20,783/- ON ACCOUNT OF UNEXPLAINED PURCHASE WAS MADE ONLY IN TH E ABSENCE OF ORIGINAL BILLS. IT DOES NOT PROVE THE BAD INTENTION OR DELIBERATE CONC EALMENT OF INCOME. THE COUNSEL OF THE ASSESSEE ALSO PRODUCED THE SALES REGISTER OF TH E ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 HIGHLIGHTING THE SALE OF GOODS IN THE MONTH OF MARCH TO THE PARTIES TO WHOM THE ASSESSEE HAS SOLD THE GOODS DURING THE YEAR UND ER CONSIDERATION ALONG WITH THE OTHER SALES. THE COUNSEL OF THE ASSESSEE CONTENDED THAT GOODS PURCHASED WERE SOLD AND SALES ARE NOT DISPUTED. THEREFORE, THE LD. CIT( A) OUGHT TO HAVE CANCELLED THE ITA NO. 3005-AHD-09 3 PENALTY IN RESPECT OF ADDITION OF RS.6,20,783/-. WI TH REGARD TO PENALTY LEVIED AND CONFIRMED IN RESPECT OF CASH CREDIT AMOUNTING TO RS .1,44,550/- UNDER SECTION 68, THE COUNSEL OF THE ASSESSEE SUBMITTED THAT RS.1,44,550/ - BELONGS TO THE ASSESSEES SISTER CONCERN, NAMELY, M/S.VINAYAK FASHION. COPIES OF ACC OUNTS FROM THE BOOKS OF THE ASSESSEE AS ALSO OF THE SISTER CONCERN WERE ALSO FU RNISHED. IT WAS SUBMITTED THAT NO EXERCISE OR EFFORT HAVE BEEN UNDERTAKEN BY THE AO T O ENQUIRE INTO THE GENUINENESS OF THE CASH CREDIT. THE AMOUNT IN QUESTION HAS BEEN RE PAID TO THE SISTER CONCERN THROUGH ACCOUNT PAYEE CHEQUE IN THE SUBSEQUENT YEAR. THEREF ORE, ON THIS ADDITION, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. 7. ON THE OTHER HAND, SHRI JAYRAJ KUMAR, SR.D.R., A PPEARING ON BEHALF OF THE REVENUE, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). THE LD. D.R. POINTED OUT THAT EXTRACT OF SALES, NOW FURNISHED, IS NOTHING BU T AFTER-THOUGHT. THEREFORE, PENALTY IN RESPECT OF ADDITION OF RS.6,20,783/- IN RESPECT OF BOGUS PURCHASE IS RIGHTLY LEVIED BY THE AO AND CONFIRMED BY THE LD. CIT(A). WITH REGARD TO PENALTY LEVIED IN RESPECT OF ADDITION AMOUNTING TO RS.1,44,550/- MADE UNDER SECT ION 68 OF THE I.T. ACT, THE LD. D.R. POINTED OUT THAT SINCE NO DETAILS WERE FURNISH ED BEFORE THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THEREFORE, ON THIS ADDIT ION ALSO, THE PENALTY IS RIGHTLY LEVIED AND CONFIRMED BY THE LD. CIT(A) AND HENCE TH E SAME BE UPHELD. 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE QUANTUM APPEAL, THE LD. C IT(A) CONFIRMED THE ADDITION OF RS.6,20,783/- ON ACCOUNT OF BOGUS PURCHASE FOR THE DETAILED REASONS GIVEN IN PARA 6 OF THE ORDER DATED 18.07.2007 OF THE LD. CIT(A)-II, SU RAT. IN THIS ORDER, THE LD. CIT(A) HAS MENTIONED THAT THE ASSESSEE HAS NOT DISCHARGED THE INITIAL BURDEN. THEREFORE, ONUS IS NOT SHIFTED TO THE AO TO PROVE HIS CHARGE. WITH REG ARD TO SALES AND PURCHASE, THE ASSESSEE HAS NOT FURNISHED QUANTITATIVE DETAILS BEF ORE THE AO. EVEN BEFORE US ALSO, THE ASSESSEE HAS NOT FURNISHED THE SAME. WHATEVER DETAI LS, NOW FURNISHED, DID NOT CONTAIN THE QUANTITATIVE DETAILS. IN THESE CIRCUMSTANCES, W E ARE OF THE VIEW THAT PENALTY IN RESPECT OF ADDITION OF RS.6,20,783/- IS RIGHTLY LEV IED AND CONFIRMED BY THE LD. CIT(A). WE, THEREFORE, CONFIRM THE SAME. ITA NO. 3005-AHD-09 4 8.1 COMING TO THE PENALTY LEVIED ON ACCOUNT OF CASH CREDIT OF RS.1,44,550/-, WE FIND THAT THIS AMOUNT HAS BEEN REPAID THROUGH ACCOU NT PAYEE CHEQUE TO THE SISTER CONCERN. APART FROM THIS, BEFORE THE LD. CIT(A), IN THE QUANTUM APPEAL, THE ASSESSEE FURNISHED A COPY OF THE LEDGER ACCOUNT OF THE ALLEG ED CREDITOR. IN QUANTUM APPEAL, THIS FRESH EVIDENCE IS NOT ADMITTED. HOWEVER, SINCE THE PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDINGS, THE AO OUGHT TO HAVE C ONDUCTED AN ENQUIRY BEFORE LEVYING PENALTY IN RESPECT OF THIS ADDITION. SINCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NO ENQUIRY WAS CONDUCTED AND EVIDENCES FURNISHED WERE IGNORED, JUST RELYING ON THE REASONING GIVEN IN THE QUANTUM APPEA L, WE ARE OF THE VIEW THAT ON THIS ADDITION, PENALTY UNDER SECTION 271(1)(C) IS NOT LE VIABLE. WE ACCORDINGLY CANCEL THE SAME. 8.2 RESULTANTLY, THE AO IS DIRECTED TO RE-COMPUTE T HE PENALTY @100% OF TAX SOUGHT TO BE EVADED ON THE CONCEALED INCOME OF RS.6,20,783 /-, WHICH IS CONFIRMED BY US HEREINABOVE. 9. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 6 0 5#( $'!) 20/10 /2011 # 7 0 '3 8 THIS ORDER PRONOUNCED IN THE OPEN COURT ON 20/10/2011. SD/- SD/- (A.K.GARODIA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20/10/2011 0 00 0 .49 .49 .49 .49 :9(4) :9(4) :9(4) :9(4)- -- - 1. ,- 2. ./,- 3. !! 4 2> 4. 2>- - 5. 9A' .4' , , 8 6. ' C6 , ITA NO. 3005-AHD-09 5 D/ !F , 8 TALUKDAR/ SR. P.S.