The ITO, Ward-12(1), Ahmedabad V. Shri Prakash K.Patel, Ahmedabad

ITA 3095/AHD/2009

• Counselvise Citation: 309520514 RSA 2009
• Duration Of Justice: 3 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 19-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Keywords: Unexplained cash credit; Gift
• Section: 68

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD . , ! ' ' ' ' # $%, ! BEFORE SHRI A.MOHAN ALANKAMONY,ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.3095/AHD/2009 ( ' '(' ' '(' ' '(' ' '(' / / / / ASSESSMENT YEAR : 2004-05) ITO WARD-12(1) AHMEDABAD / VS. SHRI PRAKASH K.PATEL PROP. OF PRAKASH PLASTICS 19,ABHISHEK INDUSTRIAL ESTATE NARODA ROAD, AHMEDABAD !) ./*+ ./ PAN/GIR NO. : ABJPP 8709 M ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY : SHRI O.P. BATHEJA, SR.D.R. -.), 0 / / RESPONDENT BY : SHRI TUSHAR P.HEMANI, A.R. #'1 0 %2 / / / / DATE OF HEARING : 01/08/2013 3( 0 %2 / DATE OF PRONOUNCEMENT : 14/08/2013 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XX, AHMEDABA D (CIT(A) FOR SHORT) DATED 12/08/2009 PERTAINING TO ASSESSM ENT YEAR (AY) 2004- 05. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AD ON FACTS IN DELETING THE PENALTY OF RS.2,46,285/- LEVIED U/S.27 1(1)(C) OF THE I.T.ACT BY THE AO, WITHOUT PROPERLY APPRECIATING TH E FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSE SSING OFFICER. 1.2. IN DOING SO, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE COULD NOT SUBSTANTIA TE ITS ITA NO.3095/AHD /2009 ITO VS.SHRI PRAKASH K.PATEL ASST.YEAR 2004-05 - 2 - EXPLANATION REGARDING THE VARIOUS ENTRIES APPEARING IN ITS BOOKS OF ACCOUNTS LEADING TO UPHOLDING OF THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS BY THE LD.CIT(A) AND THERE FORE THE SAID PENALTY U/S.271(1)(C) READ WITH EXPLANATION 1 WAS R IGHTLY LEVIED BY THE AO. 1.3. IN DOING SO, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE RATIO OF THE FOLLOWING JUDICIAL DE CISIONS WHERE THE HONBLE HIGH COURTS HAVE HELD THAT IF THE ADDIT ION TO THE RETURNED INCOME REMAINED UNSUBSTANTIATED, THE PENAL TY U/S.271(1)(C) READ WITH EXPLANATION 1 IS LEVIABLE: (I) 288 ITR 396 (ALLD.); AND (II) 225 ITR 675 (P&H) 1.4. I DOING SO, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF UNION OF INDIA & OTHERS VS. DHARAMENDRA TEXTILE PROCESSORS & OTHERS REPORTED I 306 ITR 277 IN WHICH THE HONBLE APEX COURT HAS HELD THAT WILLFUL CONCEALMEN T IS NOT AN ESSENTIAL INGREDIENT FOR LEVY OF PENALTY U/S.271(1) (C). 2. BRIEFLY STATED FACTS ARE THAT A PENALTY AMOUNTI NG TO RS.2,46,285/- U/S.271(1)(C) WAS LEVIED ON THE BASIS OF THE FOLLOW ING ADDITIONS MADE BY THE AO:- (I) THE DIFFERENCE IN ACCOUNT - RS. 63,314/- (II) THE GIFTS TREATED AS NON-GENUINE - RS.6,50,50 1/- 2.1. THE LD.CIT(A) DELETED THE PENALTY AS LEVIED BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND S UBMITTED THAT LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY . ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO L EVIED PENALTY OF RS.2,46,285/- ON ADDITIONS AGGREGATING TO RS.7,13,8 15/-. HE SUBMITTED THAT THE MATTER IN QUANTUM PROCEEDINGS WAS CARRIED TO HONBLE ITAT. HE SUBMITTED THAT SO FAR THE ADDITION OF RS.60,63,314/ - IS CONCERNED, THE ITA NO.3095/AHD /2009 ITO VS.SHRI PRAKASH K.PATEL ASST.YEAR 2004-05 - 3 - SAME HAS BEEN SET ASIDE BY THE HONBLE ITAT B BEN CH AHMEDABAD IN ITA NOS.338/AHD/2008 FOR AY 2004-05 VIDE ORDER DATE D 16.12.2010 IN ASSESSEES OWN CASE. HE SUBMITTED THAT ONCE ANY IS SUE HAS BEEN SET ASIDE IN QUANTUM APPEAL, PENALTY LEVIED ON SUCH ADDITION DOES NOT SURVIVE. HE FURTHER SUBMITTED THAT AS REGARDS PENALTY LEVIED ON ADDITION OF RS.6,50,501/- THE SAID FIGURE IS A SUMMATION OF TWO AMOUNTS, I.E. RS.5,42,201/- AND RS.1,08,300/-. OUT OF THIS ADDIT ION, HE SUBMITTED THAT RS.5,42,201/- HAS BEEN SET ASIDE BY THE HONBLE ITA T TO ASCERTAIN THE CREDITWORTHINESS OF THE DONOR. HE SUBMITTED THAT A S REGARDS THE ADDITION OF RS.1,08,300/-, THE SAID ADDITION HAS BEEN CONFIR MED BY THE TRIBUAL IN QUANTUM APPEAL. HOWEVER, HE SUBMITTED THAT THE ASS ESSEE RECEIVED THE SAID GIFT FROM MRS.VARSHABEN PATEL RESIDING IN UK. COPIES OF CHEQUE OF 1300 (EQUIVALENT TO INR 1,08,300/-) RECEIVED FROM M RS.VARSHABEN PATEL AND THE PAY-IN-SLIP WITH REGARD TO THE SAID CHEQUE ARE PLACED ON RECORD. HE SUBMITTED THAT INDEMNITY LETTER-CUM-DEPOSIT SLIP FOR FOREIGN CURRENCY- CHEQUE/CURRENCY DEPOSITS WITH REGARD TO THE SAID CH EQUE IS PLACED AT PAGE NO.36 OF THE PAPER-BOOK. HE SUBMITTED THAT COPY O F CONFIRMATION LETTER RECEIVED FROM MRS.VARSHABEN O.PATEL IS PLACED AT P AGE NO.37 OF THE PAPER-BOOK. HE FURTHER SUBMITTED THAT COPY OF ADVI CE RECEIVED FROM ICICI BANK SATELLITE BRANCH,AHMEDABAD DATED 11/09/2 006 AS REGARDS CREDIT OF THE SAID FUNDS IS PLACED AT PAGE NO.38 OF THE PAPER-BOOK. HE FURTHER SUBMITTED THAT A COPY OF RELEVANT EXTRACT O F ASSESSEES BANK STATEMENT AND DETAILS THEREOF IS PLACED AT PAGE-39 OF THE PAPER-BOOK. HE SUBMITTED THAT IN QUANTUM APPEAL, THE HONBLE ITAT HAS CONFIRMED THE SAID ADDITION MERELY BECAUSE THE ASSESSEE WAS NOT A BLE TO ESTABLISH THE CREDITWORTHINESS. HOWEVER, IDENTITY AND GENUINENES S OF THE SAID DONOR ITA NO.3095/AHD /2009 ITO VS.SHRI PRAKASH K.PATEL ASST.YEAR 2004-05 - 4 - ARE WELL ESTABLISHED BEFORE THE HONBLE ITAT. HE R EFERRED TO PARAS 10 AT PAGES 5 & 6 OF THE HONBLE TRIBUNALS ORDER. HE S UBMITTED THAT IT IS PROVED BEYOND DOUBT THAT THE IDENTITY AND GENUINENE SS OF THE TRANSACTIONS ARE ESTABLISHED. SINCE THE ASSESSEE C OULD NOT ESTABLISH THE CREDITWORTHINESS OF THE DONOR, IT MIGHT JUSTIFY THE ADDITION U/S.68 OF THE ACT. HOWEVER, BY NO STRETCH OF IMAGINATION, IT MAKE S THE SAID CASE FIT FOR LEVY OF PENALTY. HE SUBMITTED THAT MERELY BECAUSE GIFTS ARE CONFIRMED AS INCOME U/S.68 OF THE ACT, NO PENALTY CAN BE LEVIED. IN SUPPORT OF HIS CONTENTION, HE RELIED ON THE FOLLOWING CASE-LAWS:- SL.NO(S) IN THE CASE OF . REPORTED AT 1. DINESH B.THAKKAR VS. ACIT 5 ITR (TRIB.) 120 (AHD.) 2. A.RAJENDRA VS. ACIT 127 ITD 361 (CHENNAI) 3. PUNEET SEHGAL VS. ITO (2009) 123 TTJ (DELHI) 566 4. SMT.SADHYA VERMA VS. ITO 30 SOT 29 (DEL)(URO) 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD AND THE CASE-LAWS CITED BY THE LD.COUNSEL FOR THE ASSESSEE. WE FIND THAT THE HONBLE ITAT A AHMED ABAD (ITA NO.338/AHD/2008 FOR AY 2004-05 DATED 16/12/2010) HA S SET ASIDE THE ADDITION OF RS.63,314/- FOR FRESH DECISION TO THE FILE OF AO. THIS FACT IS NOT CONTROVERTED BY THE LD.SR.DR. THEREFORE, THE P ENALTY ON THIS ADDITION DOES NOT SURVIVE, THE SAME IS HEREBY DELETED. ITA NO.3095/AHD /2009 ITO VS.SHRI PRAKASH K.PATEL ASST.YEAR 2004-05 - 5 - 5. IN RESPECT OF ADDITION OF RS.5,42,201/- TOWARDS GIFT RECEIVED FROM MRS.RITABEN HIRPARA, IT IS OBSERVED BY THE TRIBUNAL IN ITA NO.338/AHD/2008(SUPRA) THAT THE ASSESSEE HAS FILED DETAILS IN RESPECT OF THE SAID GIFT. AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, THE HONBLE ITAT SET ASIDE THE ISSUE TO THE FILE OF AO FOR CERTAIN CREDITWORTHINESS OF THE DONOR. THIS FACT IS ALSO NOT CONTROVERTED BY THE LD.SR.DR. HENCE, THE PENALTY LEVIED ON THIS ADDITI ON ALSO DOES NOT SURVIVE, THE SAME IS HEREBY DELETED. IN RESPECT OF ADDITION OF RS.1,08,300/-, THE HONBLE ITAT CONFIRMED THE ADDIT ION ON THE BASIS THAT CAPACITY OF CREDITWORTHINESS OF THE DONOR COULD NOT BE ESTABLISHED. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IN TH IS RESPECT IS THAT THERE IS NO DISPUTE WITH REGARD TO GENUINENESS AND IDENTITY OF THE DONOR. THE LD.CIT(A) DELETED THE ADDITION ON THE BASIS THAT PR OVISIONS OF SECTION 68 OF THE ACT CREATES A LEGAL FICTION AND FICTION CREA TED BY SUCH PROVISION ARE ONLY FOR THE LIMITED PURPOSE OF ASSESSMENT AND THE SAME CANNOT BE MADE APPLICABLE U/S.271(1)(C) OF THE ACT. MERE OPERATIO N OF THE FICTION IN THE QUANTUM PROCEEDINGS DOES NOT BY ITSELF JUSTIFY THE LEVY OF PENALTY. HE HAS OBSERVED THAT THE ONLY REASON WHY THE ADDITIONS HAVE BEEN CONFIRMED IS THE FAILURE OF THE ASSESSEE IN PROVING THE CREDI TWORTHINESS OF THE DONORS WHICH IS MATERIAL IN SO FAR AS QUANTUM ASSESSMENT P ROCEEDINGS ARE CONCERNED AND NOT IN CASE OF PENALTY PROCEEDINGS. 5.1. WE HAVE CONSIDERED ALL ASPECTS OF THE MATTER. WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE FINDING OF LD.CIT (A) IN THE LIGHT OF THE DECISIONS RELIED UPON BY THE ASSESSEE. HENCE, THE ORDER OF THE LD.CIT(A) IS CONFIRMED AND THE GROUND RAISED BY THE REVENUE I S DISMISSED. ITA NO.3095/AHD /2009 ITO VS.SHRI PRAKASH K.PATEL ASST.YEAR 2004-05 - 6 - 6. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE SD/- SD/- (. ) (# $%) ! ! ( A. MOHAN ALANKAMONY ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 14/ 08 /2013 72.., '.../ T.C. NAIR, SR. PS 4 0 -%8 98(% 4 0 -%8 98(% 4 0 -%8 98(% 4 0 -%8 98(%/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. % #: / CONCERNED CIT 4. #:() / THE CIT(A)-XX, AHMEDABAD 5. 8'$; -% , , / DR, ITAT, AHMEDABAD 6. ;<' =1 / GUARD FILE. 4# 4# 4# 4# / BY ORDER, .8% -% //TRUE COPY// > >> >/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 7.8.13 (DICTATION-PAD 12 PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 7.8.13 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 D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.14.8.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.8.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER