Rahman Sons, CHENNAI V. ITO, CHENNAI

ITA 3246/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4510 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 28-11-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T VASUDEVAN
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 142(1); 68; 139

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 3 24 6 /MDS/2016 / ASSESSMENT YEAR :200 7 - 0 8 RAHMAN SONS, NO. 4 - A, KASI CHETTY STREET, SOWCARPET, CHENNAI 60 0 0 7 9 . [PAN:A AA FR6759D ] VS. THE INCOME TAX OFFICER , WARD 6 ( 1 ), CHENNAI 6. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE / RESPONDENT BY : SHRI A.V. SREEKANTH , JCIT / DATE OF HEARING : 2 6 . 0 4 .201 7 / DAT E OF P RONOUNCEMENT : 30 .0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 5 , CHENNAI DATED 1 9 . 10 .201 6 RELEVANT TO THE ASSE SSMENT YEAR 20 0 7 - 0 8 CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AND ENHANCING THE PENALTY . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS CARRYING ON BUSINESS IN PLASTIC HOUSE HOLD ARTICLES AN D FILED ITS RETURN OF INCOME ON 13.11.2007 I.T.A. NO . 3 24 6 /M/ 16 2 ADMITTING A NET PROFIT OF .10,04,299/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1)(A) OF THE ACT ON 16.07.2008. THIS BEING A SURVEY CASE, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED ON THE A SSESSEE. ON 16.11.2009, NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED ALONG WITH QUESTIONNAIRE CALLING FOR SPECIFIC DETAILS. IN RESPONSE THERETO, THE DETAILS FILED BY THE ASSESSEE WERE VERIFIED. 3. IN THIS CASE, THERE WAS A SURVEY CONDUCTED ON 14.02 .2007 IN THE BUSINESS PREMISES OF THE ASSESSEE AND EXCESS STOCK AMOUNTING TO .7,22,000/ - AND EXCESS CASH AMOUNTING TO .2,73,000/ - WERE FOUND. WHILE RECORDING THE SWORN STATEMENT AT THE TIME OF SURVEY, THE ASSESSEE ADMITTED THE EXCESS STOCK AND CASH AND PAID THE TAX. 4. AFTER VERIFICATION OF BOOKS OF ACCOUNTS PRODUCED BY THE AS SESSEE, THE ASSESSING OFFICER CALLED FOR CONFIRMATION FOR THE AMOUNT DUE TO ANDAMAN SUPER M ARKET. SINCE THE ASSESSEE COULD NOT FILE CONFIRMATION OR ANY SUPPORTING EVIDENCE, THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT AND BROUGHT TO TAX. 5. PENALTY PROCEEDINGS WERE INITIATED AGAINST THE CASH CREDIT OF .3,50,000/ - DUE TO ANDAMAN SUPER MARKET. SINCE THE ASSESSEE COULD NOT I.T.A. NO . 3 24 6 /M/ 16 3 FILE CONFIRMATION FROM THE CREDITORS, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED. 6. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WITH REGARD TO LEVY OF PENALTY, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AND ALSO ORDERED FOR ENHANCEMENT OF PENALTY SINCE EXCESS STOCK AND EXCESS CASH WERE FOUND IN THE PREMISES OF THE ASS ESSEE DURING THE COURSE OF SURVEY. 7. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE HAS FURNISH TRUE AND COMPLETE PARTIC ULARS OF INCOME AND FURNISHED ALL DETAILS BEFORE THE ASSESSING OFFICER FOR ASSESSMENT. NO PARTICULAR OF INCOME, WHICH WAS NOT FURNISHED IN THE RETURN OF INCOME OR BOOKS OF ACCOUNTS, IS DISCOVERED BY THE ASSESSING OFFICER TO TREAT THE SAME AS CONCEALMENT OF INCOME. NON FILING OF CONFIRMATION OF CREDITOR DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME WARRANT ING LEVY OF PENALTY. SINCE THE DETAIL OF THE CREDITOR WAS NOT READILY AVAILABLE WITH THE ASSESSEE, THE ASSESSEE HAS PAID TAX DUE FOR THE SAID CASH CREDIT. HE FURTHER SUBMITTED THAT EXCESS STOCK AND EXCESS CASH FOUND DURING THE COURSE OF SURVEY, DID NOT CALL FOR LEVY OF PENALTY OR ENHANCING PENALTY AND MOREOVER, TAX DUE FOR EXCESS I.T.A. NO . 3 24 6 /M/ 16 4 STOCK AND EXCESS CASH, AS DEMANDED, WERE DULY PAID BY THE ASSESSEE. IN VIEW OF THE ABOVE, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED FOR DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AND ALSO ORDER OF ENHANCEMENT OF PENALTY. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS O F AUTHORITIES BELOW. 8. WE HAVE HEARD BOTH SIDE, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT ON VERIFICATION OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE ASSES SING OFFICER FOUND CASH CREDIT DUE TO ANDAMAN SUPER MARKET AND SINCE THE ASSESSEE DID NOT PRODUCE ANY DETAILS OF THE CREDITOR, THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND BROUGHT TO TAX. FOR THE SAME AD DITION, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED. FOR THE SAKE OF LEVYING PENALTY, PENALTY CANNOT BE LEVIED BY THE DEPARTMENT. ADMITTEDLY, THE ASSESSING OFFICER HAS NOT DISPUTED IN THE ASSESSMENT ORDER AS WELL AS PENALTY ORDER THAT THE EXCESS STOCK/EXCESS CASH FOUND DURING THE COURSE OF SURVEY WERE NOT REFLECTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. ON VERIFICATION OF THE BOOKS OF ACCOUNTS, THE ASSESSING OFFICER CALLED FOR CONFIRMATION FROM THE CREDITOR AND SINCE THE ASSESSEE COULD NOT PRODUCE THE DETAILS OF THE CREDITOR , THE ASSESSING OFFICER TREATED THE SAID CREDIT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE QUESTION OF I.T.A. NO . 3 24 6 /M/ 16 5 CONCEALMENT OF INCOME WAS NOT BROUGHT ON RECORD BY THE DEPARTMENT. IN THE ASSESSMENT ORDER, THE SAID CASH CREDIT WAS NOT HELD AS BOGUS OR THE DEPARTMENT MADE ANY STEPS TO SERVE SUMMON TO THE CREDITOR. OTHERWISE ALSO, IT IS DIFFICULT TO PRODUCE THE CREDITOR BEFORE THE ASSESSING OFFICER SINCE THE CREDITOR IS NOT LOCATED IN CHENNAI OR IN TAMIL NADU AND P RODUCING THE CREDITOR BEFORE THE ASSESSING OFFICER WOULD BE MORE EXPENSIVE THAN PAYING TAX AND ACCORDINGLY, THE ASSESSEE PAID THE TAX AS DEMANDED. THE DEPARTMENT COULD NOT FOUND ANY PIECE OF PAPER OR PARTICULARS OVER AND ABOVE OTHER THAN THE DETAILS FURNIS HED IN THE RETURN OF INCOME FILED BY THE ASSESSEE. IN THIS CASE, THE SURVEY WAS CONDUCTED ON 14.02.2007, MUCH PRIOR TO FILING OF RETURN OF INCOME UNDER SECTION 139 OF THE ACT FOR THE RELEVANT ASSESSMENT YEAR. IN SUCH A SITUATION, IF THE INCOME REPRESENTED BY EXCESS STOCK IS INCLUDED IN THE RETURN FILED AFTER SURVEY, THEN THERE WOULD BE NO CONCEALMENT CASE AND PENALTY U NDER SECTION 271(1)(C) ACT CANNOT BE LEVIED . THUS, THE BASIS FOR LEVYING PENALTY STANDS DEFEATED IN THIS CASE. THEREFORE, WE ARE OF THE CONS IDERED OPINION THAT IT IS NOT A FIT CASE TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AGAINST THE EXCESS STOCK AND EXCESS CASH FOUND IN THE PREMISES OF THE ASSESSEE DURING SURVEY, THE TAX DEMANDED BY THE DEPARTMENT WAS PAID BY THE ASSESSEE AND THERE WAS NO ISSUE RAISED IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER. FURTHER, WE ARE OF THE CONSIDERED OPINION THAT JUST BECAUSE SURVEY WAS CONDUCTED IN THE PREMISES AND EXCESS STOCK AND EXCESS CASH FOUND DURING THE COURSE OF SURVEY CANNOT I.T.A. NO . 3 24 6 /M/ 16 6 AMOUNT TO LEVY OF PENALTY OR ENHANCING THE PENALTY AND WHATSOEVER DONE IN THIS CASE CANNOT SUSTAIN UNDER LAW . ONCE LEVY OF PENALTY IS NOT WARRANTED IN THIS CASE, THE QUESTION OF ENHANCING THE PENALTY DOES NOT ARISE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE PENALTY LE VIED UNDER SECTION 271(1)(C) OF THE ACT STANDS DELETED AND ENHANCEMENT OF PENALTY BY THE LD. CIT(A) IS ALSO QUASHED. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 30 TH MAY , 201 7 AT CHENNAI. SD/ - SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 0 5 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.