Shri Surendra Singh Thakur HUF, Burhanpur V. The ITO, Burhanpur

ITA 329/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1523 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 01-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Business income; Question of law
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ADNPT4626P I.T.A.NO. 329/IND/2012 A.Y. : 1996 - 97 SHRI SURENDRA SINGH THAKUR HUF, INCOME - TAX OFFICER, BURHANPUR KHAN DWA ROAD, VS BURHANPUR APPELLANT RESPONDENT APPELLANT BY : SHRI S. S. DESHPANDE, C. A. RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 16 . 01 .201 3 DATE OF PRONOUNCEMENT : 29 . 01 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 30 TH MARCH, 2012, FOR THE ASSESSMENT YEAR 1996-97 IN THE MATTER OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961, AMOUNTING TO RS. 2,99,036 /-. -: 2: - 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME AT RS. 2,44,550/-. ASSESSMENT WAS FRAMED AT AN INCOME OF RS. 13,20,000/-, WHEREIN INCOME FROM BUSI NESS WAS DETERMINED AT RS. 5.20 LAKHS AND ADDITION OF RS. 8 LAKHS WAS MADE ON ACCOUNT OF CASH CREDIT. ASSESSMENT ORDER WA S CONFIRMED BY THE LD.CIT(A). IN THE SECOND APPEAL FI LED BEFORE THE TRIBUNAL, THE TRIBUNAL REDUCED THE INCOME FROM BUSINESS BY RS. 1.30 LAKHS AND CONFIRMED THE ADDITION ON ACC OUNT OF CASH CREDIT. AGAINST THIS ORDER OF TRIBUNAL DATED 3 1 ST MARCH, 2008, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE H ON'BLE HIGH COURT AND HON'BLE HIGH COURT VIDE ITS ORDER DA TED 7.11.2008, ACCEPTED THE SUBSTANTIAL QUESTION OF LAW U/S 260A OF THE INCOME-TAX ACT, 1961. 3. WITH RESPECT TO THE ADDITION SO MADE, THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT, AN D THE SAME WAS CONFIRMED BY THE LD.CIT(A) AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AGAINST THE SAID PENALTY ORDER. 4. SHRI S. S. DESHPANDE, C. A. APPEARED ON BEHALF OF T HE ASSESSEE AND CONTENDED THAT QUANTUM PROCEEDINGS AND -: 3: - 3 PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT AN D DURING PENALTY PROCEEDINGS, THE ASSESSEE CAN SUBSTANTIATE ITS CLAIM TO THE EFFECT THAT THERE WAS NO CONCEALMENT OF INCOME, THEREFORE, PENALTY WAS NOT LEVIABLE, NOTWITHSTANDING, THE FACT THAT THE ADDITION HAS BEEN CONFIRMED IN QUANTUM. 5. WITH RESPECT TO THE CASH CREDIT OF RS. 8 LAKHS ADDE D BY THE ASSESSING OFFICER, IT WAS CONTENDED THAT THE AS SESSEE HAS DISCHARGED ITS BURDEN BY PRODUCING BOTH THE CASH CR EDITORS BEFORE THE ASSESSING OFFICER WHOSE STATEMENT WAS RE CORDED AND BOTH THE CREDITORS HAVE DULY CONFIRMED ADVANCIN G OF LOAN BY ACCOUNT PAYEE CHEQUE. BOTH THE CREDITORS WERE HA VING AGRICULTURAL INCOME AND ALSO AGRICULTURAL LAND. ACC ORDINGLY, IT WAS PLEADED THAT ONCE THE ASSESSEE HAS DISCHARGED I TS BURDEN BY PRODUCING THE CREDITOR AND CONFIRMING THE GIVING OF LOAN, NO PENALTY SHOULD BE LEVIED, EVEN AFTER THE ADDITION O N ACCOUNT OF CASH CREDIT HAS BEEN CONFIRMED IN QUANTUM PROCEEDIN GS. OUR ATTENTION WAS ALSO DRAWN BY LD. AUTHORIZED REPRESEN TATIVE TO THE STATEMENT OF CASH CREDITOR RECORDED BY THE ASSE SSING OFFICER ON 4.3.1999, WHEREIN BOTH THE CREDITOR APPE ARED BEFORE THE ASSESSING OFFICER AND GOT THEIR STATEMENTS RECO RDED -: 4: - 4 WHEREIN THEY CONFIRMED THE ADVANCING OF LOAN TO THE ASSESSEE. LD. AUTHORIZED REPRESENTATIVE ALSO RELIED ON THE O RDER OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. AGRO CHEMICALS (INDIA), 288 ITR 149, IN SUPPORT OF THE PROPOSITION THAT WHERE ASSESSEE FURNISHED THE EXPLA NATION IN SUPPORT OF GENUINENESS OF CASH CREDIT, NO PENALTY W AS IMPOSABLE EVEN WHERE QUANTUM ADDITION HAS BEEN CONF IRMED. RELIANCE WAS ALSO PLACED ON THE DECISION OF M.P.HIG H COURT IN THE CASE OF CIT VS. CHIRAG INGOT PRIVATE LIMITED, 2 75 ITR 310. ON LEGAL ISSUE, IT WAS SUBMITTED BY THE LD. AUTHORI ZED REPRESENTATIVE THAT HON'BLE HIGH COURT HAS ALREADY ACCEPTED SUBSTANTIAL QUESTION OF LAW, THEREFORE, THE ISSUE H AS BECOME DEBATABLE AND IT IS NOT A FIT CASE FOR LEVY OF PENA LTY AND FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF KUSUM OSWAL PASSED IN I.T(SS). A.NO. 101/IND/2009 DATED 20 TH APRIL, 2011, WHEREIN THE TRIBUNAL OBSERVED AS UNDER :- HON'BLE COORDINATE BENCH OF AHMEDABAD IN THE CASE OF RUPAM MERCANTILE, 91 ITD 1273, HELD THAT WHERE A PLEA OR CLAIM WHICH IS HELD BY THE HIGH -: 5: - 5 COURT COULD HAVE GIVEN RISE TO A SUBSTANTIAL QUESTION OF LAW, CANNOT BE TREATED TO BE FRIVOLOUS OR MALA FIDE SO AS TO ATTRACT LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. IN THE INSTA NT CASE BEFORE US, PENALTY WAS LEVIED BY THE ASSESSING OFFICER U/S 158BFA(2) WITH REGARD TO, GOLD ORNAMENTS ADDED BY THE ASSESSING OFFICER IN HER INCOME. PENALTY U/S 158BFA(2) IS IN THE NATURE OF PENALTY WHICH IS ALSO LEVIABLE U/S 271(1)(C) OF THE ACT. MEANING THEREBY BOTH THE SECTIONS ARE PARI MATERIA AND IMPOSE PENALTY FOR CONCEALMENT OF INCOME. HOWEVER, WHERE THE ADDITION SO MADE IS DEBATABLE, AS PER OUR CONSIDERED VIEW, NO PENALTY SHOULD BE LEVIED WITH RESPECT TO SUCH ADDITION. RECENTLY, I.T.A.T., MUMBAI BENCH IN THE CASE OF NAYAN BUILDERS & DEVELOPERS PRIVATE LIMITED VS. ITO, HELD THAT WHEN THE HON'BLE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOME APPARENT THAT ADDITION IS CERTAINLY DEBATABLE AND UNDER SUCH CIRCUMSTANCES, PENALTY -: 6: - 6 CANNOT BE LEVIED U/S 271(1)(C) OF THE ACT. THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW LEADS CREDENCE TO THE BONA FIDES OF THE ASSESSEE. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY JUSTIFICATION IN THE ORDER OF LOWER AUTHORITIES FOR LEVYING THE PENALTY. ACCORDINGLY, WE REVERSE THE ORDER OF LOWER AUTHORITIES AND ALLOW THE APPEAL IN FAVOUR OF THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORD ER OF CIT(A) AND CONTENDED THAT THE TRIBUNAL HAVE ALRE ADY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R, THEREFORE, PENALTY IS AUTOMATIC. THE LD. SR. DR ALS O PLACED RELIANCE ON THE DECISIONS REPORTED AT 203 ITR 641, 215 ITR 586, 215 ITR 586 AND 225 ITR 675 . 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT THE BUSINESS INCOME ASSESSED BY TH E ASSESSING OFFICER AND CONFIRMED BY THE LD.CIT(A) WA S REDUCED BY THE TRIBUNAL TO THE EXTENT OF RS. 1.30 LAKHS. TH US, IN PLACE OF BUSINESS INCOME ASSESSED AT RS. 5.20 LAKHS, THE SAME WAS -: 7: - 7 REDUCED TO RS. 3.90 LAKHS. HOWEVER, THE ADDITION ON ACCOUNT OF CASH CREDIT WAS CONFIRMED BY THE TRIBUNAL. AGAINST THIS QUANTUM ORDER, THE ASSESSEE HAS APPROACHED TO THE H ON'BLE HIGH COURT AND VIDE ORDER DATED 7.11.2008, HON'BLE HIGH COURT HAS ADMITTED SUBSTANTIAL QUESTION OF LAW, WHI CH READS AS UNDER :- WHETHER THE INCOME TAX APPELLATE TRIBUNAL, IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS JUSTIFIED IN REJECTING THE EXPLANATION OFFERED BY THE APPELLANT AS REGARDS THE CASH CREDITS ON THE GROUND THAT SOURCE OF THE SOURCE WAS NOT PROVED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS ? 8. IT IS CLEAR FROM THE ORDER OF THE HON'BLE HIGH COUR T THAT THEY HAVE ACCEPTED SUBSTANTIAL QUESTION OF LAW WITH RESPECT TO THE ADDITION MADE ON ACCOUNT OF CASH CRE DIT. IN TERMS OF DECISION OF AHMEDABAD BENCH IN THE CASE OF RUPAM MERCANTILE, 91 ITD 1273, WHERE A PLEA FOR CLAIM WHI CH IS HELD BY THE HIGH COURT COULD HAVE GIVEN RISE TO A SUBSTA NTIAL -: 8: - 8 QUESTION OF LAW, CANNOT BE TREATED TO BE FRIVOLOUS OR MALA FIDE SO AS TO ATTRACT LEVY OF PENALTY U/S 271(1)(C) OF T HE INCOME-TAX ACT, 1961. SIMILAR VIEW WAS TAKEN BY THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PRIVATE LIMITED, WHEREIN IT WAS HELD THAT WHEN HON'BLE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOME APPARENT THAT ADDITION IS CERTAINLY DEBATABLE AND U NDER SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S 271(1)(C ) OF THE INCOME-TAX ACT, 1961. THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW LEADS CREDENCE TO THE BONA FIDES OF THE ASSE SSEE. BY FOLLOWING THESE DECISIONS, SIMILAR VIEW HAS BEEN TA KEN BY THE I.T.A.T., INDORE BENCH IN THE CASE OF KUSUM OSWAL I.T(SS).A.NO. 101/IND/2009 DATED 20 TH APRIL, 2011. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE B ENCH AS NARRATED ABOVE, WE DO NOT FIND ANY SUBSTANCE IN ACT ION OF ASSESSING OFFICER FOR LEVY OF PENALTY IN RESPECT OF ADDITION FOR WHICH SUBSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED BY THE HON'BLE HIGH COURT. EVEN ON MERITS, THERE IS NO JUS TIFICATION FOR IMPOSITION OF PENALTY WHERE THE ASSESSEE HAS DI SCHARGED -: 9: - 9 THE BURDEN CASTED ON IT, NOTWITHSTANDING THE FACT O F CONFIRMATION OF SUCH ADDITION BY APPELLATE AUTHORIT IES. 9. HOWEVER, IN RESPECT OF ADDITION IN BUSINESS INCOME , WHICH HAS BEEN CONFIRMED BY THE TRIBUNAL VIDE ITS O RDER DATED 31 ST MARCH, 2008 TO THE EXTENT OF RS. 3.90 LAKHS, WE CO NFIRM THE ACTION OF ASSESSING OFFICER FOR LEVY OF PENALTY WITH RESPECT TO THIS ADDITION, IN SO FAR AS NO SUBSTANTIAL QUEST ION OF LAW HAS BEEN ACCEPTED BY THE HON'BLE HIGH COURT AGAINST THI S ADDITION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2013. SD/ - SD/ - (JOGIND ER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH JANUARY, 2013. CPU* 23241