Shri Mukeshkumar Keshvlal Desai, Dahod V. The Income tax Officer, Ward-1, Dahod

ITA 3375/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5770 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 10-10-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Depreciation; Revised return
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND MAHAVIR SINGH, JUDICIAL MEMBER) ITA.NO.3375/AHD/2008 ASSTT.YEAR : 2004-2005 MUKESHKUMAR K. DESAI PROP. SHRI KRISHNA SWEET MART NR.POST OFFICE, DAHOD. VS. ITO, WARD-1 DAHOD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAKAR SHARMA REVENUE BY : SHRI K. MADHUSUDAN O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE CIT(A)-VI, BARODA DATED 27 .05.2008 FOR A.Y.2004- 2005 ARISING OUT OF THE ORDER OF THE ASSESSING OFFI CER PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ONLY GROUND RAISED IN THIS APPEAL OF THE ASS ESSEE IS AGAINST THE CONFIRMATION OF PENALTY OF RS.1,17,546/- LEVIED UND ER SECTION 271(1)(C) OF THE ACT. 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ASSESSEE IS RUNNING A SWEET SHOP IN A SMAL L PLACE AT DAHOD. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER LEV IED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS.1,17,546/- BEI NG 200% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.1,95,910/-. THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ORDER OF THE ASS ESSING OFFICER. HE SUBMITTED THAT THE PENALTY HAS BEEN LEVIED IN RESPE CT OF FOUR ITEMS WHICH ARE AS UNDER: I) DISALLOWANCE OF SALES TAX PENALTY : RS.55,800/ - II) UNEXPLAINED CASH CREDIT : RS.1,00,000/- ITA.NO.3375/AHD/2008 -2- III) DISALLOWANCE ON ACCOUNT OF PAYMENT TO BROKER : RS.12,000/- IV) DISALLOWANCE OF DEPRECIATION : RS.61,986/- IT WAS EXPLAINED BY THE LEARNED COUNSEL THAT THE PA YMENT OF SALES-TAX TO THE GOVERNMENT MADE AT RS.55,850/- WAS INCLUSIVE OF PEN ALTY I.E. PART AMOUNT WAS SALES TAX AND ANOTHER PART WAS TOWARDS THE PENALTY. HOWEVER, IN THE ABSENCE OF COMPLETE DETAILS, THE AO DISALLOWED THE ENTIRE CLAI M AND ALSO LEVIED PENALTY THEREOF. HE HAS SUBMITTED THAT IN QUANTUM APPEAL, THE CIT(A) HAS REDUCED THE DISALLOWANCE TO 50% I.E. RS.27,925/-. HE ALSO SUBM ITTED THAT THE ASSESSEE IS CARRYING ON SMALL BUSINESS AT A SMALL PLACE AND IS NOT AWARE OF THE INTRICACIES OF THE PROVISIONS OF THE INCOME TAX ACT. WHATEVER DEM AND WAS RAISED BY THE SALES TAX AUTHORITIES WERE PAID BY THE ASSESSEE AND THE SAME WERE DEBITED IN THE BOOKS OF ACCOUNTS AND DEDUCTION THEREFOR WAS CLAIME D. THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS. 4. WITH REGARD TO THE CASH CREDIT, IT IS SUBMITTED BY THE LEARNED COUNSEL THAT THE ASSESSEE HAS BORROWED A SUM OF RS.1,00,000/- FR OM SMT.SONALIBEN A. DESAI. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO HAS ASKED THE ASSESSEE TO PRODUCE HER. HOWEVER, SHE COULD NOT AP PEAR BEFORE THE ASSESSING OFFICER BECAUSE SHE HAD UNDERGONE CAESARIAN OPERATI ON FOR DELIVERY. HOWEVER, SHE FURNISHED AN AFFIDAVIT IN WHICH SHE ACCEPTED TH AT SHE HAD DEPOSITED A SUM OF RS.1,00,000/- WITH THE ASSESSEE OUT OF HER SAVIN GS AND GIFT RECEIVED FROM HER HUSBAND. THE ITAT DID NOT ACCEPT THE CREDIT-WORTHI NESS OF THE SMT.SONALIBEN ON THE GROUND THAT SHE DEPOSITED THE CASH SOON BEFO RE THE ISSUE OF CHEQUE TO THE ASSESSEE. IT IS SUBMITTED BY THE LEARNED COUNSEL T HAT IF THE CREDIT-WORTHINESS OF THE CREDITOR COULD NOT BE PROVED BY THE ASSESSEE TH AT MAY BE REASONABLE GROUND FOR MAKING THE ADDITION, BUT THAT DOES NOT AMOUNT T O CONCEALMENT OF INCOME. 5. WITH REGARD TO DISALLOWANCE OF BROKERAGE AND DEP RECIATION, HE SUBMITTED THAT THE FACTS WERE ALREADY DISCLOSED BY THE ASSESS EE AND MERELY BECAUSE SOME OF THE CLAIM OF THE EXPENDITURE/DEPRECIATION IS DIS ALLOWED, IT WILL NOT AMOUNT TO ITA.NO.3375/AHD/2008 -3- CONCEALMENT OF INCOME. IN THIS REGARD, HE RELIED U PON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRO DUCTS P.LTD., 322 ITR 158 (SC). HE ALSO SUBMITTED THAT THE ASSESSEE WAS ALSO MAKING SWEET AT HIS RESIDENCE AND THEREFORE IN THE RETURN OF INCOME DEP RECIATION WAS CLAIMED ON THE RESIDENTIAL HOUSES. HOWEVER AT THE BEGINNING OF TH E ASSESSMENT PROCEEDINGS ITSELF, THE ASSESSEE WITHDREW HIS CLAIM AND ALSO FU RNISHED THE REVISED RETURN. IN VIEW OF THE ABOVE, IT IS SUBMITTED BY THE LEARNED C OUNSEL THAT LEVY OF PENALTY UNDER SECTION 271(1)(C) WAS NOT JUSTIFIED. THE SAM E MAY BE CANCELLED. 6. THE LEARNED DR, ON THE OTHER HAND RELIED UPON TH E ORDER OF THE AUTHORITIES BELOW AND HE HAS STATED THAT DECISION O F HONBLE APEX COURT IN THE CASE OF UOI V DHARMENDRA TEXTILES PROCESSORS (2008 ) 306 ITR 277 WOULD BE APPLICABLE. HE ALSO STATED THAT THE ADDITIONS HAVE BEEN CONFIRMED BY THE CIT(A) AS WELL AS THE ITAT, THEREFORE, THE LEVY OF PENALTY UNDER SECTION 271(1)(C) BY THE ASSESSING OFFICER WAS FULLY JUSTIF IED, THE SAME SHOULD BE SUSTAINED. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED MATERIALS PLACED BEFORE US. AFTER CONSIDER ING THE ARGUMENTS OF BOTH THE SIDES AND FACTS OF THE CASE, IN OUR OPINION, TH E DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. (SUPRA) WOULD BE SQUARELY APPLICABLE, WHEREIN, THEIR LORDSHIPS HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO IN FORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STR ETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE ITA.NO.3375/AHD/2008 -4- THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NO ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITS ELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. WE MAY ALSO POINT OUT THAT THE ABOVE JUDGMENT WAS D ELIVERED BY THEIR LORDSHIPS AFTER CONSIDERING THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS (SUPRA). THAT ON THE FACTS OF THE ASSESSEES CASE, THE DECISION OF HONBLE APEX COURT IN THE CAS E OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) WOULD BE SQUARELY APPLICABLE. TH E ASSESSEE HAS DISCLOSED ALL THE RELEVANT FACTS. MERELY BECAUSE 50% OF THE SALE S TAX OR BROKERAGE EXPENSES OR DEPRECIATION IS DISALLOWED THAT ITSELF WOULD NOT AMOUNT TO CONCEALMENT OF INCOME. IT IS NOT THE CASE OF THE REVENUE THAT TH E ASSESSEE HAS EITHER CONCEALED ANY INCOME FURNISHED INACCURATE PARTICULARS. WITH REGARD TO CASH CREDIT, WE FIND THAT THE ASSESSEE HAS FURNISHED AFFIDAVIT OF T HE CREDITOR IN WHICH THE CREDITOR HAS ACCEPTED HAVING ADVANCED THE MONEY TO THE ASSESSEE. THE MONEY WAS ADVANCED BY THE CHEQUE. MERELY BECAUSE THE CRE DIT WORTHINESS OF THE CREDITOR WAS NOT ACCEPTED THAT WOULD NOT AMOUNT TO CONCEALMENT OF INCOME SO AS TO ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IN VIEW OF THE ABOVE, WE CANCEL THE PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE ACT. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 25 TH JUNE, 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT ITA.NO.3375/AHD/2008 -5- PLACE : AHMEDABAD DATE : 25-06-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER AR, ITAT, AHMEDABAD