Shri Rajesh Pardashani, Bhopal V. The ACIT, Bhopal

ITA 339/IND/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6637 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 28-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: PRADEEP GUPTA
• Keywords: Unexplained cash credit; Peak credit; Revised return
• Section: 133A; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.339/IND/2010 AY: 2002-03 RAJESH PARADASANI BHOPAL PAN AGIPP 9550 E ..APPELLANT V/S. ACIT-1(1), BHOPAL ..RESPONDENT ASSESSEE BY : SHRI PRADEEP GUPTA, ADV. DEPARTMENT BY : SHRI ARUN DEWAN, SR. DR ORDER PER JOGINDER SINGH, JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, BHO PAL, DATED 15.3.2010 WITH REGARD TO CONFIRMING THE PENAL TY U/S 271(1)(C) OF THE I.T. ACT. THE ASSESSEE IN ITS APPEAL HAS RAISED FOLLOWING GROUNDS :- 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ORDER OF THE LEARNED CIT(A) SUSTAINING THE PENALTY LEVIED BY LEARNED AO, AND HIS FINDINGS ARE MATERIALLY INCORRECT BAD ON FACTS AND IN LAW. THEREFORE HIS ORDER BE QUASHED AND PENALTY BE CANCELLED. 2. THAT ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE, AS THE JUDICIAL REQUIREMENTS FOR LEVY OF PENALTIES ARE NOT SATISFIED, HENCE THE ORDER IS BAD AND UNSUSTAINABLE IN LAW AND THAT ITS LEVY WAS NEITHER AUTOMATIC NOT THE FINDING RECORDED IN ASSMT . WERE CONCLUSIVE. THE SAME BE THEREFORE QUASHED. 3. THAT ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND FOR REASONS STATED IN LETTER DATED 28.02.0 5 ALONG WITH REVISED ANNEXURE THE SURRENDER OF RS.8,12,000/- OFFERED FOR TAX DURING ASSMT. PROCEEDINGS WAS MADE BEFORE DETECTION BY LEARNED AO COULD NOT BE REGARDED AS CONCEALED INCOME OF THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULAR S OF INCOME BY HIM NOT THERE IS ANY EVIDENCE THAT THE ASSESSEE HAS ACTED CONSCIOUSLY AND WAS GUILTY OF 3 CONDUCT CONTUMACIOUS OR DISHONEST SO AS TO WARRANT IMPOSITION OF PENALTY. 4. THAT ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE, THE ASSESSEE HAS ACTED BONAFIDELY AND HAD PLACED HONESTLY ALL FACTS AND MATERIAL RELATING TO THE COMPUTATION OF HIS TOTAL INCOME. THE EXPLANATIONS AND REPLY SUBMITTED BY HIM WERE ALSO HONEST AND BONAFIDE. HENCE THE PENALTY WAS NOT AT ALL LEVIABLE IN THE CASE, THEREFORE, BE CANCELLED. 5. THAT ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW IS NOT CONSIDERING THE BONAFIDE EXPLANATIONS OF THE ASSESSEE JUDICIOUSLY AND OBJECTIVELY. 6. THAT WITHOUT PREJUDICE TO THE FORE GOING GROUNDS IT IS ALTERNATIVELY PRAYED THAT PENALTY LEVIED IS ARBITRA RY AND UNREASONABLY HIGH. 2. DURING HEARING, WE HAVE HEARD SHRI PRADEEP GU PTA, LD. COUNSEL FOR ASSESSEE AND SHRI ARUN DEWAN, LEARN ED SENIOR DEPARTMENTAL REPRESENTATIVE. 4 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS PROPR IETOR OF M/S AMBIKA PAINTS AND HARDWARE STORES ENGAGED IN TH E BUSINESS OF TRADING IN PAINTS AND HARDWARE GOODS. A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 28.2.2002. DUR ING THE COURSE OF SEARCH, STATEMENT OF THE ASSESSEE WAS RECORDED AND BOOKS OF ACCOUNT WERE IMPOUNDED WHICH, INTER ALIA, CONTAINED LEDGER ACCOUNTS OF VARIOUS PA RTIES SHOWING CASH TRANSACTIONS IN THE NATURE OF ADVANCES/LOAN RECEIVED AND RETURNED BACK BY THE ASSESSEE IN CASH EACH EXCEEDING RS. 20,000/-. THE ASSESSEE FURNISHED HIS RETURN OF INCOME DECLARING T AXABLE INCOME AT RS. 3,36,314/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO ESTABLISH THE IDENTITY, CREDIT WORTHINE SS AND GENUINENESS OF THE TRANSACTIONS WITH REGARD TO VARI OUS LOANS ACCEPTED DURING THE PREVIOUS YEAR RELEVANT TO THE 5 ASSESSMENT YEAR UNDER CONSIDERATION. IN HIS TURN, THE ASSESSEE VIDE LETTER DATED 28.2.2005 SUBMITTED THAT THE ASSESSEE DID NOT HAVE COMPLETE ADDRESSES OF THE PER SONS AND AS SUCH HE WAS UNABLE TO CONTACT THEM. HOWEVER , THE ASSESSEE WORKED OUT THE PEAK CREDIT OF RS.8,12, 000/- AND OFFERED THE SAME AS INCOME TO BE INCLUDED AS ADDITIONAL INCOME. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND FOUND THAT THE ASSES SEE HAD RECEIVED A SERIES OF PAYMENTS FROM DIFFERENT TR ADERS AND PERSONS ON A CONTINUOUS BASIS WHICH HAVE BEEN ENTERED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFF ICER FOUND THAT AN AMOUNT OF RS. 21,89,450/- HAD BEEN RECEIVED BY THE ASSESSEE WHICH REMAINED UNEXPLAINED . HE, THEREFORE, ADDED RS. 21,89,450/- TO THE TOTAL I NCOME OF THE ASSESSEE U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CREDITS FOUND IN THE BOOKS OF ACCOUNT. SINCE THIS WAS TREATED TO BE THE UNEXPLAINED INCOME OF TH E ASSESSEE BY THE ASSESSING OFFICER, HE ALSO INITIATE D PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE S TAND OF 6 THE ASSESSEE WAS THAT EVEN THE TRIBUNAL SUSTAINED T HE ADDITION ON ACCOUNT OF UNEXPLAINED CREDIT OF RS.8,12,000/- AND VOLUNTARILY OFFERED THE SAME AS INCOME, THEREFORE, THE CONCEALMENT OF INCOME, IF AN Y, WAS DETECTED ONLY ON 28.2.2005 AND PAID THE TAX 1.3.200 5, THEREFORE, THERE IS NO LOSS TO THE REVENUE. HOWEVER , THE LD. SR. DR STRONGLY DEFENDED THE IMPOSITION OF PENA LTY BY CONTENDING THAT THE ASSESSEE EVEN DID NOT OFFER THE CONCEALED INCOME IN THE REVISED RETURN, THEREFORE, THE ASSESSEE DECLARED WHEN IT WAS DETECTED BY THE DEPARTMENT, THEREFORE, IT IS A CLEAR CASE OF CONCEA LMENT OF INCOME. 3.1 IT IS AN ADMITTED FACT THAT SURVEY U/S 133A WA S CARRIED OUT ON 28.2.2002 AND THE ASSESSEE FILED RET URN ON 31.10.2002. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO ESTABLISH THE GENUINENESS OF CASH TRANSACTIONS ALONG WITH CREDIT WORTHINESS OF THE PE RSONS ADVANCING SUCH CREDITS. THE ASSESSEE FAILED TO COMP LY 7 WITH REQUIREMENTS OF PROVISIONS OF THE ACT. IT IS P ERTINENT TO MENTION HERE THAT EVEN THE ASSESSEE FAILED TO RE VISE ITS RETURN AND OFFERED THE AMOUNT OF RS.8,12,000/- ON T HE BASIS OF THE PEAK CREDIT WHEN THE ASSESSEE WAS CORN ERED BY THE DEPARTMENT. THE ASSESSING OFFICER WORKED OUT THE MINIMUM PENALTY TO RS.2,48,472/- AND MAXIMUM PENALTY LEVIABLE AT RS.7,45,416/-. FOR IMPOSING PEN ALTY U/S 271(1)(C), EITHER THERE SHOULD BE CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF S UCH INCOME. IN THE PRESENT APPEAL, SINCE THE ASSESSEE CONCEALED ITS INCOME BY FURNISHING INACCURATE PARTI CULARS AND OFFERED THE SAME FOR TAXATION WHEN IT WAS DETEC TED BY THE DEPARTMENT, THEREFORE, IT IS A CLEAR CASE OF CONCEALMENT. HOWEVER, LD. ASSESSING OFFICER IMPOSED THE PENALTY OF RS.4 LACS U/S 271(1)(C). IN VIEW OF THES E FACTS, WE ARE OF THE VIEW THAT IT WILL MEET THE END OF THE JUSTICE IF A MINIMUM PENALTY IS LEVIED IN PLACE OF RS.4 LAC S IMPOSED BY THE ASSESSING OFFICER AND SUSTAINED BY T HE LD. CIT(A), CONSEQUENTLY, WE DIRECT THE LD. ASSESSI NG 8 OFFICER TO IMPOSE THE MINIMUM PENALTY. BUT, IN PRIN CIPLE, WE SUSTAIN THE ORDER OF THE LD. CIT(A) AND MODIFY T HE ORDER TO THE ABOVE EXTENT ONLY. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT THE CONCLUS ION OF THE HEARING ON 5.7.2011. (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH JULY, 2011 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE !VYS! 9