Shri Dilip Jani, Ahmedabad V. The ACIT.,Cent.Circle-2(2), Ahmedabad

ITA 3414/AHD/2009

• Counselvise Citation: [2010] 137 COUNSELVISE.COM (IT) 0122 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-01-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 24-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' (BEFORE SHRI N S SAINI ACCOUNTANT MEMBER) ITA NO.3414/AHD/2009 (ASSESSMENT YEAR:- 2001-02) SHRI DILIP A JANI, 14/159, NETAJINAGAR, NR. AMBAJI TEMPLE, MEGHANINAGAR, AHMEDABAD V/S THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(2), AHMEDABAD [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI GAURAV NAHTA, AR RESPONDENT BY:- SHRI MAHESH KUMAR, SR. LEARNED DEPARTMENTAL REPRESENTATIVE O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) DATED 10-09-2009 FOR ASSESSMENT YEAR 2001-02. 2 THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN L AW AND ON FACTS IN CONFIRMING THE LEVY OF PENALTY OF RS.70,445/- U/ S 271(1)(C) OF THE INCOME-TAX ACT, 1961 [THE ACT]. 3 THE FACTS OF THE CASE ARE THAT IN THE ORDER U/S. 153A DATED 20/3/2006 THE AO HAD DISALLOWED EXPENSES OF R S.77,525/-, INCURRED ON TELEPHONE, VEHICLE WHICH WERE RESTRICTE D TO RS.20,000/- BY THE CIT(A). ALSO AN ADDITION OF RS.2,50,000/- U/ S. 68 OF THE ACT WAS MADE, WHICH WAS RESTRICTED TO RS.2 LAKHS BY THE CIT(A). SUBSEQUENTLY, IN -RESPONSE TO NOTICE U/S. 271(1 )(C ) IT WAS SUBMITTED VIDE REPLY DATED 13/11/2008 THAT THE DISALLOWANCES MADE WERE ONLY ON A SURMISE AND ADHOC IN NATURE. IN RESPECT OF THE CASH CREDIT IT WAS EXPLAINED TO THE A.O. THAT THE AMOUNT OF RS.2 LAKHS WAS RECEIVED BY 2 ACCOUNT PAYEE CHEQUE FROM ONE SHRI S.S SHAH, THROUG H AN INTERMEDIARY RAJESH SHAH. THE CONFIRMATION OF SHRI S.S. SHALL COULD NOT BE FILED AS SHRI RAJESH SHAH HAD TURNED HOSTILE AND DID NOT OBTAIN THE CONFIRMATION. THE AO HOWEVER POINTED OUT THAT THE ENQUIRIES FROM THE BANK REVEALED THAT THE CHEQUE RE PORTEDLY FROM SHRI S.S. SHAH WAS IN FACT ISSUED FROM THE ACCOUNT OF ONE SHRI SUBHASH YADAV. THEREFORE, THE DETAILS OF OTHER CHEQ UE WERE REVEALED AS EITHER NOT BEING ISSUED OR ISSUED FROM ACCOUNT O F OTHER PERSONS. THE AO THEREFORE POINTED OUT IN THESE FACTS THE NUM BER OF JUDICIAL DECISIONS CITED BY THE ASSESSEE WERE NOT APPLICABLE . THE A.O. THEREFORE CONSIDERED THAT CONCEALMENT TO-THE EXTENT OF RS.2,20,000/- AND LEVIED THE MINIMUM PENALTY OF RS.77,490/-. 4 BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ADDI TION OF UNEXPLAINED CASH CREDIT WAS SUSTAINED AS THE ASSESS EE WAS UNABLE TO FURNISH THE CONFIRMATION OF THE DEPOSITOR, DUE TO T HE HOSTILE ATTITUDE OF THE INTERMEDIARY, SHRI RAJESH SHAH, THROUGH WHOM THIS CASH CREDIT HAD BEEN OBTAINED. HOWEVER, THE ASSESSEE HAD FURNIS HED THE DETAILS OF THE ACCOUNT PAYEE CHEQUE AND OTHER DETAILS. THE A.O. HAS NOT FOUND THESE DETAILS TO BE FALSE. EVEN THE ADDRESS O F SHRI RAJESH SHAH HAD BEEN FURNISHED. REFERENCE WAS MADE TO THE DECIS ION REPORTED IN 265 ITR 25, 249 ITR 124 (GUJ) AND THE DECISION OF T HE HON'BLE SUPREME COURT IN CASE OF HINDUSTAN STEEL, REPORTED IN 83 ITR 26. 5 AFTER THE CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HE LD AS UNDER:- 5. THE CONTENTIONS WERE CAREFULLY CONSIDERED. IT IS SEEN THAT DISALLOWANCE OF RS.20,000/- SUSTAINED WAS ON THE BA SIS OF AN ESTIMATE ONLY. HOWEVER, IN RESPECT OF THE CASH CREDIT TOTALING RS. 2 LAKHS, IT IS SEEN THAT THE EXPLANATION FURNISHED WAS FOUND TO BE INCORRECT/FAL SE, WHEN ENQUIRIES FROM THE RELEVANT BANK WERE-MADE BY THE AO., AS DIRECTED . THUS IT IS NOT A SIMPLE MATTER OF THE ASSESSEE'S EXPLANATION NOT BEING SUBS TANTIATED DUE TO HOSTILE ATTITUDE OF THE STATED INTERMEDIARY. ON THE OTHER H AND, THE ENQUIRY HAD REVEALED THE FALSITY OF THE EXPLANATION GIVEN- HENC E THE AMOUNT OF RS.2 LAKHS CONSTITUTED CONCEALMENT AND ASSESSEE IS LIABL E TO PENALTY @ 100% OF 3 THE TAX SOUGHT TO BE EVADED ON THE AMOUNT OF RS.2 L AKHS. THEREFORE, THE ADDITION MADE BY THE AO IS RESTRICTED TO RS.70445/- . 6 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 7 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND FULLY JUSTIFIED THE ORDERS OF THE LOWER AUTHOR ITIES. 8 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE THE ASSESSEE CLAIMED IN HIS RETURN OF INCOME TO HAVE RECEIVED LOAN OF RS.2,50,000/- BY CHEQUE FROM SHRI. S.S.SHAH. IN ASSESSMENT THE LEARNED ASSESSING OFFICER OBSERVED T HAT THE ASSESSEE COULD NOT FURNISH CONFIRMATION AND ADDRESS OF SHRI. S.S.SHAH ON THE GROUND THAT LOAN WAS TAKEN THROUGH A BROKER VIZ. SH RI. RAJESH SHAH AND SHRI. RAJESH SHAH HAD COMMITTED A FRAUD WITH TH E RELATIVES OF THE ASSESSEE AS A CONSEQUENCE OF WHICH CRIMINAL COM PLAINTS HAS BEEN FILED AGAINST SHRI. RAJESH SHAH AND CRIMINAL CASES ARE GOING ON. IN THE ABOVE CIRCUMSTANCES, SAID SHRI. RAJESH SHAH IS NOT COOPERATING WITH THE ASSESSEE AND THEREFORE THE ASSESSEE FURNIS HED ADDRESS OF SHRI. RAJESH SHAH AND COULD NOT FURNISH CONFIRMATIO N AND ADDRESS OF SHRI. S.S.SHAH. THE LEARNED ASSESSING OFFICER ADDE D THE ABOVE AMOUNT OF RS.2,50,000/- TO THE INCOME OF THE ASSESS EE AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . IN QUANTUM APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) OBSERVED THAT OUT OF RS.2,50,000/- RS.50,000/- WAS RECEIVED FROM SHRI. SUBHASH YADAV WHO HAD CONFIRMED THE ABOVE TRANSACTI ON BY FILING AFFIDAVIT AND COPY OF HIS BANK ACCOUNT. THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) THEREFORE DELETED THE ADDITI ON OF RS.50,000/- AND CONFIRMED THE BALANCE ADDITION OF R S.2,00,000/-. THE LEARNED ASSESSING OFFICER IMPOSED PENALTY OF RS .70,445/- UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ABOV E ADDITION OF 4 RS.2,00,000/-. THE ABOVE LEVY OF PENALTY WAS ALSO CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). BEFOR E ME THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE R EITERATED THE SUBMISSIONS WHICH WERE MADE BEFORE THE LOWER AUTHOR ITIES DURING THE ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDIN GS. I FIND THAT THE UNDISPUTED FACTS ARE THAT CASH CREDIT OF RS.2,0 0,000/- IN QUESTION WAS RECEIVED BY THE ASSESSEE THROUGH BANKING CHANNE LS. THE ASSESSEE FURNISHED NAME AND ADDRESS OF THE BROKER T HROUGH WHOM HE CLAIMED TO HAVE RECEIVED THE SAID CASH CREDIT. THE ASSESSEE ALSO EXPLAINED THAT AS HIS RELATION WITH THE SAID BROKER WAS STRAINED AND CRIMINAL CASES HAVE BEEN FILED BY THE RELATIVES OF THE ASSESSEE AGAINST THE SAID BROKER, THE SAID BROKER WAS NOT CO OPERATING WITH THE ASSESSEE. HE ALSO SUBMITTED THAT OUT OF RS.2,00,00 0/- RS.1,95,000/- WAS REPAID BY CHEQUES OR DRAFTS. I FIND THAT NO MA TERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ABOVE EXP LANATION OF THE ASSESSEE WAS FALSE OR INCORRECT. IT IS AN ESTABLIS HED POSITION OF LAW THAT THE CONSIDERATION WHICH APPLIES IN A PENALTY P ROCEEDING IS DIFFERENT FROM THE CONSIDERATION WHICH APPLIES IN A SSESSMENT PROCEEDINGS. IN MY CONSIDERED VIEW, THE ADDITION W AS MADE OF RS.2 LACS BY DISBELIEVING THE EXPLANATION OF THE ASSESSE E AND BY NOT BRINGING ANY COGENT MATERIAL TO PROVE THAT THE EXPL ANATION WAS FALSE. THERE IS A DIFFERENCE BETWEEN UNPROVED AND DISPR OVED. PENALTY UNDER SECTION 271(1)(C) IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, CANNOT BE LEGALLY LEVIED MERELY BECAUSE OF THE INAB ILITY OF THE ASSESSEE TO PROVE THE TRANSACTIONS IN QUESTION. I, THEREFORE, DELETE THE PENALTY OF RS.70,445/- LEVIED UNDER SECTION 271 (1)(C) OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 29-01 -2010 SD/- (N S SAINI) ACCOUNTANT MEMBER DATE : 29-01-2010 5 COPY OF THE ORDER FORWARDED TO : 1. SHRI DILIP A JANI, 14/159, NETAJINAGAR, NR. AMBA JI TEMPLE, MEGHANINAGAR, AHMEDABAD 2. THE ACIT, CENTRAL CIRCLE-2(2), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-III, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA