The ITO, Ward-9(1), Ahmedabad V. Shri Nikhilbhai T. Mehta, Ahmedabad

ITA 342/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6044 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 03-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR VARMA
• Keywords: Unexplained cash credit; Wrong claim
• Section: 68; 143(3)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, AND SHRI MANISH BORAD, AM ./ITA.NO.342/AHD/2014 ( / ASSTT YEAR :2006-07) I.T.O. WARD-9(1), AHMEDABAD VS. SHRI NIKHILBHAI T. MEHTA, PROP. OF SUN DEVELOPMENT SOLUTION C/42, TAKSHASHILA, SATELLITE, AHMEDABAD (APPELLANT) (RESPONDENT) / APPELLANT BY: SHRI SUMIT KUMAR VARMA, D.R / RESPONDENT BY: NONE / DATE OF HEARING 01-05-2017 /DATE OF PRONOUNCEMENT 02-05-2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL FOR ASSESSMENT YEAR 2006-07 IS DIRECT ED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XV, AHMEDAB AD DATED 01.11.2013 ARISING OUT OF THE ORDER U/S. 271(1)(C) OF THE ACT (HEREIN AFTER REFER TO THE ACT) FRAMED ON 13.03.2012 BY ITO WARD- 9(1), AHMEDABAD. ITA.NO.342/AHD/2014 ASSESSMENT YEAR 2006-07 - 2 2. REVENUE HAS RAISED THREE GROUNDS OF APPEAL BUT T HE SOLITARY GRIEVANCE IS AGAINST THE ORDER OF LEARNED COMMISSIONER OF INC OME TAX(APPEALS) DELETING PENALTY OF RS. 12,41,587/- LEVIED U/S. 271 (1)(C) OF THE ACT. 3. BRIEFLY STATED FACTS HAS CULLED OUT FROM THE REC ORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL CARRYING ON CONSTRUCTION WORK. RET URN OF INCOME FOR ASSESSMENT YEAR 2006-07 WAS FILED ON 26.12.2006 D ECLARING TOTAL INCOME OF RS. 6,46,999/- . CASE SELECTED FOR SCRUTINY ASSESSM ENT. NECESSARY DETAIL AS CALLED FOR WERE FURNISHED. ASSESSMENT U/S. 143(3) O F THE ACT WAS COMPLETED ON 19.12.2008 AFTER MAKING ADDITION OF RS. 4,23,000 /- U/S. 68 OF THE ACT FOR UNEXPLAINED CASH CREDIT AND DISALLOWANCE OF ADMINIS TRATIVE EXPENSES AT RS. 15,81,880/- . INCOME ASSESSED AT RS. 26,51,880/- AP PEAL AGAINST THE ORDER U/S. 143(3) BEFORE THE COMMISSIONER OF INCOME TAX(APPEAL S) COULD NOT BRING ANY RELIEF AS THE APPEAL WAS DISMISSED VIDE ORDER D ATED 26.05.2010. SUBSEQUENTLY PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED. PENALTY AT RS. 12,41,587/- WAS IMPOSED ON THE ADDIT ION/DISALLOWANCE OF RS. 20,04,880/- CONFIRMED BY COMMISSIONER OF INCOME TAX (APPEALS). 4. AGGRIEVED ASSESSEE FILED APPEAL BEFORE COMMISSIO NER OF INCOME TAX(APPEALS) AGAINST THE ORDER OF LEARNED ASSESSING OFFICER U/S. 271(1)(C) AND SUCCEEDED IN FULL. 5. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE TR IBUNAL. NON APPEARED ON BEHALF OF THE ASSESSEE AND CASE WAS HEA RD AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. LEARNED DEPART MENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LEARNED ASSESSING OFFICER AN D FURTHER SUBMITTED THAT ASSESSEE FILED APPEAL BEFORE HONBLE ITAT AGAINST THE QUANTUM ADDITIONS CONFIRMED BY COMMISSIONER OF INCOME TAX(APPEALS). H OWEVER COORDINATE ITA.NO.342/AHD/2014 ASSESSMENT YEAR 2006-07 - 3 BENCH VIDE ITA NO. 2652/AHD/2010 ORDER DATED 21.06. 2013 HAS SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS) AND RE STORED THE MATTER BACK TO THE FILE OF COMMISSIONER OF INCOME TAX(APPEALS) TO PASSED DE NOVO ORDER, AS THE ORDER DATED 25.08.2010 PASSED BY COMMISSIONE R OF INCOME TAX(APPEALS) WAS EX-PARTE BECAUSE THERE WAS NO COMP LIANCES AND NEITHER ANY SUBMISSIONS WERE RECEIVED FROM THE APPELLANT. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE AND PERUSED THE RECORD PLACED BEFORE US. REVENUES SOLE GRIEVA NCE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS) DELETING PENALT Y OF RS. 12,41,587/- LEVIED U/S. 271(1)(C) OF THE ACT. WE OBSERVE THAT L EARNED ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3) AFTER MAKING A DDITION U/S. 68 FOR UNEXPLAINED CASH CREDIT OF RS. 4,23,000/- AND DISAL LOWED RS. 15,81,880/- BEING 10% OF ADMINISTRATIVE EXPENSES OF RS. 15,81,8 80/- FOR LACK OF PROPER SUPPORTING. IN ALL ADDITIONS OF RS. 20,04,880/- WAS MADE BY THE LEARNED ASSESSING OFFICER. 7. WE FURTHER OBSERVE THAT IN THE QUANTUM OF APPE AL COMMISSIONER OF INCOME TAX(APPEALS) PASSED EX-PARTE ORDER CONFIRMIN G THE ADDITION/DISALLOWANCES AS NON APPEARED BEFORE HIM A ND NEITHER ANY SUBMISSION WERE MADE BY THE ASSESSEE. SUBSEQUENT TH ERETO PENALTY PROCEEDINGS U/S.271(1)(C) WAS INITIATED AND PENALT Y IMPOSED AT RS. 12,41,587/- @ OF 100% OF TAX ON THE ADDITIONS OF RS . 20,04,880/-. 8. WE FURTHER OBSERVE THAT ASSESSEE PREFERRED AN AP PEAL BEFORE THE COORDINATE BENCH AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMING ADDITIONS OF RS. 20,04,880/ -. COORDINATE BENCH VIDE ITA NO. 2652/AHD/2010, ORDER DATED 21.06.2013 HAS SET ASIDE THE ORDER ITA.NO.342/AHD/2014 ASSESSMENT YEAR 2006-07 - 4 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON Q UANTUM ISSUES AND RESTORED THE MATTER BACK TO THE FILE OF LEARNED COM MISSIONER OF INCOME TAX(APPEALS) TO PASS DE NOVO ORDER. 9. IN THE BACK DROP OF ABOVE FACTS WE ARE TO ADJUDI CATE AS TO WHETHER ASSESSEE HAS RIGHTLY BEEN VISITED BY PENALTY U/S. 2 71(1)(C) ON THE UNEXPLAINED CASH CREDIT OF RS. 4,23,000/- AND LUMP-SUM DISALLOW ANCE OF RS. 15,81,880/- 10. A BARE PERUSAL OF PROVISIONS OF SECTION 271(1)( C) OF THE ACT REVEALS THAT FOR VISITING ASSESSEE WITH THE PENALTY, THE A SSESSING OFFICER OR THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DURING THE COURSE OF HEARING IN PROCEEDINGS BEFORE THEM SHOULD BE SATISFIED THAT THE ASSESSEE HAS CONCEALED HIS PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF INCOME. THE OTHER MOST IMPORTANT FEATURE OF THE SEC TION IS DEEMING PROVISION REGARDING CONCEALMENT OF INCOME WHICH NOT ONLY COVE RS THE SITUATION IN WHICH THE ASSESSEE CONCEALED THE INCOME OR FURNISHE D INACCURATE PARTICULARS, IN CERTAIN SITUATIONS, EVEN WITHOUT THERE BEING ANY THING TO INDICATE SO, STATUTORY DEEMING FIXATION FOR CONCEALMENT OF INCOM E COMES INTO PLAY. THIS DEEMING FIXATION, BY WAY OF EXPLANATION ONE TO SECT ION 271(1)(C) POSTULATE TWO SITUATIONS (A) IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE A SSESSEE FAILS TO OFFER THE EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSES SEE IS FOUND TO BE FALLS. (B) IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE. IN THE LIGHT OF ABOVE, IF WE EXAMINE THE FACTS OF THE PRESENT CA SE WITH REGARD TO DISALLOWANCE OF ADMINISTRATIVE EXPENSES AT RS. 15,8 1,880/-, WE FIND THAT ASSESSEES BOOKS OF ACCOUNT ARE AUDITED U/S. 44AB O F THE ACT AND AUDITED ITA.NO.342/AHD/2014 ASSESSMENT YEAR 2006-07 - 5 FINANCIAL STATEMENTS WERE VERY MUCH BEFORE THE ASSE SSING AUTHORITY. LEARNED ASSESSING OFFICER MADE A LUMP SUM DISALLOWANCE OF 1 0% OF THE TOTAL ADMINISTRATIVE EXPENSES OF RS. 15,81,880/- FOR WANT OF PROPER SUPPORTING. BUT UNDISPUTEDLY NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT ASSESSEE HAD MADE SOME FALSE CLAIM OR FURNISHE D FALSE DOCUMENTS AND WITHOUT BRINGING OUT ANY SUCH INSTANCES OF CONCEALM ENT OF PARTICULARS OF INCOME OR A CASE OF FURNISHING INACCURATE PARTICULA RS OF INCOME LEARNED ASSESSING OFFICER MADE DISALLOWANCE OF RS. 15,81,88 0/-. WE ARE OF THE CONSIDERED VIEW THAT ASSESSEE SHOULD NOT BE PENALIZ ED FOR THE DISALLOWANCE MADE ON SUMP SUM BASIS BY THE LEARNED ASSESSING OFF ICER. WE THEREFORE DELETE THE PENALTY U/S. 271(1)(C) OF THE ACT IMPOSE D ON THE DISALLOWANCES OF ADMINISTRATIVE EXPENSES AT RS. 15,81,880/-. 11. AS REGARDS THE UNEXPLAINED CASH CREDITS OF RS. 4,23,000/- RECEIVED FROM FRIENDS AND RELATIVES, THE ADDITION HAS ALREAD Y BEEN CONFIRMED BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS). HOWEVE R IN VIEW OF THE FACT THAT COORDINATE BENCH HAS RESTORED THE ISSUES TO TH E FILE OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR PASSING DE-NOVO ORDER, WE REMIT THE ISSUE OF PENALTY U/S. 271(1)(C), WHETHER TO BE IMPOSED ON THE UNEXPLAINED CASH CREDIT OF RS. 4,23,000/-, TO THE FILE OF LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) WHO WILL ADJUDICATE THIS ISSUE AFTER F RAMING DE NOVO ORDER ON QUANTUM ISSUES AS PER THE DIRECTIONS OF COORDINATE BENCH. ITA.NO.342/AHD/2014 ASSESSMENT YEAR 2006-07 - 6 12 IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2017 AT AHMEDABAD. SD/- SD/- (SHRI RAJPAL YADAV) JUDICIAL MEMBER (SHRI MANISH BOARD) ACCOUNTANT MEMBER