Late Mohd. Anwar Khan, Bhopal V. The ITO 3(1), Bhopal

ITA 343/IND/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1517 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 1996-1997
• Appeal Filed On: 07-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: YASHWANT SHARMA
• Keywords: Question of law; Onus to prove

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. : ABKPK4921D I.T.A.NO. 343/IND/2011 A.Y. : 1996 - 97 LATE MOHD.ANWAR KHAN, ITO THROUGH LEGAL HEIR : MUZAFFAR KHAN, PROP. M/S. VIKRAM ENGINEERS, I.E. BHOPAL VS 3(1), BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI YASHWANT SHARMA, C. A. RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 30 . 01 .201 3 DATE OF PRONOUNCEMENT : 31 . 0 1 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) DATED 20.9.2011, FOR THE ASSES SMENT YEAR 1996-97, IN THE MATTER OF IMPOSITION OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. -: 2: - 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FROM THE RECORD, WE FOUND THAT THE ASSESSI NG OFFICER HAS LEVIED PENALTY U/S 271(1)(C) IN RESPECT OF ADDI TION MADE ON ACCOUNT OF CASH CREDIT AT RS. 6 LAKHS AND SALE OF S CRAP RS. 50,000/-. THE ADDITION SO MADE WAS FINALLY CONFIRME D BY THE TRIBUNAL. AGAINST THE QUANTUM ORDER OF TRIBUNAL, TH E ASSESSEE HAS APPROACHED TO THE HON'BLE HIGH COURT WHEREIN SU BSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED VIDE ITS ORDER DA TED 7 TH JANUARY, 2008. FOLLOWING SUBSTANTIAL QUESTION OF LA W HAS BEEN ACCEPTED :- WHETHER WHEN THE ASSESSEE FURNISHED ADDRESS, AFFIDAVITS FROM THE CREDITORS AND STATEMENTS OF CREDITORS HAVE BEEN RECORDED, THE ASSESSEE HAS DISCHARGED THE BURDEN TO PROVE THE GENUINENESS OF PARTIES AND TRANSACTION KIN ADDITION TO THE CAPACIT Y SATISFACTORILY, AS THERE IS NO GROUND FOR ADDITION. PARTICULARLY WHEN IN THIS REGARD THE DEPARTMENT ALS O HAS NOT BROUGHT ANY MATERIAL TO DISPROVE THE GENUINENESS OF THE PARTIES, CAPACITY OF THE LENDERS -: 3: - 3 AND TRANSACTIONS ON THE BASIS OF COGENT FACTS ON RECORDS ? 3. WE ARE CONSISTENTLY TAKING THE VIEW THAT WHERE SUBSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED BY TH E HON'BLE HIGH COURT, THE ISSUE BECOMES DEBATABLE, THEREFORE, NO PENALTY CAN BE IMPOSED FOR SUCH ADDITION. I.T.A.T. IN ITS O RDER PASSED IN I.T.A.NO. 329/IND/2012 DATED 29 TH JANUARY, 2013, IN THE CASE OF SURENDRA SINGH THAKUR VS. ITO, FOR THE ASS ESSMENT YEAR 1996-97 HAS OBSERVED AS UNDER :- 8. IT IS CLEAR FROM THE ORDER OF THE HON'BLE HIGH COURT THAT THEY HAVE ACCEPTED SUBSTANTIAL QUESTION OF LAW WITH RESPECT TO THE ADDITION MADE ON ACCOUNT OF CASH CREDIT. IN TERMS OF DECISION OF AHMEDABAD BENCH IN THE CASE OF RUPAM MERCANTILE, 91 ITD 1273, WHERE A PLEA FOR CLAIM WHICH IS HELD BY THE HIGH 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. SIMILAR VIEW WAS TAKEN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PRIVATE LIMITED, WHEREIN IT WAS HELD THAT WHEN HON'BLE HIGH -: 4: - 4 COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOME APPARENT THAT ADDITION IS CERTAINLY DEBATABLE AND UNDER 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 ASSESSEE. BY FOLLOWING THESE DECISIONS, SIMILAR VIEW HAS BEEN TAKEN 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 BENCH AS NARRATED ABOVE, WE DO NOT FIND ANY SUBSTANCE IN ACTION 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 JUSTIFICATION FOR IMPOSITION OF PENALTY WHERE THE ASSESSEE HAS DISCHARGED THE BURDEN CASTED ON IT, NOTWITHSTANDING THE FACT OF CONFIRMATION OF SUCH ADDITION BY APPELLATE AUTHORITIES. 4. FURTHERMORE, HON'BLE DELHI HIGH COURT IN THE CASE O F CIT VS. LIQUID INVESTMENT LIMITED, I.T.A.NO. 240/20 09 VIDE ITS ORDER DATED 5.10.2010 HAS CLEARLY HELD THAT WHERE H IGH COURT HAS ACCEPTED SUBSTANTIAL QUESTION OF LAW U/S 260A, THIS ITSELF -: 5: - 5 SHOWS THAT ISSUE IS DEBATABLE. ACCORDINGLY, NO PENA LTY WAS IMPOSABLE U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 . HON'BLE SUPREME COURT IN THE CASE OF SANTOSH HOSIERY, CIVIL APPEAL NO. 1117 OF 20001 IN ITS ORDER DATED 3 RD FEBRUARY, 2001, OB SERVED THAT TO BE SUBSTANTIAL, A QUESTION OF LAW MUST BE DEBATABLE. HON'BLE SUPREME COURT WHILE DECIDING AS TO WHAT IS SUBSTANTIAL QUESTION OF LAW HAS HELD THAT SAME M UST BE DEBATABLE. 5. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE DE CISION OF COORDINATE BENCH AS WELL AS HON'BLE HIGH COURT A ND SUPREME COURT, AS NARRATED ABOVE, WE DIRECT THE ASS ESSING OFFICER TO CANCEL THE PENALTY IN RESPECT OF ADDITIO N CONFIRMED ON ACCOUNT OF CASH CREDIT. HOWEVER, WITH RESPECT TO ADDITION ON ACCOUNT OF SALE OF SCRAP, WE CONFIRM THE ACTION OF ASSESSING OFFICER FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. -: 6: - 6 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2013. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST JANUARY, 2013. CPU* 3031