ACIT, New Delhi V. M/s. Indica Exports, New Delhi

ITA 3518/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2179 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 17-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 10-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: S K GOYAL
• Keywords: Unexplained cash credit; Search and seizure
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 3518/DEL/2009 ASSESSMENT YEAR: 2004-05 ACIT, VS. INDICA EXPORTS, CIRCLE 33(1), 18/38, WEST PATEL NAGAR, NEW DELHI. NEW DELHI. PAN NO. AAAF18954R (APPELLANT) (RESPONDENT) & CROSS OBJECTION NO. 330/DEL/09 ASSESSMENT YEAR: 2004-05 INDICA EXPORTS, VS. ACIT, 18/38, WEST PATEL NAGAR, CIRCLE 33(1), NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. B.K. GUPTA, SR. DR RESPONDENT BY : SH. S.K. GOYAL, CA ORDER PER I.P. BANSAL, J.M. THE APPEAL IS FILED BY THE REVENUE AND CROSS OBJE CTION BY THE ASSESSEE. BOTH OF THEM ARE DIRECTED AGAINST ORDER OF CIT(A) DATED 15 TH MAY, 2009 FOR A.Y. 2004-05. 2. GROUNDS OF APPEAL READ AS UNDER : - THE LD. CIT(A) HAS ERRED ON FACTS IN DELETING THE PENALTY U/S 271(1)(C) AGAINST ADDITION OF RS. 10,00,000/- (PENALTY AMOUNT BEING RS. 4,49,007) ON A/C OF UNEXPLAINED CREDITORS US/ 68 OF THE I.T. ACT AS BASIC PREPOSITION OF ITA NO. 3518/D/09 & CO NO. 330/DEL/09 2 INVOLVEMENT OF MENS REA WAS CLEARLY FOUND TO BE EST ABLISHED IN THE PENALTY ORDER. GROUNDS OF CROSS OBJECTION READ AS UNDER : - 1. THE ORDER OF THE LD. ACIT CIRCLE 31(1) IN IMPOS ING PENALTY OF RS. 4,49,007/- (AS MENTIONED IN THE FORM NO. 36 FILED B Y THE DEPARTMENT) U/S 271(1)(C) ON THE SURRENDER AMOUNT OF RS. 10 LAC S IS TOTALLY WRONG, BAD IN LAW AND NEEDS TO BE QUASHED. 2. THE ASSESSEE HAS ALSO SURRENDERED INCOME IN OTHE R YEARS ALSO BUT NO PENALTY HAS BEEN IMPOSED IN THOSE YEARS ALTHOUGH THE FACTS OF THE CASE AND ASSESSEE IS THE SAME. 3. NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE AND ORD ER WAS PASSED WITHOUT HEARING/GIVING OPPORTUNITY AS MENTIONED IN THE PENALTY ORDER. 3. THE ABOVE APPEAL IS FILED BY THE DEPARTMENT AGAI NST DELETION OF CONCEALMENT PENALTY BY THE CIT (A) LEVIED IN RESPEC T OF ADDITION OF RS.10 LAC MADE ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS. A SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 23 RD SEPTEMBER, 2004 BY THE ADDL. DIT, INVESTIGATION UNIT-1, NEW DELHI. IN ORD ER TO VERIFY THE PURCHASES AND CONSEQUENT SUNDRY CREDITORS, THE ASSESSING OFFI CER REQUIRED THE ASSESSEE TO PROVE THE SAME. THE BOOKS OF ACCOUNT W ERE NOT PRODUCED ON THE GROUND THAT THOSE WERE DESTROYED BY THE TERMIT E AND IT WAS STATED THAT THOSE PARTIES USED TO COME TO THE ASSESSEE WITH A S AMPLE AND, THEREFORE, THE ASSESSEE DOES NOT KNOW MUCH ABOUT THEIR WHEREAB OUTS EXCEPT THE ADDRESSES STATED IN THE VOUCHERS. IT WAS SUBMITTED THAT SALES HAVE BEEN MADE AND WITHOUT PURCHASES SALES CANNOT BE EFFECTED . IT WAS SUBMITTED THAT PARTIES ARE AFRAID OF INCOME-TAX DEPARTMENT, T HEREFORE, THEY ARE NOT COOPERATING AND, AS SUCH, THE PARTIES WERE ALSO NO T PRODUCED. IT WAS SUBMITTED THAT AS THE ASSESSEE CANNOT PRODUCE THE P ARTIES FOR EXAMINATION, ITA NO. 3518/D/09 & CO NO. 330/DEL/09 3 THE ASSESSEE IS READY TO SURRENDER RS.10 LAC FOR TH E YEAR UNDER CONSIDERATION WITH A REQUEST THAT NO PENALTY/INTERE ST SHALL BE LEVIED. IN ORDER TO VERIFY THE CORRECTNESS OF AMOUNT SHOWN IN THE NAME OF SUNDRY CREDITORS, THE AO MADE SOME INVESTIGATION, BUT, HE COULD NOT FIND ANY FRUITFUL RESULT. ONE SHRI HIMANSU ARORA, PROPRIETOR OF JONA TEXTILES WAS ALSO SUMMONED WHO APPEARED AND WHO CONFIRMED THAT PURCHA SES WERE MADE BY THE ASSESSEE THROUGH HIM. IN THESE CIRCUMSTANCE S, THE AO ACCEPTED THE OFFER OF THE ASSESSEE AND MADE THE ADDITION OF RS.1 0 LAC WITH THE FOLLOWING OBSERVATIONS:- AS DISCUSSED HEREINABOVE UNDER THE FACT AND C IRCUMSTANCES OF THE CASE AND THE SCENARIO AS EMERGED OUT EVER SI NCE THE SURVEY CONDUCTED AT THE BUSINESS PREMISES OF THE AS SESSEE TILL THE DATE OF ASSESSMENT PROCEEDINGS, I HAVE NO MATER IAL AND ANY AID TO MAKE A TRUE ASSESSMENT OF THE INCOME DECLARE D BY THE ASSESSEE AND ALSO TO VERIFY THE GENUINENESS OF THE SUNDRY CREDITORS. AS MENTIONED HEREINABOVE, SINCE THE ASSESSE E COULD NOT PRODUCE THE SUNDRY CREDITORS FOR EXAMINATION, HE HA S FILED A LETTER SUBMITTING INTER ALIA THAT IN ORDER TO BUY P EACE AND LITIGATION, THEY ARE READY TO SURRENDER RS.10 LAKH FOR THE A.Y. 2004-05 WITH REQUEST THAT NO PENALTY/INTT. SHALL BE LEVIED. ALTHOUGH THE ASSESSEES SUBMISSION DURING THE COUR SE OF ASSTT. PROCEEDINGS HAVE SOME GROUND BUT THE SAME DOES NOT FULLY AND SATISFACTORILY JUSTIFIES THE REASONS PREVENTING THE M TO PRODUCE THE SUN. CREDITORS FOR VERIFICATION. THE ASSESSEE S REQUEST HAS BEEN CONSIDERED TAKING NOTE OF FACTS OF THE CASE AN D OTHER RELATED CIRCUMSTANCES AS DISCUSSED HEREINABOVE AND ALSO KEEPING IN MIND TO AVOID UNNECESSARY LITIGATION IN THE MATTER. SINCE NO SOLUTION TO THE IMPASSE APPEARS IMMINENT I T HAS BEEN THOUGHT PRUDENT TO ACCEPT ASSESSEES SUBMISSION TO SURRENDER OF AMOUNT OF RS.10 LAKH TO AVOID LITIGATION. CONSE QUENTLY, SURRENDER OF RS.10 LAKH HAS BEEN ACCEPTED ON THE GR OUND OF ASSESSEE NOT ABLE TO PROVE THE SUNDRY CREDITORS FOR VERIFICATION. RESULTANTLY, AN ADDITION OF RS.10 LAKH IS BEING MAD E ON ACCOUNT OF EXPLAINED CREDITOR ENTRIES IN THE FORM OF SUNDRY CREDITORS SUNDRY CREDITORS INTRODUCED DURING THE YEAR UNDER CONSIDERATION AS PER THE PROVISIONS OF SEC.68 OF THE IT ACT. ITA NO. 3518/D/09 & CO NO. 330/DEL/09 4 4. THE AO FURTHER INITIATED PENALTY PROCEEDINGS AS PER THE FOLLOWING OBSERVATIONS:- CONSEQUENTLY, I AM SATISFIED THAT NOT ABLE TO GET THE SUNDRY CREDITORS VERIFIED ASSESSEE HAS FURNISHING INACCURA TE PARTICULARS OF INCOME WHICH ULTIMATELY LED TO THE C ONCEALMENT OF INCOME. PENALTY PROCEEDINGS U/S 271(1)(C) FOR S UCH CONCEALMENT OF INCOME HAVE BEEN INITIATED. 5. IT IS IN ACCORDANCE WITH THE ABOVE OBSERVATIONS OF AO PENALTY PROCEEDINGS WERE STARTED. DURING THE PENALTY PROCE EDINGS, THE ASSESSEE DID NOT APPEAR AND CONSEQUENTLY, THE AO, RELYING ON THE ASSESSMENT ORDER IMPOSED, THE PENALTY WHICH WAS IN RESPECT OF ADDITI ON OF RS.10 LAC AS WELL AS DISALLOWANCE CLAIMED U/S 80HHC. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) WHO HAS DELETED THE PENAL TY VIS-A-VIS BOTH THE ITEMS. THE DEPARTMENT IN ITS APPEAL HAS CONTESTED THE DELETION OF PENALTY ONLY IN RESPECT OF ADDITION MADE ON ACCOUNT OF UNEX PLAINED SUNDRY CREDITORS. THE ASSESSEE IN ITS CROSS OBJECTIONS HA S SUPPORTED THE ORDER OF THE CIT (A). 6. ARGUING THE APPEAL FOR REVENUE, IT WAS VEHEMENTL Y SUBMITTED BY LD. DR THAT THE ASSESSEE COULD NOT SUPPORT THE BALANCE SHOWN IN THE NAME OF SUNDRY CREDITORS, THEREFORE, AN ADDITION OF RS.10 L AC WAS MADE. THE SAID AMOUNT REPRESENTED THE CONCEALED INCOME OF THE ASSE SSEE AND, THEREFORE, THE AO WAS RIGHT IN IMPOSING THE PENALTY AND THE CI T (A) HAS WRONGLY DELETED THE SAME. 7. AS AGAINST THAT, IT WAS THE SUBMISSION OF THE LD . AR THAT THE BOOKS OF ACCOUNT COULD NOT BE PRODUCED DUE TO THE FACT THAT THEY WERE DESTROYED BY ITA NO. 3518/D/09 & CO NO. 330/DEL/09 5 THE TERMITE AND THIS FACT WAS BROUGHT TO THE NOTICE OF THE AO. IT WAS SUBMITTED THAT DUE TO NON-AVAILABILITY OF BOOKS OF ACCOUNT AND RELEVANT VOUCHERS, THE ASSESSEE WAS NOT IN A POSITION TO SUP PORT THE BALANCES SHOWN IN THE NAME OF SUNDRY CREDITORS. HOWEVER, IT WAS SUBMITTED THAT TO BUY PEACE OF MIND AND TO AVOID PROLONGED LITIGATION A SUM OF RS.10 LAC WAS OFFERED TO BE ASSESSED AS INCOME SUBJECT TO NON-LEV Y OF PENALTY AS WELL AS INTEREST. IT WAS SUBMITTED THAT THE CIT (A) WAS RI GHT IN DELETING THE PENALTY ON THE GROUND THAT THERE WAS NO MATERIAL BROUGHT ON RECORD BY THE AO TO SUPPORT THAT THE SAID AMOUNT REPRESENTING SUNDRY CR EDITOR WAS THE CONCEALED INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT NO PROPER OPPORTUNITY OF HEARING WAS GIVEN BY THE AO AS IS EV IDENT FROM THE PENALTY ORDER ITSELF WHEN THE AO FAILED TO MENTION EVEN THE DATE OF NOTICE AS WELL AS COMPLIANCE. RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF ADDL. CIT VS. PREM CHAND GARG (2009) 24 DTR (DEL) (TM) (TRIB) 513 TO CONTEND THAT THERE BEING NO MATERIAL AVAILABLE ON RECORD AND THE ASSESSMENT FRAMED ON THE BASIS OF SURRENDER, NO CONCEALMENT PENALTY COUL D BE LEVIED. IT WAS SUBMITTED THAT RELIANCE WAS PLACED BEFORE THE CIT ( A) ON VARIOUS DECISIONS TO CONTEND THAT IT WAS NOT A CASE WHERE LEVY OF PEN ALTY COULD BE HELD JUSTIFIED AND IT WAS SUBMITTED THAT THESE CASES HAV E BEEN DISCUSSED IN THE ORDER OF THE CIT (A) AND RELYING ON THOSE DECISIONS IT WAS SUBMITTED THAT PENALTY HAS RIGHTLY BEEN DELETED BY THE CIT (A). I T WAS FURTHER SUBMITTED THAT UNDER SIMILAR FACTS AND CIRCUMSTANCES, SURREND ER WAS MADE IN RESPECT OF OTHER ASSESSMENT YEARS ALSO AND THIS FACT HAS BE EN DULY NOTED BY THE CIT (A) IN HIS ORDER AND IN RESPECT OF THOSE ASSESS MENT YEARS NO PENALTY WHATSOEVER HAS BEEN IMPOSED AND, THUS, IT WAS PLEAD ED THAT IMPOSITION OF ITA NO. 3518/D/09 & CO NO. 330/DEL/09 6 PENALTY FOR THE PRESENT YEAR HAS RIGHTLY BEEN DELET ED BY LD. CIT (A) AND HIS ORDER SHOULD BE UPHELD. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. WHILE MAKING THE ADDIT ION THE OBSERVATIONS OF AO HAVE ALREADY BEEN REPRODUCED. FROM THE OBSERVATI ONS OF AO IT CAN BE NOTICED THAT HE HAS ADMITTED THAT THE AO IS IN LACK OF ALL THE MATERIAL. FURTHER, THE AO HAS OBSERVED THAT SINCE NO SOLUTIO N TO THE IMPASSE APPEARS IMMINENT IT HAS BEEN THOUGHT PRUDENT TO ACC EPT THE OFFER OF SURRENDER OF AN AMOUNT OF RS.10 LAC TO AVOID LITIGA TION AND, IN THIS MANNER, THE AO HAS ACCEPTED THE OFFER OF THE ASSESS EE OF RS.10 LAC. THE OFFER WAS MADE BY THE ASSESSEE SUBJECT TO THE CONDI TION OF NON-LEVY OF PENALTY. IT IS ALSO THE CASE OF THE ASSESSEE THAT IN OTHER YEARS ALSO SIMILAR SURRENDER WAS MADE IN RESPECT OF WHICH NO PENALTY WAS IMPOSED. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO CONTROVERT THIS ASSERTION OF THE ASSESEE THAT UNDER SIMILAR CIRCUMS TANCES IN OTHER YEARS NO PENALTY WAS IMPOSED. KEEPING IN VIEW ALL THESE FAC TS, WE ARE OF THE OPINION THAT LD. CIT (A) WAS RIGHT IN HOLDING THAT IT WAS N OT A FIT CASE WHERE LEVY OF PENALTY COULD BE HELD JUSTIFIED. WE FIND NO INFIRM ITY IN SUCH FINDING OF CIT (A). THEREFORE, WE DECLINE TO INTERFERE IN THE DEL ETION OF PENALTY. THE APPEAL FILED BY THE REVENUE IS DISMISSED. AS THE CO FILED BY THE ASSESSEE IS ONLY SUPPORTING THE ORDER OF THE CIT (A) AND AS WE HAVE DISMISSED DEPARTMENTAL APPEAL, THE CO FILED BY THE ASSESSEE H AS BECOME INFRUCTUOUS AND THE SAME IS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL AS WELL AS CO BOTH ARE DISMISSED. ITA NO. 3518/D/09 & CO NO. 330/DEL/09 7 ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2009. (SHAMIM YAHYA) (I.P. BANSAL ) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED: 18.12.09. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR