M/s. Jai Jawala Processors, Panipat V. ITO, Panipat

ITA 4076/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6678 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 21-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST IMPUGNED DATED PASSED
• Keywords: Deemed to accrue or arise in india
• Section: 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT ME MBER ITA NO. 4076/DEL/2014 ASSTT. YEAR: 2006-07 O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 12.12.2013 PASSED BY LD. CIT( APPEALS), KARNAL IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE ASSESSMENT YEAR 2006-07. THE ASSESSEE IS AGGRIEVED BY LEVY OF PENALTY OF RS. 2,19,725/- U/S 271(1)(C) ON ACCOUNT OF ADDITION MADE U/S 68 ON UNSECURED LOANS TAKEN FROM THREE PERSONS BY THE ASSE SSEE DURING THE YEAR. JAI JAWALA PROCESSORS BARSAT ROAD, VILL CHANDOLI PANIPAT PAN AAEFJ1820H VS. ITO WARD-4 PANIPAT (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI K.C. ANEJA, ITF DEPARTMENT BY : SHRI AMIT JAIN SR.DR DATE OF HEARING 25/07/2018 DATE OF PRONOUNCEMENT 30/07/2018 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS SHOWN UNSECURED LOAN IN ITS BOOKS OF ACCOUNTS FROM THREE PERSONS, VI Z. I) SMT. NANCY GARG RS. 3,00,000/-; II) SMT. SHAFALI GARG RS. 3,01, 479/-; AND III) SHRI SANJU GARG RS. 1,05,000/-. LD. AO HAS ADDED ALL TH ESE LOANS U/S 68 ON THE GROUND THAT BEFORE MAKING WITHDRAWALS BY THESE PERSONS FOR ADVANCING LOAN TO THE ASSESSEE, THERE HAS BEEN CERTAIN DEPOSITS IN THE BANK ACCOUNT OF THE LENDERS FOR WHICH THE SOURCE HAS NOT BEEN GIVEN AND NOR THESE LENDERS WERE PRODUCED FOR EXAMINATION. ACCORDINGLY, ALL THE AMOUNT OF LOAN RECEIVED FROM THE LENDERS AGGREGATIN G TO RS. 7,05,000/- AND INTEREST PAID BY THE ASSESSEE THEREON A T RS. 13,084/- WAS ADDED U/S 68. SUCH AN ADDITION STANDS CONFIRMED I N THE APPELLATE PROCEEDINGS. NOW THE PENALTY HAS BEEN LEVIED ON THE GROUND THAT THESE ADDITIONS STAND CONFIRMED FROM THE STAGE OF THE TRIBUNAL AND THE EXPLANATION FURNISHED BY THE ASSESSEE HAS NOT BEEN FO UND TO BE TENABLE. LD. CIT (A) WHO HAS CONFIRMED THE SAID PENA LTY AFTER REFERRING TO THE FINDINGS GIVEN IN THE QUANTUM PROCEEDINGS AND ALSO REFERRING TO VARIOUS JUDGMENTS. 3. BEFORE US LD. COUNSEL SUBMITTED THAT THE ASSES SEE IN SUPPORT OF THE LOAN TAKEN FROM TWO LADIES, HAVE FILED THEIR IN COME TAX RETURNS; CONFIRMATIONS; AND ALSO COPY OF THEIR BANK STATEMENT. H E DREW OUR ATTENTION TO THE COPY OF THE BANK STATEMENT AND SUBMITTED THAT THE MAJOR ENTRY BEFORE ISSUING THE CHEQUE TO THE ASSESSEE HAS COME BY WAY OF CLEARANCE AND ONLY CASH DEPOSITS OF RS. 1,25, 000/- WAS MADE, BEFORE ISSUING THE CHEQUE TO THE ASSESSEE. THESE PERSO NS WERE HAVING INDEPENDENT SOURCE OF INCOME AND WERE FILING THE RETU RN OF INCOME; THEREFORE, IT CANNOT BE HELD THAT ASSESSEE HAS FAILED TO DISCHARGE THE ONUS ATLEAST IN THE PENALTY PROCEEDINGS. WITH REGARD TO LOAN TAKEN FROM SHRI SANJU, HE SUBMITTED THAT THE RELEVANT DOCUMENTS FROM THE SAID PARTY COULD NOT BE FURNISHED AS ASSESSEE DID NO T HAD GOOD RELATIONSHIP DUE TO FAMILY FEUDS BUT HAS PROVIDED PAN NUMBER OF THE 3 SAID PARTY AND THE TDS CERTIFICATE OF THE SAID PARTY. THUS, HE SUBMITTED THAT THERE CANNOT BE ANY CASE OF CONCEALMENT OF INCOME OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. ON THE OTHER HAND LD. DR SUBMITTED THAT IN CASES OF TWO LADIES THERE IS A CATEGORICAL FINDING THAT BEFORE ISSUING CHE QUES CERTAIN CASH WAS DEPOSITED AND DESPITE OPPORTUNITY GIVEN BY THE A O TO THE ASSESSEE, THE SOURCE OF THESE DEPOSITS IN THEIR HANDS COULD NOT BE ESTABLISHED. ACCORDINGLY, THE CREDITWORTHINESS OF THE PARTIES WAS IN DOUBT. REGARDING THE LOAN TAKEN FROM SHRI SANJU, ASSE SSEE COULD PROVE ANYTHING; THEREFORE THE ADDITIONS GOT CONFIRMED FROM THE STAGE OF THE TRIBUNAL. ACCORDINGLY, THE PENALTY LEVIED SHOULD BE CONFIRMED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS MATERIAL REFERRED TO BEFORE US. THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED ON ACCOUNT OF ADDITION MADE U/S 68 ON THE GROUND THAT UNSE CURED LOANS RECEIVED BY THE ASSESSEE WERE NOT GENUINE AND WERE H ELD TO BE DEEMED INCOME OF THE ASSESSEE U/S 68. DURING THE COURSE OF TH E QUANTUM PROCEEDINGS AS WELL AS IN THE PENALTY PROCEEDINGS IN SO FAR AS TWO PERSONS ARE CONCERNED, NAMELY, SMT. NANCY GARG AND S MT. SHIFALI GARG FROM WHOM THE ASSESSEE HAS RECEIVED RS. 3 LACS EACH, WE FIND THAT BOTH THESE LADIES ARE ASSESSED TO TAX AND HAVE ALSO FURNISHED THEIR COPIES OF INCOME TAX RETURNS ALONGWITH THEIR CONF IRMATION AND BANK STATEMENT. ON PERUSAL OF THE BANK STATEMENT IT IS SEE N THAT CERTAIN AMOUNT HAVE BEEN COME BY WAY OF CLEARANCE I N FEBRUARY, 2006 AND CASH OF RS. 1,25,000/- WAS DEPOSITED IN SAM E MONTH. THEREAFTER ALMOST AFTER ONE MONTH CHEQUE HAS BEEN ISS UED TO THE ASSESSEES FIRM. ONCE THE CREDITOR HAS CONFIRMED THE L OAN; IS REGULARLY ASSESSED TO TAX AND HAS GIVEN THE BANK STATEMENT FROM WHI CH THE LOAN HAS BEEN GIVEN, THEN THE SOURCE OF LOAN GIVEN FROM THE BANK ACCOUNT 4 CAN BE SAID TO BE PROVED BY THE SAID PERSON. AS FAR A S ASSESSEE IS CONCERNED PRIMARY ONUS TO SUBSTANTIATE THE NATURE AND SOU RCE OF CREDIT ENTRY IN THE BOOKS NOT ACCOUNT GETS DISCHARGED U NLESS IT IS BROUGHT ON RECORD BY SOME OTHER MATERIAL FACTS THAT A SSESSEES OWN UNACCOUNTED MONEY HAS BEEN ROUTED THROUGH THESE ACCOUNT S. THOUGH ADDITION HAS BEEN CONFIRMED IN THE QUANTUM PROCEEDINGS ON THE GROUND SOURCE OF CREDIT IN THE BANK ACCOUNT HAS NOT B EEN PROVED, BUT SO FAR AS PENALTY PROCEEDINGS ARE CONCERNED, WHICH IS SEPARATE AND DISTINCT PROCEEDINGS, THE ASSESSEE MAY RELY ON SAME M ATERIAL AND CAN ALWAYS SHOW THAT HE HAS NOT CONCEALED ANY INCOME OR F URNISHED ANY INACCURATE PARTICULARS OF INCOME. HERE NOT ONLY THESE TWO PERSONS HAVE CONFIRMED THE LOAN BUT ALSO OWNED UP TO HAVE BEE N GIVEN FROM THEIR BANK ACCOUNT AND THUS, IT IS IN THEIR HANDS THE SOURCE SHOULD HAVE BEEN ENQUIRED INTO. ACCORDINGLY, ON THESE FACTS AND ON THE BASIS OF EVIDENCES FURNISHED, WE DO NOT FIND THAT IT IS A FI T CASE FOR LEVY OF PENALTY U/S 271(1)(C) ON THESE TWO ADDITIONS ON THE L OAN RECEIVED FROM THESE TWO PERSONS. IN THE CASE OF SHRI SANJU ALSO FRO M WHOM ASSESSEE HAS RECEIVED A SUM OF RS. 1,05,000/-, ASSESSEE HAS GIVEN THE PAN DETAILS OF THE SAID PARTY AND ALSO TDS CERTIFICATE TO S HOW THAT THE AMOUNT COMING FROM HIS BANK ACCOUNT IN THE BOOKS OF TH E ASSESSEE IS COMING FROM THE KNOWN SOURCE. THOUGH IN ABSENCE OF OTHER CORROBORATIVE DOCUMENTARY EVIDENCES THE ADDITION HAS BE EN CONFIRMED IN QUANTUM PROCEEDINGS, BUT AGAIN IF THE PERSON WAS G IVEN THE LOAN WHO IS ASSESSED TO TAX AND WHOSE IDENTITY IS KNOWN, THE N UNDER THE DEEMING PROVISION OF SECTION 68 IT CANNOT BE CONCLUSIV ELY HELD THAT SUCH A LOAN RECEIVED BY THE ASSESSEE ALSO TANTAMOUNT T O CONCEALMENT OF INCOME. THE WORD MAY IN SECTION 68 POSTULATES THE DEGREE OF EVIDENCES AND EXPLANATION TO PROVE NATURE AND SOURCE OF CREDIT. IF THE EXPLANATION FURNISHED THOUGH MAY NOT HAVE BEEN FOUND T O BE SUFFICIENT IN THE QUANTUM PROCEEDINGS; BUT IN THE PENA LTY PROCEEDINGS 5 IF EVIDENCES FILED AND EXPLANATION GIVEN HAS NOT BEEN FOUND TO BE FALSE, THEN PREPONDERANCE OF PROBABILITY FACTORS ARE TO BE SE EN AND IF THERE IS NO ADVERSE MATERIAL TO DISLODGE THE ASSESSEES EXPLAN ATION THEN HE CANNOT BE CHARGED FOR PENAL CONSEQUENCES UNDER SECTIO N 271(1)(C). THUS, PENALTY LEVIED ON LOAN RECEIVED FROM SUCH PER SON ALSO DESERVES TO BE DELETED. 5. IN THE RESULT PENALTY LEVIED BY THE AO IS DIRECTED TO BE DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2018. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/07/2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 6