The Income-tax Oficer, Amritsar. V. M/s. C.R.S. Rice Mills, Amritsar.

ITA 409/ASR/2012

• Counselvise Citation: 40920914 RSA 2012
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K SAXENA
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 PAN: AAEFC6173A INCOME TAX OFFICER, VS. M/S C.R.S. RICE MILLS, WARD-V(1), AMRITSAR V&P. MAHALWALA, AJNALA ROAD, AMRITSAR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. Y. K. SAXENA, DR ASSESSEE BY: WRITTEN SUBMISSION DATE OF HEARING: 25.07.2013 DATE OF PRONOUNCEMENT: 01.08.2013 ORDER PER BENCH 1) THE REVENUE HAS FILED THE PRESENT APPEAL A GAINST THE IMPUGNED ORDER DATED 17.08.2012 PASSED BY LEARNED CIT(A), JA MMU, PERTAINING TO THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUND S: I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEAR NED CIT(A), AMRITSAR HAS ERRED IN DELETING THE PENALTY OF RS. 4 ,82,850/- IMPOSED BY THE A.O. ON ACCOUNT OF CONCEALMENT OF INCOME BY WAY OF UNEXPLAINED CREDIT STANDING IN THE BOOKS OF ACCOUNT OF ASSESSEE. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER OF LD. CIT(A) BE VACATED AND THAT OF A.O. BE RESTORED. 2 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 III. APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY OR MORE GROUNDS OF THE APPEAL. 2) NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE FOR 25.07.2013. IN RESPONSE TO THE SAME, THE ASSESSEE FILED ITS WRITTE N SUBMISSIONS ALONG WITH SOME DOCUMENTARY EVIDENCE CONTAINING PAGES FRO M 1 TO 18 AND REQUESTED THAT THE APPEAL FILED BY THE REVENUE MAY BE DISMISSED. 3) THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE-FIRM IS RUNNING A RICE SHELLER, FILED ITS RETURN ON 10.10.2006 DECLARING LOSS OF RS. 84,527/. THE CASE OF THE ASSE SSEE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS AS PER ACTION PLAN. ASSESSI NG OFFICE ISSUED NOTICES TO THE ASSESSEE UNDER SECTIONS 143(2) & 142 (1) ALONG WITH A QUESTIONNAIRE. IN RESPONSE TO THE SAME, THE AUTHORI ZED REPRESENTATIVE OF THE ASSESSEE ALONG WITH SOME PARTNERS OF THE ASSESS EE-FIRM ATTENDED THE ASSESSMENT PROCEEDINGS. ACCOUNTS OF THE ASSESSEE AR E DULY AUDITED BY THE CHARTERED ACCOUNTANT AND AUDIT REPORTS IN FORM NO. 3CB & 3CD ALONGWITH BALANCE-SHEET, TRADING AND PROFIT & LOSS ACCOUNT HAVE BEEN FILED ALONG WITH THE RETURN OF INCOME. ON TOTAL SAL ES OF RS. 1,60,29,895/-, GROSS PROFIT OF RS. 14,90,801/- HAS BEEN SHOWN GIVI NG G.P. RATE OF 9.30%. ON BEING ASKED BY THE ASSESSEE OFFICER TO THE ASSES SEE ABOUT THE YIELD PERCENTAGE OF RICE MANUFACTURED, THE ASSESSEE FILED ITS REPLY AND STATED 3 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 THAT THE TOTAL RICE MANUFACTURED IS RS. 22135.05 QT LS. OUT OF PADDY MILLED AT 33990 QULS., THIS GIVES YIELD OF 65.12 %. THE A SSESSEE FURTHER STATED THAT THE UNIT HAS NOT BEEN DONE ANY MILLING OF THE STATE GOVERNMENT DURING THE YEAR UNDER ASSESSMENT AND THE UNIT IS NO T DEALING/MANUFACTURING IR 8/PARMAL. THE YIELD OF SHA RBATI IS ALMOST LESS BY MORE THAN 2% AS COMPARED TO PARMAL RICE AND THUS , THE YIELD DECLARED AT 65.12. DETAILS OF CLOSING STOCK AND QUANTITATIVE STOCK-TALLY HAVE BEEN FURNISHED BY THE ASSESSEE AND ALL OTHER INFORMATION REQUIRED FOR THE PURPOSE OF COMPLETION OF ASSESSMENT HAS BEEN FILED AND VERIFIED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS BEEN F OUND THAT DURING THE YEAR UNDER ASSESSMENT THE ASSESSEE HAS ALLEGEDLY RA ISED LOANS FROM CERTAIN PERSONS. ON FURTHER INVESTIGATION OF THE BA NKS ACCOUNTS OF THE PERSONS FROM WHERE THE ALLEGED LOANS HAVE BEEN ADVA NCED IT IS FOUND THAT SOME OF THE ALLEGED LOANS ARE NOT GENUINE IN AS MUC H AS THE CASH OF EQUAL AMOUNT HAS BEEN DEPOSITED IN THE BANK ACCOUNT AND I N TURN CHEQUES FAVOURING THE ASSESSEE HAVE BEEN ISSUED EITHER ON T HE SAME DAY OR WITHIN NEXT ONE OR TWO DAYS. IN THIS REGARD, ASSESSING OFF ICER ISSUED SHOW CAUSE TO THE ASSESSEE VIDE OFFICE LETTER DATED 08.12.2008 . IN REPLY, THE ASSESSEE VIDE ITS LETTER DATED 24.12.2008 STATED THAT THOUGH THE UNSECURED LOANS HAVE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AN D ARE GENUINE 4 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 CREDITS BEING RAISED FROM AGRICULTURIST BUT IN ORDE R TO AVOID ANY CONTROVERSY WITH THE DEPARTMENT AND TO BUY PEACE OF MIND THE SAID DEPOSITS ARE OFFERED FOR ASSESSMENT. IT IS HELD BY THE ASSESSING OFFICER THAT ALL THE ACCOUNT PAYEE CHEQUES FAVOURING THE AS SESSEE HAVE BEEN ISSUED BY THE ALLEGED CREDITORS ONLY AFTER MAKING C ASH DEPOSITS OF EQUAL AMOUNTS JUST ONE OR TWO DAYS EARLIER TO THE ISSUANC E OF CHEQUES TO THE ASSESSEE. LASTLY, HE HELD THAT ANY IOTA OF DOUBT TH AT THE ALLEGED LOANS OF RS. 14,50,000/- REPRESENT ASSESSEES OWN INCOME INT RODUCED UNDER THE GARB OF UNSECURED LOANS AND THESE ARE ASSESSED AS A SSESSEE INCOME UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (IN SHORT T HE ACT) AS INCOME OF THE ASSESSEE FROM SOURCES NOT DISCLOSED TO THE DEPA RTMENT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143( 3) OF THE ACT ON 24.12.2008 ON TOTAL INCOME OF RS. 13,65,723/- AND MADE ADDITION OF RS. 14,50,000/- UNDER SECTION 68 OF THE ACT. PENALTY PR OCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED FOR CON CEALING THE PARTICULARS OF INCOME AND NOTICE UNDER SECTION 274 READ WITH SE CTION 271(1)(C) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE STATED THAT ALL THE AMOUNTS AS UNSECURED LOANS HAVE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. BUT TO AVOID ANY CONTROVERSY WITH THE DEPARTMENT AND TO BUY PEACE OF MIND THE ASSESSEE FIRM HAS SURR ENDERED THIS AMOUNT 5 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 FOR ASSESSMENT SUBJECT TO NO PENALTY & PROSECUTION AND LASTLY THE ASSESSING OFFICER IMPOSED A MINIMUM PENALTY OF RS. 4,82,850/- UNDER SECTION 271(1)(C) OF THE ACT VIDE ORDER DATED 18.06 .2009. 4) AGGRIEVED BY THE PENALTY ORDER DATED 18.06.2009 PASSED BY INCOME TAX OFFICER, WARD 5(1), AMRITSAR, FOR ASSESS MENT YEAR 2006-07, THE ASSESSEE FILED AN APPEAL BEFORE LEARNED CIT(A), AMRITSAR, WHO VIDE IMPUGNED ORDER DATED 17.08.2012, ALLOWED THE APPEAL OF THE ASSESSEE. NOW, THE REVENUE BEING AGGRIEVED WITH THE ORDER OF LEARNED CIT(A), JAMMU, FILED THE PRESENT APPEAL. 5) AT THE TIME OF HEARING, LEARNED DR RELIED UPON T HE ORDER DATED 18.06.2009 PASSED BY INCOME TAX OFFICER, WARD 5(1), AMRITSAR, UNDER SECTION 271(1)(C) OF THE ACT. 6) WE HAVE HEARD LEANED D.R. AND PERUSED THE RELEV ANT RECORDS AVAILABLE WITH US, ESPECIALLY THE WRITTEN SUBMISSIO N FILED BY THE ASSESSEE ALONG WITH OTHER DOCUMENTARY EVIDENCE AS WELL AS TH E IMPUGNED ORDER PASSED BY THE LEARNED FIRST APPELLATE AUTHORITY. FO R THE SAKE OF CONVENIENCE, RELEVANT PORTION OF THE IMPUGNED ORDE R I.E. PARAS 6 TO 7 ( PAGES 17 TO 19) ARE REPRODUCED AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE APPELLANTS WRI TTEN SUBMISSIONS AND HAVE ALSO GONE THROUGH THE A.O.S FINDINGS AS C ONTAINED IN HIS 6 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 IMPUGNED PENALTY ORDER. THE LD. A.R. FOR THE APPELL ANT HAS CONTESTED AND CHALLENGED THE PENALTY ORDER ON THE FOLLOWING G ROUNDS: 6.1 THAT THE CAUSE OF ACTION GERMANE FROM SO-CALLED SIX CASH CREDITORS, WHICH HAVE BEEN ENROOTED THROUGH WELL AP PROVED AND WELL RECOGNIZED BANKING CHANNELS, FULLY DISCLOSING IDENT ITY, CAPACITY, CREDITWORTHINESS AND GENUINENESS OF ALL THE SIX CAS H CREDITORS BY STATING THAT THESE WERE ALL MEN OF MEANS HOLDING SU FFICIENT AGRICULTURAL LAND HOLDINGS AND THE SOURCE OF MAKING CREDITS IS GERMANING FROM THEIR PASING SAVINGS DERIVED FROM AG RICULTURAL INCOME FROM TIME TO TIME. THEIR AFFIDAVITS FURNISHE D WERE NEITHER REBUTTED OR DIS-APPROVED BY BRINGING ON RECORD ANY ADVERSE MATERIAL IN ANY MANNER DULY CONFRONTING THE APPELLANT FOR CO UNTERING THE SAME. HOWEVER, BEFORE ANY ADVERSE MATERIAL HAVING BEEN CO NFRONTED OR BROUGHT ON RECORD, THE APPELLANT FIRM CAME FORWARD AMICABLY TO EARN PEACE OF MIND AND TO AVOID UNNECESSARY PROLONGED LI TIGATION WITH A SUO MOTU SURRENDER OF RS. 14,50,000/- VIDE LETTER D ATED 24.12.2008 EQUIVALENT TO THE CASH CREDITS SUBJECT TO NO PENALT Y AND IN A BONAFIDE MANNER HONOURED THE SURRENDER BY DISCHARGING THE AD DITIONAL TAX LIABILITY AS A GOOD AND GOODWILL GESTURE AND EXTEND FULL COOPERATION WITH THE DEPARTMENT. THE LD. A.R. HAS VEHEMENTLY PL ACED RELIANCE ON THE FOLLOWING CASE LAWS AND REBUTTING THE CASE LAWS RELIED UPON BY THE LD. A.O. AS MISCONCEIVED BEING IRRELEVANT, HAVING N O DIRECT BEARING BUT QUITE DISTINGUISHABLE TO THE FACTS OF THE INSTA NCE CASE. CIT V. REAL TIME MARKETING (P) LTD. (2009) 221 CTR (DEL) 716 72 DTR 216 (CHHA) H/C RAJ RANI MITTAL IT DELHI A BENCH 106 ITR 307 (ALL.) 246 ITR 216 (ALL.) 8 DTR 253 (P&H) CIT V. SMT. SUDERSHAN GUPTA THRU L/H [2008] 10 DTR 184 (P&H) CIT V. RAJIV GARG & OTHERS (2009) 18 DTR 452 (P&H) 272 ITR 323 (M.P.) CIT V. SURAJ BHAN [2009] 294 ITR 481 [P&H] CIT V. SURESH CHANDRA MITTAL [2001] 251 ITR 9 (S.C. ) ACIT V. MALU ELECTRODES (P) LTD. (2010) 33 DTR 487 (NAG) (TRIB.) 34 ITR 328 & 117 ITR 371 7 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 49 ITR 112, S.C. 249 ITR 125 (GUJ.) NATIONAL TEXTILES V. CIT 23 DTR 163 (P&H) CIT V. GP INTERNATIONAL 49 ITR 273; 59 ITR 632; 264 ITR 254; 280 ITR 512. DURING THE APPELLATE PROCEEDINGS, THE LD. A.R. HAS ENDEAVOURED ADDUCE AGAIN THE RELEVANT CONFIRMATIONS IN R/O ALL THE SIX CASH CREDITORS IN THE FORM OF THEIR CONFIRMED COPIES OF ACCOUNTS, WITH THEIR COMPLETE SIGNATURES & ADDRESSES ALONG WITH COPIES O F RESPECTIVE AFFIDAVITS AND THUS ATTEMPTED TO FULFILL ALL THE BA SIC INGREDIENTS LAID DOWN U/S 68 OF THE I.T. ACT, 1961 SUCH AS ESTABLISH ING IDENTITY, CAPACITY AND CREDITWORTHINESS AS WELL AS SUBSTANTIA TING FULL GENUINENESS AND JUSTIFICATION OF ALL THE SIX CASH C REDITORS. FURTHER, IT IS A MATTER OF RECORD THAT THE APPELLANTS SUO MOTU SURRENDER HAS BEEN ENTERTAINED BY THE DEPARTMENT AND ON THE OTHER HAND , NO ADVERSE MATERIAL OR POSITIVE SELF-CONTRADICTIONS HAVE BEEN BROUGHT ON RECORD SO AS TO REJECT THE APPELLANTS CONTENTIONS AND SUB MISSIONS. UNDER THESE FACTS & CIRCUMSTANCES AND ALSO RESPECTFULLY F OLLOWING THE DECISIONS OF THE HON'BLE SUPREME COURT AND THAT OF THE JURISDICTIONAL HON'BLE PUNJAB & HARYANA HIGH COURT, QUOTED (SUPRA) , I AM OF THE CONSIDERED OPINION THAT IT IS NOT A CASE WHERE THE APPELLANT HAS FAILED TO FURNISH ANY EXPLANATION AND THAT THE EXPLANATION SO FURNISHED HAS BEEN HELD TO BE FALSE OR UNSUBSTANTIATED BY BRINGIN G ANY POSITIVE ADVERSE MATERIAL AVAILABLE ON RECORD AND IT CAN BE SAFELY OPINED THAT IT IS NOT A FIT CASE FOR INVITING AND IMPOSING CONC EALMENT PENALTY AS LEVIED BY THE LD. A.O. AMOUNTING TO RS. 4,82,850/- BEING HELD TO BE UNFOUNDED AND UNWARRANTED DESERVES TO BE CANCELED. IT IS WELL SETTLED LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEED INGS ARE QUITE SEPARATE AND INDEPENDENT TO EACH OTHER AND PENALTY PROCEEDINGS BEING QUASI JUDICIAL PROCEEDINGS, THE REVENUE HAS T O DISCHARGE ITS BASIC ONUS HEAVILY FALLING ON ITS SHOULDER TO BRING ADVERSE MATERIAL IN THREADBARE MANNER, BASIS AND IN POSITIVE TERMS WHIC H CAN BE SAFELY EMPLOYED AGAINST THE APPELLANT. IN THE LIGHT OF ABOVE DISCUSSIONS, IT WOULD BE JUSTIFIED TO HOLD THAT A.O.S PENALTY ORDE R DATED 18.06.2009 LEVYING MINIMUM PENALTY OF RS. 4,82,850/- IS HEREBY CANCELLED. HOWEVER, THE PRESENT A.O. CONCERNED IS DIRECTED TO PASS ON NECESSARY INTIMATIONS, IF NOT ALREADY DONE AS THE CASE MAY BE , TO THE RESPECTIVE A.O. HOLDING JURISDICTION OVER THE CASH CREDITORS F OR NECESSARY ACTION AT THEIR END. 8 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 7. IN THE RESULT, THE APPEAL IS HEREBY ALLOWED. 6. AFTER GOING THROUGH IMPUGNED ORDER PASSED BY LEA RNED FIRST APPELLATE AUTHORITY, WE ARE OF THE VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY PASSED THE IMPUGNED ORDER IN THE LIGHT OF THE VARIOUS JUDGMENTS/DECISIONS PASSED BY THE HO N'BLE HIGH COURTS AND TRIBUNALS. WE HAVE ALSO FOUND THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS ALSO APPRECIATED THE EVIDENCE PRODUCE D BY THE ASSESSEE IN SUPPORT OF ITS CLAIM IN DISPUTE, WHICH HAS NOT B EEN CONSIDERED BY THE ASSESSING OFFICER IN THE PENALTY PROCEEDING. IN OUR VIEW THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF ITS I NCOME OR HAS NOT FILED ANY INACCURATE PARTICULARS OF ITS INCOME. THE REFORE, IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFICER HAS WRONGLY LEV IED THE PENALTY IN DISPUTE AND THE LEARNED FIRST APPELLATE AUTHORITY H AS DELETED THE SAME AFTER APPRECIATING THE EVIDENCE PRODUCED BY THE ASS ESSEE BEFORE HIM, WHICH THE ASSESSEE HAS ALSO FILED BEFORE THIS BENCH . 7. KEEPING IN VIEW THE AFORESAID DISCUSSION, WE ARE OF THE VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER; THEREFORE, NO INTERFERENCE IS CALLE D FOR. ACCORDINGLY, 9 I.T.A. NO. 409(ASR)/2012 ASSESSMENT YEAR: 2006-07 WE UPHOLD THE IMPUGNED ORDER DATED 17.08.2012 PASSE D BY LEARNED CIT(A), AMRITSAR, AND DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST, 2013 SD/./ SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST AUGUST, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES: M/S C.R.S. RICE MILLS, V&P. MAHALWAL A, AJNALA ROAD, AMRITSAR 2. INCOME TAX OFFICER, WARD-V(1), AMRITSAR 3. THE CIT(A), AMRITSAR 4. THE CIT, AMRITSAR 5. THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.