PRIMARY METALS P. LTD, MUMBAI V. ITO WD 9(2(4), MUMBAI

ITA 4233/MUM/2010

• Counselvise Citation: 423319914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 25-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V V SHASHTRI
• Keywords: Income from undisclosed sources; Reasonable cause
• Section: 273B; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI D. MANMOHAN (VICE-PRESIDENT) & SHRI R.S. SYAL (ACCOUNTANT MEMBER) I.T.A.NO.4233/MUM/2010 (A.Y. 2002-03) M/S. PRIMARY METALS PVT. LTD., E/302, ASHOK NAGAR, VAZIRA NAKA, BORIVLI (W), MUMBAI-400 092. PAN: AAACP4188K VS. INCOME-TAX OFFICER, WARD-9(2)(4), MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI PRAKASH JHUNJHUNWALA. RESPONDENT BY SHRI V .V. SHASHTRI. DATE OF HEARING 25 - 10 - 2011 DATE OF PRONOUNCEMENT 28 - 10 - 2011 O R D E R PER R.S. SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 15-03-2010 UPHOLDING PENALTY OF RS.2,82,387/- IM POSED BY THE AO U/S. 271(1)(C) IN RELATION TO ASSESSMENT YEAR 2002-03. 2. THERE IS A DELAY OF 1 DAY IN PRESENTING THE APPE AL BEFORE THE TRIBUNAL. WE ARE SATISFIED WITH THE REASONS STATED BY THE LD. A. R. FOR PRESENTING THIS APPEAL BELATEDLY. ACCORDINGLY, THE DELAY OF 1 DAY IS CONDO NED AND THE APPEAL IS ADMITTED FOR HEARING ON MERITS. ITA NO.4233/M/2010 PRIMARY METALS P.LTD. 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE HAD SHOWN A SUM OF RS.7.91 LAKHS AS PAYABLE TO ORIENTAL BANK OF COM MERCE, NARIMAN POINT, MUMBAI, AS A THE END OF THE YEAR IN ITS BOOKS OF AC COUNT. THE AO CALLED FOR INFORMATION FROM THE BANK ABOUT THE BALANCE OUTSTAN DING. A LETTER DATED 30-11- 2005 WAS RECEIVED FROM THE BANK STATING THAT THERE WAS RATHER A CREDIT BALANCE OF RS.3990/-. THIS FACT WAS BROUGHT TO THE NOTICE O F THE ASSESSEE. IN THE ABSENCE OF THE ASSESSEE FURNISHING ANY ACCEPTABLE REASONS I N THIS REGARD, THE AO TREATED THIS SUM OF RS.7.91 LAKHS PAID TO THE BANK AS HAVIN G COME OUT OF INCOME FROM UNDISCLOSED SOURCES. RESULTANTLY, ADDITION OF RS.7. 91 WAS MADE. 4. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE TH E CIT(A) CONTENDING THAT IT HAD NOT REPAID THE LOAN TO THE BANK BUT THE SAME WA S FORCEFULLY RECOVERED FROM ITS DEBTORS, M/S. SATYA PRAKASH & SONS AND M/S. RIS HI INTERNATIONAL. IT WAS EXPLAINED THAT THE ASSESSEE WAS UNABLE TO REPAY THE BANK LOAN FOR WHICH IT WAS DECLARED AS A DEFAULTER AND SUBSEQUENTLY THE BANK R ECOVERED THE AMOUNT DUE FROM ITS DEBTORS. THE LD. CIT(A) WAS ALSO NOT CONVI NCED WITH THE ASSESSEES SUBMISSIONS FOR THE REASON THAT NO EVIDENCE WAS FI LED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. THUS, THE ADDITION SO MADE WAS U PHELD IN THE FIRST APPEAL. THE ASSESSEE DID NOT CHOOSE TO FILE ANY FURTHER APPEAL. 5. THEREAFTER, PENALTY WAS IMPOSED ON THE ADDITION OF RS.7.91 LAKHS. THE LD. CIT(A) WAS NOT CONVINCED WITH THE ASSESSEES SUBMIS SION AND HE, THEREFORE, ECHOED THE PENALTY ORDER ON THIS ASPECT. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS NOTICED FROM THE FACTS THAT THE AS SESSEE SHOWED A LIABILITY OF RS.7.91 LAKHS IN THE NAME OF ORIENTAL BANK OF COMME RCE IN ITS BALANCE-SHEET FOR ITA NO.4233/M/2010 PRIMARY METALS P.LTD. 3 THE YEAR ENDING 31-03-2002 RELEVANT FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION. ON THE OTHER HAND, THE BANK INTIMATE D TO THE AO THAT THERE WAS NOTHING DUE FROM THE ASSESSEE. ON THE CONTRARY IT W AS INFORMED THAT THERE WAS A CREDIT BALANCE IN THEIR BOOKS. IT IS OBVIOUS THAT W HEN THE BANK IS ACKNOWLEDGING AS NO ARREARS FROM THE ASSESSEE AND THE ASSESSEE IS SHOWING THE LIABILITY, THE ONLY INFERENCE WHICH CAN BE DRAWN IS THAT THE ASSES SEE PAID THIS AMOUNT, UNLESS IT IS SHOWN THAT THE BANK WRONGLY CREDITED THE ACCO UNT OF THE ASSESSEE IN ITS BOOKS OF ACCOUNT. IT WAS STATED BY THE BANK THAT T HERE WAS NO AMOUNT DUE FROM THE ASSESSEE, WHICH FACT, WAS NOT DENIED BY THE ASS ESSEE. IT SHOWS THAT THE AMOUNT WAS PAID BY THE ASSESSEE DISCHARGING ITS LIA BILITY TO THE BANK. AS THE ASSESSEE DID NOT REFLECT THE PAYMENT TO THE BANK IN ITS BOOKS OF ACCOUNT, IN OUR CONSIDERED OPINION, THE AO WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT THE AMOUNT WAS PAID BY THE ASSESSEE TO THE BANK OUT OF UNDISCLOSED INCOME. 7. THE CONTENTION OF THE ASSESSEE THAT THE BANK FORCIBLY RECOVERED THE AMOUNT IN QUESTION FROM ITS DEBTORS HAS REMAINED UN PROVED BY THE ASSESSEE AS NO BANK STATEMENT SHOWING RECOVERY FROM THE DEBTORS WAS EVER SUBMITTED BY THE ASSESSEE EITHER DURING THE APPELLATE PROCEEDINGS IN QUANTUM OR DURING THE PENALTY PROCEEDINGS. THE SITUATION CONTINUES TO REM AIN THE SAME BEFORE US AS WELL, AS THE ASSESSEE FAILED TO FILE THE COPY OF BA NK STATEMENT SHOWING THE RECOVERY EFFECTED FROM DEBTORS. THE LD. A.R. IS HAR PING ON ONE CERTIFICATE FROM THE BANK SHOWING OPENING BALANCE ON 01-01-2002 AS RS.3 990/- BY CONTENDING THAT THE AMOUNT, IF ANY, WAS ALREADY RECOVERED BY THE BA NK AND HENCE NO PENALTY COULD HAVE BEEN IMPOSED. IT IS IMPORTANT TO NOTE T HAT WE ARE DEALING WITH ASSESSMENT YEAR 2002-03 AND THE RELEVANT PREVIOUS Y EAR IS FROM 01-04-2001 TO 31-03-2002. THE SAID CERTIFICATE OF THE BANK DEALS WITH THE PERIOD 01-01-2002 TO ITA NO.4233/M/2010 PRIMARY METALS P.LTD. 4 27-04-2004. THE EARLIER PERIOD FROM 01-04-2001 TO 3 1-12-2001 HAS NOT COME UP IN THIS STATEMENT. ON A SPECIFIC QUERY, THE LD. A.R . COULD NOT PLACE ON RECORD A COPY OF THE BANK STATEMENT SHOWING THE MODE OF PAYM ENT OF RS.7.91 LAKHS. UNDER SUCH CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN IMPOSING AND UPHOLDING PENA LTY U/S. 271(1)(C) IN RESPECT OF THIS AMOUNT. 8. THE ASSESSEE RAISED A FURTHER CONTENTION THAT IT HAD NIL INCOME AND IN SUCH A SITUATION THE AMENDED EXPLANATION 4 TO SECTION 27 1(1) WILL NOT BE APPLICABLE. WE ARE UNABLE TO ACCEPT THIS CONTENTION IN VIEW OF THE LATER JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. GOLD C OIN HEALTH FOOD PVT. LTD.(2008) 304 ITR 308 (SC) IN WHICH IT HAS BEEN HE LD THAT EXPLANATION 4 TO SECTION 271(1)(C), BEING CLARIFICATORY, IS APPLICAB LE RETROSPECTIVELY. IT, THEREFORE, FOLLOWS THAT EVEN IF THERE IS A LOSS, THERE IS NO BAR ON IMPOSING PENALTY U/S. 271(1)(C) IF THE OTHER REQUISITE CONDITIONS ARE SAT ISFIED. THIS CONTENTION OF THE LD. A.R., THEREFORE, FAILS. 9. THE LAST ATTEMPT MADE BY THE LD. A.R. FOR PERSUA DING US TO DELETE THE PENALTY WAS APPLICABILITY OF SEC. 273B. IT WAS STAT ED THAT THERE WAS A REASONABLE CAUSE AND HENCE PENALTY SHOULD NOT BE IMPOSED. ON T HIS COUNT ALSO, WE ARE UNABLE TO ENDORSE THE CONTENTION SO RAISED FOR THE OBVIOUS REASON THAT SECTION 273B DOES NOT COVER CLAUSE (C) OF SECTION 271(1).T HUS, THE NON-OBSTANTE CLAUSE IN SECTION 273B WOULD NOT BE APPLICABLE ON THE PENA LTY IMPOSED U/S. 271(1)(C). THE NATURAL COROLLARY WHICH, THEREFORE, FOLLOWS IS THAT PENALTY U/S. 271(1)(C) HAS TO BE IMPOSED IF THE REQUISITE CONDITIONS ARE SATIS FIED NOTWITHSTANDING ANY REASONABLE CAUSE AS ENVISAGED U/S. 273B. ITA NO.4233/M/2010 PRIMARY METALS P.LTD. 5 10. IN VIEW OF THE FOREGOING REASONS, WE ARE SATISF IED THAT THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE PENALTY. 11. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THE 28TH DAY OF OCTOBER, 2 011. SD/- SD/- (D. MANMOHAN) (R.S. SYAL) VICE-PRESIDENT ACCOUNTANT MEMBER MUMBAI: 28TH OCTOBER , 2011. NG: COPY TO : 1.ASSESSEE. 2.DEPARTMENT 3 CIT(A)-20,MUMBAI. 4 CIT-9,MUMBAI. 5.DR,C BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.4233/M/2010 PRIMARY METALS P.LTD. 6 DETAILS DATE INITIALS DESIGN ATION 1 . DRAFT DICTATED ON 25 - 1 0 - 2011 SR.PS/ 2 . DRAFT PLACED BEFORE AUTHOR 25 - 1 0 - 2011 SR.PS/ 3 . DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 . DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 . D ATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 . DATE O N WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER *