INVENIOLIFE TECHNOLOGY P.LTD, NAVI MUMBAI V. ITO WD 3, PANVEL

ITA 4519/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2301 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2015
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Agreed addition

Judgement Text

, , D, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.4519/MUM/2015 ASSESSMENT YEAR: 2008-09 INVENIOLIFE TECHNOLOGY P. LTD. C-701, SHELTER COMPLEX, SECTOR -8, KHARGAR, NAVI MUMBAI- 410210 / VS. ITO WARD 3 , 3 RD FLOOR, TRIFED TOWER, OPP. KHANDA COLONY, PANVEL-410206, DIST. RAIGAD. ( APPELLANT ) ( REVENUE ) P.A. NO . AABC16314B APPELLANT BY NONE REVENUE BY SHRI VACHASPATI TRIPATHI( DR) / DATE OF HEARING : 06/10/2016 / DATE OF ORDER: 26/10/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), THANE- 2,{(IN SHORT CIT(A)}, DATED 01.05.2015 PASSED AGA INST PENALTY ORDER OF THE AO DATED 18.04.2011 U/S 271(1)(C) FOR ASSESSMENT YEAR 2008-09. INVENIOLIFE TECHNOLOGIES PVT. LTD. 2 3. DURING THE COURSE OF HEARING NONE APPEARED ON BEHAL F OF THE ASSESSEE DESPITE THE FACT THAT ON THE EARLIER D ATE THIS CASE WAS ADJOURNED AS PER CONVENIENCE ASSESSEES COUNSEL . UNDER THESE CIRCUMSTANCES, WE HAVE NO OPTION BUT TO PROCE ED EX- PARTE QUA THE ASSESSEE. 3.1. THE BRIEF FACTS IN THIS CASE ARE THAT DURING THE Y EAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAD RECEIVED UNS ECURED LOAN OF RS.10,47,101/-, AND OUT OF THE SAME LOAN O F RS.4,50,000/- WAS FOUND TO BE UNEXPLAINED. IT WAS O BSERVED BY THE AO THAT ASSESSEE FAILED TO EXPLAIN THE SOURC E WITH REQUISITE DOCUMENTARY EVIDENCE. THE AO HAD HELD THA T THE IMPUGNED LOANS WERE BOGUS. THEREAFTER ASSESSEE HAD OFFERED IT TO TAX VIDE ITS LETTER DATED 28.10.2010 AND EXPRESS ED INABILITY TO SUBSTANTIATE SAID LOAN AMOUNT. SUBSEQUENTLY, PEN ALTY PROCEEDINGS WERE INITIATED AND THE AO LEVIED THE PE NALTY BY OBSERVING AS UNDER: IN THE ABOVE SUBMISSION, THE ASSESSEE HAS STATED TH AT THE PROMOTERS -DIRECTORS HAD FORWARDED THE SAID LOANS T O THE ASSESSEE COMPANY WITH THE SOLE INTENTION OF HELPING THE COMPANY COPE WITH THE INITIAL PHASE OF ITS SURVIVAL. THE ASSESSEE OFFERED THE AMOUNT FOR TAXATION WITH THE PLEA OF 'BUYING PEACE OF MIND'. BUT THE ASSESSEE OFFERED THE AMOUNT TO TAX DURING ASSESSMENT PROCEEDINGS, ONLY AFTER HAVING BEEN FAILED TO EXPLAIN & SUBSTANTIATE THE SOURCES OF SUC H UN-SECURED LOANS. SO THERE IS NO VOLUNTARY DISCLOSU RE MADE FROM THE PART OF THE ASSESSEE. AS PER EXPLANATION 1 TO SEC. 271(1)(C), WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING OFFICE R] OR THE [COMMISSIONER (APPEALS)] [OR THE COMMISSIONE R] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH INVENIOLIFE TECHNOLOGIES PVT. LTD. 3 HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE T HAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM,] THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESU LT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF TH IS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN VIEW OF THE ABOVE, THE PLEA OF THE ASSESSEE CANNOT BE ACCEPTED AND PENALTY U/S 271(1)(C) IS LEVIABLE FOR THE DEFAULT AS THE ASSESSEE HAS NOT AB LE TO EXPLAIN AND SUBSTANTIATE THE SOURCES OF UN- SECURED LOAN TO THE EXTENT OF RS. 4,50,000/-. 3.2. BEING AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE TH E LD. CIT(A) AND THERE ALSO NO RELIEF WAS GIVEN AND PENAL TY WAS CONFIRMED BY THE LD. CIT(A) BY INTERA ALIA OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS OF THE AO IN THE PENALT Y ORDER; CASE LAWS RELIED UPON BY THE APPELLANT AND THE FACT S OF THE CASE. (I) IN THE FIRST PLACE, THE APPELLANT SUBMISSION IT SELF IS NOT CLEAR AS FROM WHOM THE LOANS WERE OBTAINED, EITHER FROM RELATIVES OF DIRECTORS OR FROM DIRECTORS ITSELF BEC AUSE IN THE WRITTEN SUBMISSION ABOVE THE APPELLANT HAS STATED T HAT LOANS WERE TAKEN FROM RELATIVES OF DIRECTORS WHEREA S IN GROUND NO. 3 ABOVE, THE APPELLANT HAS REFERRED OF L OANS BEING TAKEN FROM DIRECTORS. THIS SHOWS THE INCONSIS TENCY SUBMISSION OF THE APPELLANT. (II) IF THE LOANS RECEIVED FROM DIRECTORS OR RELATI VES WERE GENUINE, THERE IS NO REASON FOR NOT ABLE TO EXPLAIN THE SOURCE OF THE LOANS AS THE LOANS WERE NOT TAKEN FROM THIRD PARTIES. IN MANY INSTANCES, UNEXPLAINED CASH CREDIT IS ADDED AS INCOME MAINLY DUE TO ABSENCE OF LOAN CONFIRMATION OR LOAN CREDITO RS NOT AVAILABLE, WHEREAS IN THE CASE OF THE APPELLANT , BOTH CONFIRMATIONS AND IDENTITY WERE ESTABLISHED , HOWEVER, THE SOURCE HAS NOT BEEN EXPLAINED, THEREFORE, THE APPELLANT HAS OFFERED TO TAX AFTER T HE INVENIOLIFE TECHNOLOGIES PVT. LTD. 4 AO STARTED THE ENQUIRIES ABOUT LOANS. HENCE, THE AGREED ADDITION OF THESE LOANS CANNOT BE CONSIDERED AS VOLUNTARILY. (III) HAD IT NOT BEEN TAKEN UP THE CASE FOR SCRUTIN Y, THE APPELLANT WOULD NOT HAVE PAID THE TAX. EVEN IN THE PENALTY PROCEEDINGS, THE APPELLANT HAD NOT PROVED THAT IT WAS NOT CONCEALMENT OR FILING INACCU RATE PARTICULARS OF INCOME. (IV )THE APPELLANT FURTHER STATED THAT WHILE FILING RETURN OF INCOME, DUE TO LACK OF PROFESSIONAL ADVICE, THE LOANS AND ADVANCES HAS NOT BEEN OFFERED AS INCOME. THIS PLEA OF THE APPELLANT IS NOT ACCEPTABLE AS THERE IS NO EXCUSE FOR IGNORANCE OF L AW AND THE REASON GIVEN IS BEYOND UNACCEPTABLE EXPLANATION. (V) THE CASE LAWS RELIED UPON BY THE APPELLANT ARE NOT APPLICABLE IN THE CASE OF THE APPELLANT AS THE FACTS AND THE CIRCUMSTANCES ARE NOT THE SAME. IN VIEW OF THE ABOVE STATED FACTS, THE APPEAL OF TH E APPELLANT ON THIS GROUND IS REJECTED AND THE PENALT Y ORDER PASSED BY THE AO IS UPHELD. 3.3. DURING THE COURSE OF HEARING BEFORE US, LD. DR SUB MITTED THAT PENALTY HAS BEEN RIGHTLY CONFIRMED AS THE IMPU GNED LOAN HAS BEEN HELD TO BE BOGUS WHICH HAS BEEN ACCEPTED A S SUCH BY THE ASSESSEE AS WELL. IT IS NOTED BY US THAT NO EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE IN THIS REGARD. THER E IS NOTHING BEFORE US TO COUNTER THE ADVERSE OBSERVATION MADE B Y THE AO AND LD. CIT(A) WHEREIN IMPUGNED LOAN AMOUNT HAS BEE N HELD TO BE BOGUS. UNDER THESE CIRCUMSTANCES, WE HAVE NO OTHER OPTION BUT TO HOLD THAT THE PENALTY HAS BEEN RIGHTL Y LEVIED AND CONFIRMED BY THE LD. CIT(A). THEREFORE APPEAL OF TH E ASSESSEE IS DISMISSED. INVENIOLIFE TECHNOLOGIES PVT. LTD. 5 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2016 SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; ' DATED : 26/10/2016 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. $ %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * ( $ ) / THE CIT, MUMBAI. 4. ) ) * / CIT(A)- , MUMBAI 5. -. ' /0 , ) $ /01 , / DR, ITAT, MUMBAI 6. 2 3 / GUARD FILE. / BY ORDER, ( -$ ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI