JATIN P. THAPPAR, MUMBAI V. CIT(A| -25, MUMBAI

ITA 5086/MUM/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5559 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Unexplained cash credit; Additional evidence; Onus to prove; Set aside
• Section: 271(1)(c); 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 5086/MUM/2015 ASSESSMENT Y EAR: 2009 - 10 JATIN P THAPAR, B - 10, EDEN GARDENS, OPP SHIVAJI CHOWK, S T ROAD, DEONAR, MUMBAI - 400088 PAN: ADEPT8156H VS. THE ITO WARD 15(3)(2), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. SUBRAMANIAN ( AR ) REVENUE BY : SHRI S.K. BEPARI ( SR. D R) DATE OF HEARING: 16 /08 /201 8 DATE OF PRONOUNCEMENT: 09 / 11 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 03.08.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 25 (FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSE SSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY ORDER PASSED U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. IN THE PRESENT CASE, THE ASSESSMENT ORDER WAS PASSED DETERMIN ING THE TOTAL INCOME OF RS. 35,38,170/ - AS AGAINST THE RETURNED INCOME OF RS. 6,27,666/ - , AFTER MAKING ADDITION OF RS. 29,10,499/ - ON ACCOUNT OF UNEXPLAINED CASH CREDITS. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE PRODUCED CERTAIN DOCUMENTS FOR ADMITTIN G THE SAME AS ADDITIONAL EVIDENCE. ACCORDINGLY, THE LD. CIT(A) SOUGHT REMAND REPORT FROM THE AO. ON THE BASIS OF REMAND REPORT SUBMITTED BY THE AO THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 12,82,040/ - AS AGAINST THE ADDITION OF RS. 29,10,499/ - MADE BY TH E AO. ACCORDINGLY, AO 2 I TA NO. 5086 MUM/2015 ASSESSMENT YEAR: 2009 - 10 INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME AND REJECTING THE EXPLANATION OFFERED BY THE ASSESSEE LEVIED PENALTY OF RS.445273/ - . IN THE FIRST APPEAL THE LD. CIT(A) CONFIRMED THE ACTI ON OF THE ASSESSEE AND CONFIRMED THE PENALTY . 3 . AGGRIEVED BY THE ORDER OF LD. CIT (APPEAL S ), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUND : - THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING PENALTY U/S 271 (1) (C) OF RS. 445273/ - WHICH WAS LEVIED BY ITO WARD 15(3)(2) MUMBAI VIDE ORDER DATED 20/03/2014. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AO HA D MADE ADDITION OF RS.29,10,499/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT ON THE GRO UND THAT THE OUTSTANDING BALANCE IN THE LEDGER ACCOUNT OF INDIAN OIL CORPORATION IS N OT MATCHING WITH SUNDRY DEBTORS SHOWN IN BALANCE SHEET AND TRIAL BALANCE FOR THE PERIOD 01.04.2008 TO 31.03.2009 SHOWING CAPITAL BALANCE IS NOT MATCHING WITH THE AMOUNT OF CAPITAL BALANCE SHOWN IN THE ACCOUNTS AND THE EXPLANATION OFFERED IS NOT PLAUSIBLE BEING CONTRADICTORY. IN THE REMAND REPORT, TH E AO CONFIRMED THAT COMMISSION RECEIPTS AMOUNTING TO RS. 17,90,632/ - WAS REFLECTED IN THE BOOKS OF ACCOUNT. FURTHER, THE AO TRE ATED THE SOURCE OF DEPOSITS OF RS. 10,23,059/ - IN THE SAVING S BANK ACCOUNT AS EXPLAINED. ACCORDINGLY, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 12,82,040/ - IN THE QUANTUM APPEAL ON THE BASIS OF REMAND REPORT AND HIS FINDINGS REGARDING DEPOSIT OF RS. 5,00 ,000/ - . AS REGARDS THE DEPOSIT OF RS. 5,00,000/ - , THE LD. COUNSEL SUBMITTED THAT IT WAS A REFUND ABLE SECURITY DEPOSIT WHICH WAS PAID ON 01.02.2006 TO THE INDIAN OIL CORPORATION . SINCE T HE SAID AMOUNT WAS OUT OF THE PAST SAVINGS OF THE ASSESSEE AND OTHER NON TAXABLE RECEIPTS AND SINCE THIS AMOUNT WAS NOT PAID FROM THE BANK ACCOUNT , THE SAME WAS NOT REFLECTED IN THE BALANCE SHEET. REGARDING THE CASH DEPOSIT OF RS. 2 , 72 ,000/ - , THE LD. COUNSEL SUBMITTED THAT THIS REPRESENTS MERE CREDIT CONTRA 3 I TA NO. 5086 MUM/2015 ASSESSMENT YEAR: 2009 - 10 ENTRIES WHICH WA S PASSED ONLY TO CANCEL WRONG DEBIT ENTRIES AND THERE WAS NO ACTUAL CASH DEPOSIT OR WITHDRAWALS. HENCE , THE FINDINGS OF THE LD. CIT(A) IS NOT BASED ON ANY EVIDENCE ON RECORD BUT ON THE SURMISES OR GUESS WORK . MOREOVER, THE ASSESSEE HAS OFFERED EXPLANATION DURING THE APPELLATE PROCEEDINGS TO ESTABLISH THAT THE EXPLANATIONS ARE BONA FIDE . THEREFORE, THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PENALTY LEVIED ON THE BASIS OF ADDITION OF RS. 12,82,040/ - CONFIRMED IN QUANTUM APPEAL. 5. ON THE OTHER HAND, THE LD. D EPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CONTENTIONS, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE AO ON THE BASIS OF ADDITION OF RS. 12,82,040/ - CONFIRMED BY THE LD. CIT (A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE AUTHORITIES BELOW. WE NOTICE THAT INITIALLY THE AO HA D MADE ADDITION OF RS. 29,10,499/ - TREATIN G THE SAME AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT ON THE GROUND THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS MADE CONTRADICTORY STATEMENTS ABOUT THE SAID CREDITS IN THE CAPITAL ACCOUNT AND ITS CLOSING BALANCE. HOWEVER, DURING THE QUANTUM A PPE A L PROCEEDINGS, THE AO SUBMITTED REMAND REPORT VIDE WHICH THE AO CONFIRMED THAT COMMISSION RECEIPTS OF RS. 17,90,632/ - ARE REFLECTED IN THE BOOKS OF ACCOUNT. THE AO FURTHER TREATED THE SOURCE OF DEPOSITS OF RS. 10,23,059/ - IN THE SAVINGS BANK ACCOUNT AS EXPLAINED. BUT THE LD. CIT (A) CONFIRMED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT DISCLOSED THE SOURCE OF DEPOSITS AMOUNTING TO RS. 4,499/ - SHOWN IN CAPITAL ACCOUNT, INTEREST OF RS. 5,585/ - ON NSC INTEREST RECEIVED FROM ASHA AUTO SERVICES AMOU NTING TO RS. 84,948/ - DEPOSIT OF RS. 5 ,00,000/ - AND RS. 2, 72 ,000/ - APPEARING IN THE CAPITAL ACCOUNT OF THE ASSESSEE. FROM THE ABOVE DETAILS, IT IS CLEAR THAT INITIALLY THE AO HAD MADE ADDITIONS ON DIFFERENT GROUNDS, WHEREAS IN THE REMAND REPORT, THE AO HAS TAKEN THE DIFFERENT AMOUNTS TO JUSTIFY THE ADDITION . WE 4 I TA NO. 5086 MUM/2015 ASSESSMENT YEAR: 2009 - 10 FURTHER NOTICE THAT THE ASSESSEE HAS EXPLAINED ABOUT THE TWO MAJOR AMOUNTS I.E. RS. 5,00,000/ - AND RS. 2,72,000/ - BE FORE THE LD. CIT(A) . THE CONTENTION OF THE ASSESSEE IS THAT THE AMOUNT OF RS. 5,00, 000/ WAS A REFUNDABLE SECURITY DEPOSIT WHICH WAS PAID TO INDIAN OIL CORPORATION ON 01.06.2006 AND THE AMOUNT OF RS. 2,72 ,000/ - REPRESENTS MERE CREDIT CONTRA ENTRIES WHICH WAS PASSED ONLY TO CANCEL WRONG DEBIT ENTRIES AND THERE WAS NO ACTUAL CASH DEPOSIT OR WITHDRAWALS . H OWEVER, THE LD. CIT (A) HAS REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND CONFIRMED THE PENALTY LEVIED ON THE BASIS OF ADDITION OF RS. 12,82,040/ - CONFIRMED IN QUANTUM APPEAL . THE LD. CIT(A) HAS NOT POINTED OUT ANY MATERIAL OR EVIDEN CE TO REBUT THE EXPLANATION OFFERED BY THE ASS E SSEE. 7. AS PER THE SETTLED LAW PENALTY PROCEEDINGS ARE DIFFERENT FROM THE ASSESSMENT PROCEEDINGS AND ADDITION MADE DURING ASSESSMENT PROCEEDINGS OR IN QUANTUM APPEAL DOES NOT I P SO FACTO MAKE THE ASSESSEE LIA BLE FOR PENALTY U/S 271 (1) (C) OF THE ACT. AS PER E XPLANATION 1(B) TO SECTION 271 (1), THE ASSESSING OFFICER OR THE CIT (A) AS THE CASE MAY BE , HAS JURISDICTION TO MAKE ADDITION OR DISALLOWANCE OF ANY AMOUNT IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, IF THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. HENCE, T HE BURDEN OF PROOF HAS BEEN PLACED ON THE ASSESSEE TO PROV E THAT THE EXPLANATION IS BONA FIDE . HOWEVER, THE BURDEN IS AKIN TO THAT IN A CIVIL CASE WHERE THE DETERMINATION IS MADE ON PREPONDERANCE OF PROBABILITIES. ONCE THE PRESUMPTION UNDER EXPLANATION STANDS REBUTTED, THE AO OR THE CIT (A) AS THE CASE MAY BE , MU ST RECORD A POSITIVE FINDINGS INDEPENDENT OF PRESUMPTION ABOUT CONCEALMENT OF INCOME BY THE ASSESSEE. THE PENALTY CANNOT BE SUSTAINED U/S 271 (1) (C) IN THE ABSENCE OF ANY EVIDENCE TO CONCLUDE POSITIVE FINDINGS THAT THERE IS A CONCEALMENT OF INCOME OR INAC CURATE FURNISHING OF PARTICULARS OF INCOME. 8. IN THE PRESENT CASE , WE DO NOT FIND ANY POSITIVE FINDINGS IN THE ORDER PASSED BY THE LD. CIT (A). MAKING ADDITION OF SOME DIFFERENT AMOUNT IN THE 5 I TA NO. 5086 MUM/2015 ASSESSMENT YEAR: 2009 - 10 ASSESSMENT ORDER AND REFERRING SOME OTHER AMOUNTS IN THE REMAN D REPORT ITSELF CREATE A DOUBT IN THE ADDITION ITSELF TO CONCLUDE SAFELY THAT THE ASSESSEE HAS CONCEALMENT THE PARTICULARS OF HIS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. ADMITTEDLY, T HE ASSESSEE HAS NOT CHALLENGED THE ADDITION CONFIRMED IN QUANTUM APPEAL , BUT THIS FACT ITSELF IS NOT SUFFICIENT TO LEVY PENALTY U/S 271 (1) (C) OF THE ACT IN RESPECT OF THE ADDITION CONFIRMED BY THE LD. CIT (A). HENCE, I N THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SETTLED POSITION OF LAW, W E ARE OF THE CONSIDERED VIEW THAT SINCE THE ASSESSEE HAS EXPLAINED THE CREDIT ENTRIES IN QUESTION IN CAPITAL ACCOUNT AND THE SAME IS BONA FIDE , WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDER CONFIRMING PENALTY U/S 271 (1) (C) OF THE ACT IS NOT SUSTA INABLE IN LAW . WE THEREFORE , ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER PASSED BY THE LD. CIT (A ) AND DIRECT THE AO TO DELETE THE PENALTY. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 2010 IS ALLOWED. ORDE R PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2018. SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 09 / 11 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A ) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6 I TA NO. 5086 MUM/2015 ASSESSMENT YEAR: 2009 - 10 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI