M/s Shiv Shakti Extrusions Ltd., Delhi V. ITO, New Delhi

ITA 5144/DEL/2013

• Counselvise Citation: 514420114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-09-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 09-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: KAPIL GOYAL
• Keywords: Unexplained cash credit; Difference of opinion; Accommodation entries
• Section: 133(6); 68; 148; 6; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G , NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.5144 /DEL/2013 ASSESSMENT YEAR : 2002-03 SHIV SHAKTI EXTRUSIONS LTD., VS. ITO, WARD 8(2), C/O KAPIL GOEL ADV., NEW DELHI. A-1/25, SECTOR 15 ROHINI, DELHI 110 085 GIR / PAN: AACCS7623N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KAPIL GOYAL, ADV. RESPONDENT BY : SHRI BRR KUMAR, SR. DR ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST OR DER OF LD. CIT(A) DATED 22.05.2013. THE ASSESSEE HAS TAKEN 5 GROUNDS OF APPEAL WHICH ARE DESCRIPTIVE IN NATURE BUT THE CRUX OF GRIEVANCE OF ASSESSEE IS THE ACTION OF LD. CIT(A) BY WHICH HE HAS CONFIRMED HE PENALTY IMPOSED BY A.O. U/S 271(1)(C) OF THE I. T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME DECLARING LOSS OF RS.83,55,091/-. THE CASE WAS REO PENED U/S 148 OF THE ACT ON THE BASIS OF INFORMATION FROM DIRECTOR (INVESTIG ATION) THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES. THEREFORE, ASS ESSEE WAS SHOW CAUSED TO PROVE THE GENUINENESS OF RECEIPT OF AMOUNT OF RS .10,01,500/- FROM M/S. MANOHAR LAL MANISH KUMAR. HOWEVER NOBODY ATTENDED THE PROCEEDINGS DESPITE THE A.O. ISSUED NOTICES ON 2-3 OCCASIONS. THE A.O. ON THE BASIS OF ITA NO.5144/DEL/2013 2 INFORMATION CALLED FORM JAI LAXMI COOPERATIVE BANK LTD. U/S 133(6) OF THE ACT, OBSERVED THAT IN THE BANK STATEMENT OF M/S. MA NOHAR LAL MANISH KUMAR ON 01.06.2001, AN AMOUNT OF RS.10,01,500/- WA S DEPOSITED IN CASH AND ON THE SAME DATE A CHEQUE OF EQUIVALENT AMOUNT WAS ISSUED IN FAVOUR OF THE ASSESSEE. THE A.O. HELD THAT THE CASH DEPOSITE D IN THE BANK ACCOUNT OF M/S. MANOHAR LAL MANISH KUMAR MUST BE BELONGING TO THE ASSESSEE AND THEREFORE, HE MADE AN ADDITION U/S 68 OF THE ACT AS UNEXPLAINED DEPOSIT. THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). HOWEV ER, LD. CIT(A) UPHELD THE ADDITION MADE BY THE A.O. BEFORE LD. CIT(A) AL SO, THE ASSESSEE OR ITS A.R. DID NOT ATTEND THE PROCEEDINGS. IN VIEW OF TH E ADDITION A.O. INITIATED IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT. T HE A.O. DID NOT ACCEPT THE ARGUMENT OF THE ASSESSEE THAT THE ADDITION ITSELF C ANNOT LEAD TO THE CONCLUSION THAT ASSESSEE HAD CONCEALED INCOME AND HAD FURNISHE D INACCURATE PARTICULARS OF INCOME. THE PENALTY ORDER WAS CHALLENGED BEFOR E LD. CIT(A) WHO UPHELD THE SAME BY HOLDING AS UNDER: IN THIS CASE, THE APPELLANT HAD RECEIVED RS.10,01, 500/- AS SHARE APPLICATION MONEY. THE APPELLANT DID NOT PRO DUCE THE PERSON WHO HAD GIVEN THE MONEY OR FURNISH HIS PAN NO. THE APPELLANT THUS FAILED TO ESTABLISH THE IDENTITY OF THE PERSON. NO BANK STATEMENT OR BANK DETAILS OR RETURN OF INCOME DETAILS, TO SHOW T HAT THE PERSON GIVING THE MONEY HAD SUFFICIENT BALANCE TO GIVE THE MONEY WAS PRODUCED, NO SHARE APPLICATION REGISTERS WERE PRODU CED. ALL THESE FACTORS SHOWED THAT THE CREDITWORTHINESS OF THE SHA RE APPLICANTS OR GENUINENESS OF THE TRANSACTION, WAS NOT PROVED. THE APPELLANT THUS HAD AN UNEXPLAINED CREDIT IN IFS BOOKS. THE NATURE AND SOURCE OF SUCH CREDIT WAS NOT PROVED BY THE APPELLANT. IN THE CASE OF K.C.BUILDERS SUPREME COURT HAS HELD THAT: 'IT, IS IMPLICIT IN-THE WORD 'CONCEALED' THAT THERE HAS BEEN A DELIBERATE ACT ON THE PART OF THE ASSESSEE.' IN THI S CASE, THE AMOUNT OF RS. 10,01,500/- REPRESENTS 'THE APPELLANT'S CONCEAL ED INCOME. THERE IS AN INTENTION AND DESIRE ON THE PART-OF THE APPELLAN T TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THE REON.' THE APPELLANT ITA NO.5144/DEL/2013 3 HAS CONSCIOUSLY MADE THE CONCEALMENT AND FURNISHED INACCURATE PARTICULARS OF HIS) INCOME WITH A, VIEW TO AVOID .I MPOSITION OF TAX. IN THE CASE OF BALWANT RAI AND CO. THE ALLAHABAD H IGH COURT HAS HELD THAT WERE THE APPELLANT DOES NOT OFFER ANY EXPLANATION REGARDING THE SOURCE OF DEPOSIT EITHER IN THE ASSES SMENT PROCEEDINGS OR IN THE PENALTY PROCEEDINGS, PENALTY IS LEVIABLE. THE APPELLANT HAD DELIBERATELY FURNISHED' INACCURAT E PARTICULARS OF ITS INCOME WITH A VIEW TO CONCEALMEN T OF INCOME. THE EXPLANATION OF THE APPELLANT IS NOT BONAFIDE. IN VI EW THEREOF PENALTY OF RS.3,09,460/- IMPOSED U/S 271(I)(C), IS CONFIRMED. THE GROUND OF APPEAL IS THUS RULED AGAINST THE APPELLANT. 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, LD. A.R. SUBMITTED THAT THE ORDER PASSED BY A.O. AND LD. CIT(A) ARE BOTH EX-PARTE ORDERS AS THERE WAS N IL DEMAND, THE ASSESSEE COULD NOT PRESENT THE CASE PROPERLY AND ALSO DID N OT FILE APPEAL BEFORE ITAT IN QUANTUM PROCEEDINGS. HOWEVER, HE ARGUED THAT PE NALTY WAS NOT IMPOSABLE AS ASSESSEE HAD NOT FURNISHED INACCURATE PARTICULARS OF INCOME AND THE ADDITION WAS MADE AS THE A.O. AND CIT(A) DID NO T ACCEPT THE GENUINENESS OF SHARE APPLICANT. IT WAS SUBMITTED T HAT ALL PARTICULARS REGARDING SHARE APPLICANTS WAS FURNISHED IN THE BOO KS OF ACCOUNT AND, THEREFORE, IN THE BALANCE SHEET OF ASSESSEE COMPANY THE ADDITION WAS MADE ONLY BECAUSE OF DIFFERENCE OF OPINION. 5. LD. D.R. ON THE OTHER HAND SUBMITTED THAT THE A. O. AND CIT(A) GAVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO EXPLAIN T HE CREDITWORTHINESS AND GENUINENESS OF ENTRIES BUT ON BOTH THE OCCASIONS, T HE ASSESSEE OR THE REPRESENTATIVE OF THE ASSESSEE DID NOT APPEAR. HE SUBMITTED THAT THE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF SPECIFIC INFORMATION FORM DIRECTOR OF INVESTIGATION. THE ASSESSEE HAD DELIBERATELY DE PLOYED ITS OWN INCOME AS ITA NO.5144/DEL/2013 4 SHARE APPLICATION MONEY PROVIDED BY A PERSON WHICH IT COULD NOT PROVE, THEREFORE, MENS REA AND CONCEALMENT BOTH ARE PROVED IN THE PRESENT CASE. 6. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. SECTION 271(1)(C) OF THE ACT HAS A DIR ECT BEARING ON THE CONTROVERSY AND THEREFORE, IT IS SALUTARY ON OUR PA RT TO TAKE NOTE OF PROVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANATION WHICH R EADS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1). IF THE ASSESSING OFFICER OR THE COMMISSIONER ( APPEALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)******** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I) AND (INCOME-TAX OFFICER,)******** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1.- WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN E XPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER( APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLA NATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SU CH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCL OSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN R ESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED'. 14. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED ITA NO.5144/DEL/2013 5 CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CON CEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PEN ALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300% OF T HE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONC EALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOS T IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGA RDING CONCEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATI ON IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INAC CURATE PARTICULARS, IN CERTAIN SITUATION, EVEN WITHOUT THE RE BEING ANYTHING TO INDICATE SO, STATUTORY DEEMING FICTION FOR CONCEALM ENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EX PLANATION I TO SECTION 271 (1)( C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSES SEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEA LS); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPU TATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSE E IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY A CTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GI VING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICT ION WOULD COME TO PLAY BY THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO T HE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DI SCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271 (1)( C) MAKES IT CLEAR THAT THAT WHEN T HIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN TH E RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF TH E ASSESSEE, FOR THE ITA NO.5144/DEL/2013 6 PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS H AVE BEEN FURNISHED. 7. IN THE LIGHT OF ABOVE PROPOSITION, LET US EXAMIN E THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, THE ASSESSEE CL AIMED TO HAVE RECEIVED SHARE APPLICATION MONEY FROM ONE PERSON WHICH THE D IRECTOR (INV.) HAD FOUND TO BE ENGAGED IN THE BUSINESS OF ACCOMMODATIO N ENTRIES AND ASSESSEE WAS FOUND TO BE THE BENEFICIARY OF THE SAME. ON TH E BASIS OF INVESTIGATION REPORT, THE CASE OF THE ASSESSEE WAS REOPENED. HOW EVER, DESPITE REPEATED OPPORTUNITIES PROVIDED BY A.O. AND LD. CIT(A) THE A SSESSEE DID NOT PRESENT ITSELF WHICH ITSELF PROVES THAT THE ASSESSEE HAD NO ANSWER TO THE QUERY OF THE REVENUE AUTHORITIES. HAD THERE BEEN ANY GENUINE P ROBLEM IN REPRESENTING THE CASE, THE ASSESSEE WOULD HAVE FILED EVIDENCE TO THIS EFFECT. SECTION 68 CLEARLY STATES THAT IF A CREDIT APPEARING IN THE BO OKS OF ACCOUNT OF THE ASSESSEE IS NOT EXPLAINED REGARDING ITS NATURE AND SOURCE THEN THIS AMOUNT WILL BE TREATED AS INCOME OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION REGARDING THIS CASH CREDI T, THEREFORE, A.O. RIGHTLY TREATED IT AS INCOME OF THE ASSESSEE. HENCE, IN TH E PRESENT CASE, THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION REGARDING THIS DEPOSIT. THEREFORE, EXPLANATION I TO SECTION 271(1)(C) COMES INTO PLAY. THE PROVISIONS OF SECTION 271(1)(C) NOT ONLY COVERS THE CASES IN WHIC H ASSESSEE HAS CONCEALED THE INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN CERTAIN SITUATIONS, EVEN WITHOUT THERE BEING ANYTHING TO IN DICATE NOTEWORTHY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES TO PLAY AND IT COVERS THE CASES WHERE THE ASSESSEE DOES NOT OFFER ANY EXPLANA TION FOR ANY MATERIAL CONCERNING THE COMPUTATION OF TOTAL INCOME UNDER TH E PROVISION OF THE ACT. ITA NO.5144/DEL/2013 7 IN THE PRESENT CASE, THE ASSESSEE MISERABLY FAILED TO OFFER AN EXPLANATION FOR THE CASH CREDIT RAISED IN THE FORM OF SHARE APPLICA TION MONEY. THEREFORE, THE CASE OF THE ASSESSEE IS SQUARELY HIT BY THE PROVISI ONS OF SECTION 271(1)(C) OF THE ACT. LD. CIT(A) HAS PASSED AN ELABORATE AND WE LL REASONED SPEAKING ORDER WHEREIN WE DO NOT FIND ANY INFIRMITY. 8. IN VIEW OF ABOVE, APPEAL FILED BY THE ASSESSEE I S DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOV., 2014. SD./- SD./- ( I. C. SUDHIR ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 21SST NOV., 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER