M/S. SAURASHTRA BALL PEN PVT. LTD, MUMBAI V. THE ITO WD 8(3), MUMBAI

ITA 5280/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1610 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-10-2009
• Assessment Year: 1994-1995
• Appeal Filed On: 19-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR U ANJANEYULU
• Assessee Lawyers: S S PAREKH
• Section: 271(1)(c); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH: MUMBAI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V D RAO, JUDICIAL MEMBER ITA NO 5280/MUM/2008 (ASSESSMENT YEAR: 1994-95) SAURASHTRA BALL PEN PVT LTD , C/O NIBS INDIA, A/3 MIRA INDUSTRIAL ESTATE, MIRA ROAD, DIST THANE MUMBAI PAN: AAACS 7658 F VS INCOME TAX OFFICER-WARD 8(3) , MUMBAI APPELLANT RESPONDENT APPELLANT BY: MISS S S PAREKH RESPONDENT BY: DR U ANJANEYULU ORDER PER PRAMOD KUMAR 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT THE CIT (A) WAS JUSTIFIED IN UPHOLDING THE PENA LTY IMPOSED ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 IN RE SPECT OF ADDITION OF RS 3,00,000/- MADE U/S 68 IN RESPECT OF UNEXPLAINED SECURITY DEPO SITS. THE ASSESSMENT YEAR INVOLVED IS 1994-95. 2. THE MATERIAL FACTS GIVING RISE TO THIS APPEAL BE FORE US ARE AS FOLLOWS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G OF PENS, REFILLS AND SKETCH PENS. ON THE COURSE OF ORIGINAL ASSESSMENT PROCEED INGS, AN ADDITION OF RS 7,05,000 WAS MADE ON ACCOUNT OF UNEXPLAINED SECURITY DEPOSIT S. IN APPEAL, THIS ISSUE WAS REMITTED TO THE FILE OF THE ASSESSING OFFICER BUT T HE ASSESSING OFFICER ONCE AGAIN MADE THE ADDITION OF RS 3,95,000 WHICH WAS REDUCED TO RS 3,00,000 BY THE CIT (A). WHEN THE MATTER FINALLY TRAVELLED TO A CO-ORDINATE BENCH OF THIS TRIBUNAL, THE SAID ADDITION WAS CONFIRMED, VIDE ORDER DATED 20TH OCTOB ER 2005, BY OBSERVING AS FOLLOWS:- SAURASHTRA BALL PEN PVT LTD 2 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIALS ON RECORD. WE FIND THAT ALTHOUGH PAN/GIR NUMBERS OF S OME OF THE PARTIES ARE MENTIONED ON PAGE NO. 26 TO 28 OF THE PAPER BOOK; B UT AGAINST NAME OF 11 PARTIES FOR SOME THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER FOR RS 3 LAKHS OF DEPOSITS AND CORRESPONDING INTEREST THEREO N, NO PAN/GIR NUMBER IS AVAILABLE ON PAGE NO.26 TO 28 OF THE PAPER BOOK EXC EPT IN THE CASE OF ONE PARTY I.E. M/S JAMBOO STORES, FOR WHOM ADDITION OF RS 15,000/- FOR DEPOSIT AND OF RS 1,200/- FOR INTEREST WAS MADE BY THE ASSESSIN G OFFICER. BUT HIS CONFIRMATION IS NOT AVAILABLE ON PAGE NO.50 TO 59 O F THE PAPER BOOK. WE FIND THAT AS PER LEDGER COPY OF SUPPLIES TO SOME PARTIES , THERE IS DEBIT BALANCE IN THE CASE OF SOME PARTIES; BUT THIS DOES NOT MEAN TH AT IF THERE IS DEBIT BALANCE OUTSTANDING IN THE NAME OF CUSTOMERS, ANY DEPOSIT S TANDING IN THE NAME OF THE SAME CUSTOMER IN A SEPARATE ACCOUNT HAS TO BE ACCEP TED AS EXPLAINED EVEN WITHOUT HIS CONFIRMATION REGARDING DEPOSIT AND WITH OUT EXAMINATION OF HIS CREDITWORTHINESS OF THESE PARTIES, WE ARE OF THE CO NSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LEARNED CIT (A) ON THIS ISSUE ALSO; AND HENCE, WE DECLINE TO INTERFERE WITH THE SAME. THIS GROUND OF THE ASSESSEE IS ALSO REJECTED. 3. IT IS IN THE ABOVE BACKDROP THAT THE PENALTY U/S 271(1)(C) WAS IMPOSED ON THE ASSESSEE AS EQUIVALENT TO TAX SOUGHT TO BE AVOIDED. THE ASSESSING OFFICER NOTICED THAT THE OUT OF 11 PARTIES, FROM WHOM SECURITY DEPO SIT AGGREGATING TO RS 3,00,000 WAS RECEIVED, PAN/GIR NUMBERS WERE NOT FILED FOR 10 PARTIES, AND, FOR THE REMAINING ONE PARTY, BALANCE CONFIRMATION WAS NOT FILED. THE ASSESSING OFFICER NOTED THAT THE CONTENTIONS OF THE ASSESSEE ARE REJECTED BY THE CIT (A) AS ALSO BY THE ITAT AND THIS SHOWS THAT THERE WAS AN ATTEMPT TO MISLEAD THE DEP ARTMENT AND TO DEFRAUD THE REVENUE. AGGRIEVED BY THE PENALTY SO IMPOSED, ASS ESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. THE CIT (A) CONFIRMED THE PENALTY BY OBSERVING AS FOLLOWS:- 4.2 COMING TO THE ANOTHER AMOUNT OF RS 3,00,000 ON WHICH PENALTY IS LEVIED, THE FACTS IN THIS REGARD IS THAT ORIGINAL A DDITION OF RS 7,50,000 WAS MADE BY THE AO ON ACCOUNT OF DEPOSIT AND FURTHER RS 16,504/- ON ACCOUNT OF INTEREST THEREON. THE LD CIT (A) HAD GIVEN CERTAIN RELIEF. HOWEVER, ADDITION IN RESPECT OF 11 PARTIES IN RESPECT OF WHICH NO EVIDEN CE WAS PRODUCED WAS CONFIRMED. THE APPELLANT FILED APPEAL BEFORE HONB LE ITAT. THE HONBLE ITAT VIDE PARA 14 OF ORDER DATED 20.10.2005 HAS RECORDED ITS FINDING THAT THE ASSESSEE HAS NEITHER SUBMITTED PROPER CONFIRMATIONS OF THESE PARTIES NOR PROVED CREDITWORTHINESS OF THESE PARTIES AND THEREF ORE PROVISION OF SECTION 68 AS INVOKED BY AO AND CONFIRMED BY THE LD CIT (A0 WA S FOUND TO BE JUSTIFIED. BEFORE ME ALSO THE APPELLANT HAVE MADE VARIOUS LEGA L SUBMISSIONS. HOWEVER, THE BASIC ONUS REGARDING GENUINENESS OF THE DEPOSIT S WITHIN THE MEANING OF SECTION 68 HAS NEVER BEEN DISCHARGED. THE APPELLAN T HAD ANOTHER OPPORTUNITY DURING THE PENALTY PROCEEDINGS TO DISCHARGE ITS ONU S. HOWEVER, THE DEPOSITS SAURASHTRA BALL PEN PVT LTD 3 REMAIN UNPROVED. CONSIDERING THE FACTS OF THIS ISS UE, I AM OF THE CONSIDERED OPINION THAT AO HAS RIGHTLY LEVIED PENALTY ON THE D ISALLOWANCE MADE U/S 68 AMOUNTING OF RS 3,00,000/-. PENALTY LEVIED TO THAT EXTENT IS UPHELD. ACCORDINGLY, THE APPELLANT GETS PARTIAL RELIEF. 4. THE ASSESSEE, IS NOT FORTIFIED AND IS IN FURTHER APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE ARE INCLINED TO UPHOLD THE GRIEVANCE OF THE ASSE SSEE. WE HAVE NOTED THAT THE QUANTUM ADDITION HAS BEEN CONFIRMED FOR WANT OF PAN /GIR NOS AND FOR WANT OF CONFIRMATION OF ONE OF THE PARTY. THE PARTIES WHO HAVE GIVEN THESE SECURITY DEPOSITS, AS NOTED IN THE ORDER PASSED BY OUR CO-ORDINATE BEN CH EXTRACTS FROM WHICH ARE REPRODUCED EARLIER HERE, ARE DOING BUSINESS WITH TH E ASSESSEE. THE AMOUNTS DEPOSITED ARE ALSO SMALL AMOUNTS, SUCH AS RS 15,000 FROM JUMBO STORES REFERRED TO IN THE SAID ORDER. ON THESE FACTS, IT CANNOT BE SA ID THAT THE EXPLANATION GIVEN BY THE ASSESSEE, BY WAY OF CONFIRMATIONS OF THE PARTIES EVEN THOUGH WITHOUT PAN/GIR NUMBERS, CAN BE SIMPLY BRUSHED ASIDE AND REJECTED A S ATTEMPT TO DEFRAUD THE REVENUE. IT IS FUTILE TO SUGGEST THAT WHEN ASSESS EE RECEIVES SOMETHING LIKE RS 15,000 FROM A PERSON IN BUSINESS, HE HAS TO ESTABLI SH CREDITWORTHINESS OF SUCH A PERSON AND IN THE ABSENCE OF PAN/GIR NUMBER, ACCEPT ANCE OF SUCH A SECURITY DEPOSITS CAN BE CONSTRUED AS ATTEMPT TO DEFRAUD RE VENUE. IN OUR CONSIDERED VIEW, THE EXPLANATION OF THE ASSESSEE, AT LEAST IN THE PE NALTY PROCEEDINGS, OUGHT TO HAVE BEEN ACCEPTED. WE DO NOT THINK IT WAS A FIT CASE F OR IMPOSITION OF PENALTY. 6. FOR THE REASONS SET OUT ABOVE, WE DIRECT THE ASS ESSING OFFICER TO DELETE THE IMPUGNED PENALTY. THE ASSESSEE GETS THE RELIEF ACC ORDINGLY. 7. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 26TH OCTO BER 2009. SD/- (V D RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATE: 26TH OCTOBER 2009 SAURASHTRA BALL PEN PVT LTD 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -XXIX, MUMBAI. 4) THE CIT8, MUMBAI. 5) THE D.R. E BENCH, ITAT, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI SAURASHTRA BALL PEN PVT LTD 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 26.10.09 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 26.10.09 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 SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER