The ITO, Ward-1(1), Bhavnagar V. Shri Shamjibhai Talshibhai Sutariya, Bhavnagar

ITA 539/AHD/2010

• Counselvise Citation: 53920514 RSA 2010
• Duration Of Justice: 2 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Keywords: Unexplained cash credit; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO. 538 & 539/ AHD/2010 (ASSESSMENT YEAR 2006-07) ITO, WARD 1(1), BHAVNAGAR VS. SHRI SHAMJIBHAI TALSHIBHAI SUTARIA, 4, VITHALWADI, UDYOGNAGAR, BHAVNAGAR PAN/GIR NO. : AFHPS6272E (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI T SHANKAR, SR. DR RESPONDENT BY: NONE DATE OF HEARING: 30.08.212 DATE OF PRONOUNCEMENT: 05.10.2012 O R D E R PER SHRI A. K. GARODIA, AM:- BOTH THESE APPEALS ARE FILED BY THE REVENUE IN THE CASE OF THE SAME ASSESSEE FOR THE SAME ASSESSMENT YEAR I.E. ASSESSME NT YEAR 2006-07. THE FIRST APPEAL IS IN THE CASE OF QUANTUM PROCEEDINGS I.E. I.T.A.NO. 538/AHD/2010 DIRECTED AGAINST THE ORDER OF LD. CIT( A) XX, AHMEDABAD DATED 12.11.2009 AND THE 2 ND APPEALS IN I.T.A.NO. 539/AHD/2010 IS IN THE CASE OF PENALTY PROCEEDINGS BEING PENALTY IMPOSED B Y THE A.O. U/S 271(1)(C) AND THIS APPEAL IS DIRECTED AGAINST A SEP ARATE ORDER OF THE SAME CIT(A) DATED 12.11.2009. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. I.T.A.NO.538,538 /AHD/2010 2 2. ON 14.06.2012 AS PER THE REQUEST OF THE LD. A.R. DATED 13.06.2012, THE HEARING WAS ADJOURNED TO 30.08.2012 AND THIS DA TE OF HEARING WAS PRONOUNCED IN THE COURT ON THAT DATE. IN SPITE OF THIS, NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPOINTED DATE OF HEA RING I.E. 30.08.2012 AND NO REQUEST FOR ADJOURNMENT HAS BEEN RECEIVED AN D HENCE, WE PROCEED TO DECIDE THESE APPEALS OF THE REVENUE EX-PARTE QUA THE ASSESSEE. 3. FIRST, WE TAKE UP THE QUANTUM APPEAL IN I.T.A.NO . 538/AHD/2010. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL AR E AS UNDER: 1. 'THE LD, CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.21,11,000/- MA DE U/S. 68 OF THE I.T. ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS, WI THOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO, 1.2 IN DOING SO, THE LD. CIT(A) HAS ERRED IN LA W AND ON FACTS IN NOT APPRECIATING THAT IN THE BANK ACCOUNTS OF THE 1 2 HUFS FROM WHOM THE SAID AMOUNT WAS CLAIMED TO HAVE BEEN RECEI VED BY THE ASSESSEE, CASH WAS DEPOSITED BEFORE ADVANCING THE A MOUNTS BY CHEQUE TO THE ASSESSEE AND THE ASSESSEE FAILED TO E STABLISH THE CREDITWORTHINESS OF THESE CREDITORS BEFORE THE AO A S WELL AS THE GENUINENESS OF THE TRANSACTIONS, 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O, , 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF A.O. BE RESTORED TO THE ABOVE EXT ENT. 4. LD. D.R. SUPPORTED THE ASSESSMENT ORDER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D. R. AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND T HAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA 7 OF THE IMPUGNED ORDER, WHICH IS REPRODUCED BELOW: 7. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R, SUBMISSIONS, CASE LAWS RELIED UPON AND ARGUMENTS OF THE ID. COUNSEL OF THE APPELLANT. FROM THE EVIDENCES ON REC ORD, IT IS VERY DEAR THAT THE APPELLANT RECEIVED A LOAN OF RS.21,11 ,000/- FROM HIS I.T.A.NO.538,538 /AHD/2010 3 HUF THROUGH ACCOUNT PAYEE CHEQUES. ALSO IT IS CLARI FIED THAT THE SAID HUF HAD RECEIVED THIS MONEY FROM 12 DIFFERENT HUFS, ALSO THROUGH ACCOUNT PAYEE CHEQUES. I FIND THAT THE APPE LLANT HAS PLACED ON RECORD THE CONFIRMATION OF HIS HUF, THE DETAILS OF THE BANK ACCOUNT OF HIS .HUF ALONG WITH DETAILS OF LAND HOLD INGS VIZ. EXTRACTS OF 7/12 AND 8A DETAILS. THE APPELLANT HAS ALSO PLACED ON RECORD THE CONFIRMATIONS, DETAILS OF THE BANK ACCOU NT ALONG WITH DETAILS OF LAND HOLDINGS VIZ. EXTRACTS OF 7/12 AND 8A OF THE 12 HUFS WHO HAD ADVANCED MONEY TO THE APPELLANT'S HUF. SO IN THE PRESENT CASE, THE APPELLANT HAS NOT ONLY PROVED THE IMMEDIATE SOURCE OF THE CREDIT BUT ALSO THE SOURCE OF THE SOU RCE. ALL THE TRANSACTIONS ARE THROUGH ACCOUNT PAYEE CHEQUES AND ALL THE PERSONS HAVE CONFIRMED HAVING ADVANCED THE LOAN AND ALL OF THEM WERE HAVING SUFFICIENT LAND HOLDINGS TO JUSTIFY THE AMOU NT ADVANCED BY THEM. SINCE, IN THE FACTS AND CIRCUMSTANCES, WHEN A LL THE INGREDIENTS ARE PROVED WITH DOCUMENTARY EVIDENCES, KEEPING IN VIEW THE RATIO LAID DOWN IN THE QUOTED DECISIONS, I HOLD THAT THE ADDITION MADE U/S.68 OF THE ACT BY THE AO IS NOT JU STIFIED. RESPECTFULLY FOLLOWING THESE DECISIONS, PARTICULARL Y THE DECISIONS OF HON'BLE GUJARAT HIGH COURT IN THE CASES OF PRAGA TI CO-OP. BANK (SUPRA) AND MURLIDHAR LAHORIMAL (SUPRA). RESPECTFUL LY FOLLOWING THESE DECISIONS, I HEREBY DIRECT THE AO TO DELETE T HE ADDITION OF RS.21,11,000/- MADE U/S 68 OF THE ACT. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 6. FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A), WE FIND THAT THE ASSESSEE HAD PLACED ON RECORD THE CONFIRMATION OF H UF, DETAILS OF BANK ACCOUNT ALONG WITH DETAILS OF LAND HOLDING AS PER 7 /12 AND 8A DETAILS. IT IS ALSO NOTED BY LD. CIT(A) THAT THE ASSESSEE HAS A LSO PLACED ON RECORD THE CONFIRMATION, DETAILS OF BANK ACCOUNT ALONG WIT H DETAILS OF LAND HOLDING OF 12 HUFS WHO HAD ADVANCED MONEY TO THE AS SESSEE HUF. ON THE BASIS OF THESE FACTS, THIS FINDING IS GIVEN BY LD. CIT(A) THAT THE ASSESSEE HAS NOT ONLY PROVED THE IMMEDIATE SOURCE O F THE CREDIT BUT ALSO THE SOURCE OF THE SOURCE. LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JUDGEMENT OF HONBLE GUJA RAT HIGH COURT RENDERED IN THE CASE OF PRAGATI COOPERATIVE BANK AS REPORTED IN 278 ITR I.T.A.NO.538,538 /AHD/2010 4 170. LD. D.R. COULD NOT CONTROVERT THESE FINDINGS OF LD. CIT(A) AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN TH E ORDER OF LD. CIT(A) ON THIS ISSUE. 7. IN THE RESULT, QUANTUM APPEAL OF THE REVENUE IS DISMISSED. 8. NOW, WE TAKE THE REVENUES APPEAL IN RESPECT OF PENALTY PROCEEDINGS I.E. I.T.A.NO. 539/AHD/2010. THE GROUN DS RAISED BY THE REVENUE ARE AS UNDER: 1. THE LD, CIT(A)-XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN CANCELING THE PENALTY OF RS.5,72,000/- LEV IED U/S. 271E OF THE I.T. ACT, 1961, WITHOUT PROPERLY APPRECIATING T HE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. 1.2 IN DOING SO, THE LD, CIT(A) HAS ERRED IN LA W AND ON FACTS IN NOT APPRECIATING THE UNDERLYING INTENTION BEHIND IN TRODUCTION OF SECTION 269T WHICH IS TO DISCOURAGE TRANSACTIONS MA DE IN CASH OF DEPOSIT OR LOAN AND/OR REPAYMENT THEREOF IN ORDER TO CURB THE MENACE OF INTRODUCING ONE'S OWN UNACCOUNTED MONEY IN THE GARB OF CASH TRANSACTIONS, 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF A.O. BE RESTORED TO THE ABOVE EXT ENT. 9. FOR THIS APPEAL ALSO, LD. D.R. SUPPORTED THE PEN ALTY ORDER. HE ALSO SUBMITTED THAT LD. CIT(A) HAS DELETED THIS PENALTY AS PER PARA 6 OF HIS ORDER ON THIS BASIS THAT OUT OF 11 PERSONS, 4 PERSO NS WERE NOT HAVING ANY BANK ACCOUNT AND, THEREFORE, THEY WERE REQUIRED TO BE PAID IN CASH ONLY. HE ALSO SUBMITTED THAT THIS IS ALSO A BASIS OF CIT( A)S ORDER THAT THESE PERSONS WERE RESIDING IN SMALL VILLAGES AND NEAREST BANK WAS SITUATED ABOUT 15 KM AWAY FROM THEIR VILLAGES AND, THEREFORE , THERE WAS REASONABLE CAUSE FOR REPAYMENT IN CASH. IT IS FURTHER SUBMITT ED THAT SINCE IN QUANTUM PROCEEDINGS, THIS IS A FINDING GIVEN BY LD. CIT(A) THAT ALL THESE 11 PERSONS HAVE GIVEN MONEY TO THE ASSESSEE BY WAY OF A/C PAYEE CHEQUE, IT I.T.A.NO.538,538 /AHD/2010 5 CANNOT BE ACCEPTED THAT THESE PERSONS WERE NOT HOLD ING BANK ACCOUNTS AND REPAYMENT COULD NOT BE MADE BY A/C PAYEE CHEQUES. HE SUBMITTED THAT THIS ORDER OF LD. CIT(A) SHOULD BE REVERSED AND THA T OF THE A.O. SHOULD BE RESTORED. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D .R. AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND TH AT IN THE QUANTUM PROCEEDINGS, THE NAMES OF VARIOUS HUFS FORM WHOM TH E MONEY WAS RECEIVED BY THE ASSESSEE AS PER PAGE 3 -4 OF THE AS SESSMENT ORDER ARE AS UNDER: 1. BHIKHABHAI KURJIBHAI 2. JANAKBHAI MANJIBHAI 3. JIVRAJBHAI KURJIBHAI 4. KISHORBHAI MANJIBHAI 5. LXMANBHAI KURJIBHAI 6. MANJIBHAI KURJIBHAI 7. ODHAVBHAI KURJIBHAI 8. PAARESHBHAI LAXMANBHAI 9. SUESHBHAI TALSHIBHAI 10. TALSHIBHAI KURJIBHAI 11. VINODBHAI BHIKHABHAI 11. AS PER PARA 8 OF THE ASSESSMENT ORDER, REPAYMEN T IN CASH WAS MADE TO THE FOLLOWING 11 HUFS: 1. VALLABHBHAI KALYANBHAI 2. BABUBHAI HIRJIBHAI 3. KALYANBHAI GANESHBHAI 4. BABUBHAI PARSHOTTAMBHAI 5. HARIBHAI LAXMANBHAI 6. KARAMASHIBHI GOPALBHAI 7. GOVINDBHAI NARHSIBHAI 8. KALUBHAI GANESHBHAI 9. GORDHANBHAI KANJIBHAI 10. TALSHIBHAI ZAVERBHAI 11. KHIMJIBHAI LAXMANBHAI I.T.A.NO.538,538 /AHD/2010 6 12. FROM THE ABOVE TWO LISTS OF NAMES, IT IS CLEAR THAT THE NAMES ARE NOT THE SAME REGARDING RECEIPT OF LOAN BY CHEQUES AND R EPAYMENT OF LOANS IN CASH. IN VIEW OF THIS FACT, THIS ARGUMENT OF LD. D .R. IS NOT VALID THAT WHEN THE PERSONS ARE HAVING BANK ACCOUNT AT THE TIM E OF GIVING THE MONEY TO THE ASSESSEE, HOW THEY WERE NOT HAVING BAN K ACCOUNT WHEN REPAYMENT WAS MADE TO THEM. A CLEAR FINDING IS GIV EN BY LD. CIT(A) THAT THESE PERSONS WERE RESIDING IN SMALL VILLAGES AND THE NEAREST BANK WAS SITUATED ABOUT 15 KM AWAY FROM THEIR VILLAGES. HE HAS ALSO GIVEN A FINDING THAT OUT OF 11 PERSONS, 4 PERSONS WERE NOT HAVING BY BANK ACCOUNT AND ONE PERSON HAD EXPIRED AND, THEREFORE, THE ASSE SSEE WAS COMPELLED TO MAKE REPAYMENT IN CASH TO HIS LEGAL HEIRS ON THEIR REQUEST. REGARDING THE REMAINING 6 PERSONS, HE HAS GIVEN FINDING THAT THEY WERE RESIDING IN THE VILLAGES WHERE NO BANK AND BANKING FACILITIES WERE AVAILABLE TO THEM AND THE ASSESSEE HAS REPAID IN CASH TO THEM. THESE FIN DINGS OF LD. CIT(A) COULD NOT BE CONTROVERTED BY THE REVENUE AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). 13. IN THE RESULT, THE PENALTY APPEAL OF THE REVENU E IS ALSO DISMISSED. 14. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 15. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO.538,538 /AHD/2010 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 19.09/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25/09/2012.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 05/10/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.9/10/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09.10.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .