M/s B.K, Jagan & Co., Chandigarh V. ITO, Chandigarh

ITA 552/CHANDI/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7782 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1996-1997
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 552 TO 554/CHD/2012 A.Y. 1996-97, 1997-98 & 1998-99 M/S B.K.JAGAN & CO., V ITO, WARD 4(2), SCO 48, SECTOR 28-C, CHANDIGARH. CHANDIGARH. PAN: AABFB-1197L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.R.SHARMA RESPONDENT : SMT.JAISHREE SHARMA DATE OF HEARING : 10.07.2012 DATE OF PRONOUNCEMENT : 27.7.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEALS BY THE SAME ASSESSEE, HAVE BEEN FILED AGAINST THE ORDER DATED 17.02.2012 PASSED BY THE LD. CIT(A) CHANDIGARH U/S 250(6) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THESE APPEALS ARE BEING TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN ITA NO. 552/CHD/2012, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO THE LEVY OF PENALTY ON THE AMOUNT OF RS. 18,000/- BEING THE AMOUNT OF DISALLOW ANCE OF SALARY PAID MADE S BAD IN LAW AND NEEDS TO BE SET ASIDE. 2. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO THE LEVY OF PENALTY ON THE AMOUNT OF RS. 28,000/- BEING THE AMOUNT OF UNEXPLAI NED CASH .CREDITS IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS BAD IN L AW AND NEEDS TO BE SET ASIDE. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DEL ETE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME IS DECIDED. 2 3. IN ITA NO. 553/CHD/2012, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO THE LEVY OF PENALTY ON THE AMOUNT OF RS. 56,000/- BEING THE AMOUNT OF DISALLOW ANCE OF SALARY PAID MADE S BAD IN LAW AND NEEDS TO BE SET ASIDE. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELE TE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME IS DECIDED. 4. IN ITA NO. 554/CHD/2012, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1 . THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO THE LEVY OF PENALTY ON THE AMOUNT OF RS. 48,000/- BEING THE AMOUNT OF DISALLOW ANCE OF SALARY PAID MADE S BAD IN LAW AND NEEDS TO BE SET ASIDE. 2. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE COMMISSIONER OF INCOME TAX (APPEALS) WITH REGARD TO THE LEVY OF PENALTY ON THE AMOUNT OF RS. 10,500/- BEING THE AMOUNT OF UNEXPLAI NED CASH .CREDITS IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS BAD IN L AW AND NEEDS TO BE SET ASIDE.. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELETE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME IS DECIDED. 5. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'AR' STATED THAT THERE IS COMMON GROUND OF APPEAL IN ALL THESE APPEALS, AGAINST UPHOLDING OF PENALTY U/S 271(1)(C) OF THE ACT, IN RESPECT OF DISALLOWANCE OF SALARY AND UNEXP LAINED CASH CREDITS. LD. 'AR' CONTENDED THAT THE DISALLOW ANCE MADE AND UPHELD BY THE CIT(A), WAS ERRONEOUS AND CANNOT BE TAKEN AS ABSOLUTE GROUND FOR LEVY OF PENALTY. THE ADDITION IN THE FORM OF DISALLOWANCE OF SALARY IS NOT AN ITE M OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. SIMILARLY, THE A MOUNT OF CASH CREDIT, ADDED ON THE FOUNDATION OF ..CREDIT SYSTEM IS ALSO NOT A FIT ITEM WHICH DESERVES A LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT. 3 6. LD. 'DR' PLACED RELIANCE ON THE ORDER OF THE CIT (A) AND AO. 7. THE BRIEF FACTS OF THE CASE ARE THAT CERTAIN ADD ITIONS WERE MADE AT THE TIME OF ASSESSMENT AND OUT OF THE ADDITIONS MADE, FOLLOWING ADDITIONS WERE CONFIRMED BY THE CIT(A), CHANDIGARH IN THE APPEAL FILED BY THE APPEL LANT AGAINST THE SET-ASIDE ASSESSMENT: I) ON ACCOUNT OF VARIOUS DISCREPANCIES RS.50,000/ - II) SALARY TO SHRI RAMAN SINGHAL RS.18,000/- III) UNEXPLAINED CASH CREDIT RS.28,000/- THE AO INITIATED CONCEALMENT PENALTY U/S 271(1)(C) OF THE ACT AT THE TIME OF ASSESSMENT. SUBSEQUENTLY, IN THE PENALTY PROCEEDINGS, THE APPELLANT HAD FILED A REPLY, BUT A O WAS NOT SATISFIED AND HE IMPOSED MINIMUM PENALTY OF RS.42,7 56/- U/S 271(1)(C) OF THE ACT. 8. IN THE COURSE OF ASSESSMENT PROCEEDINGS, BEFORE CIT(A), THE ASSESSEE FILED WRITTEN SUBMISSIONS AND PLACED R ELIANCE ON THE ORDER OF THE HON'BLE SUPREME COURT IN THE CA SE OF ASHOK Z.PAI V CIT 291 ITR 11 & DILIP N. SHROFF 291 ITR 519 AND OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF HARYANA WAREHOUSING CORPORATION 314 ITR 215. LD. C IT(A), ON APPRECIATION OF THE FACTUAL MATRIX OF THE CASE, DELETED THE PENALTY LEVIED IN RESPECT OF ADDITION MADE OF RS.50 ,000/- ON ACCOUNT OF VARIOUS DISCREPANCIES BY FOLLOWING THE D ECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HARGOPAL SINGH 258 ITR 85. HOWEVER, LD. CIT(A) UPH ELD THE PENALTY IN RESPECT OF ADDITION OF RS.18,000/- ON AC COUNT OF 4 SALARY AND ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS.28,000/-. NEEDLESS TO SAY THAT IT IS AN ESTABLI SHED PROPOSITION OF LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DIFFERENT IN NATURE AND INDEPENDENT OF EACH OTHER. THE PROOF AND ITS DEGREE WITH REFERENCE TO ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDIN GS, ARE DIFFERENT IN NATURE. MERE DISALLOWANCE WOULD NOT L EAD TO THE FACTUM OF CONCEALMENT OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THEREFORE, HAVING RE GARD TO THE FACT-SITUATION OF THE PRESENT CASE, THE PENALTY UPH ELD BY THE CIT(A), IN RESPECT OF THESE TWO ITEMS ARE DELETED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA N O. 552/CHD/2012 IS ALLOWED. 10. IN VIEW OF THE FINDINGS IN ITA NO.552/CHD/2012, APPEALS OF THE ASSESSEE IN ITA NO. 553 AND 554/CHD/ 2012 ARE ALSO ALLOWED. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH JULY,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH