ACIT, UDAIPUR V. Hanuman Singh Hitendra Tak Ritesh, SUMERPUR

ITA 554/JODH/2008

• Counselvise Citation: 55423314 RSA 2008
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-09-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MN MO RYA
• Keywords: Unexplained cash credit
• Section: 43B; 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (JODH[PUR BENCH: JODHPUR) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 554/JDP/2008 ASSESSMENT YEAR: 2005-06 ASSISTANT COMMISSIONER OF IT, VS. HANUMAN SINGH HI TENDRA TAK CIRC-2, RITESH SUWALKA & PARTY, UDAIPUR. UDAIPUR-RAJSAMAND GROUP, 318, BHUPALPURA, UDAIPUR. (PAN:AAAAH1475P) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI MN MO RYA, DR RESPONDENT BY: NONE ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 17.07.2008 PASSED FOR ASSESSMENT YEAR 2005-06. THE GRIEVANCE OF THE REVENUE IS THAT LEARNED CIT(APPEAL S) HAS ERRED IN RESTRICTING THE PENALTY LEVIED UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT, 1961 TO RS.67,500 AS AGAINST RS.9,35,000 IMPOSED BY THE ASSESSING OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN AOP. IT DERIVES INCOME FROM SALE OF COUNTRY MADE LIQUOR, IMFL/BEAR. IT HAS FILED ITS RETURN OF INCOME ON 31 ST OCTOBER, 2005 DECLARING TOTAL INCOME OF RS.26,22,8 70. AN ASSESSMENT WAS FRAMED UNDER SEC. 143(3) ON 29.3.200 7. ASSESSING OFFICER HAS DETERMINED THE INCOME OF THE ASSESSEE AT RS.80, 11,890. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT REVEALED THAT AS PER BALANCE SHEET, THERE 2 WAS AN AMOUNT OF RS.24,90,679 AS SALES-TAX DUES. TH E ASSESSEE HAD PAID SALES-TAX OF RS.18,97,390 ON 28.3.2006, 22.4.2006 A ND 25.4.2006. IT HAS NOT PAID A SUM OF RS.6,18,689. THE ASSESSEE HAS CLAIMED TOTAL AMOUNT OF RS.24,90,679. ASSESSING OFFICER WAS OF THE OPINION THAT THE AMOUNT WHICH WAS PAID BY THE ASSESSEE WAS NOT PAID BEFORE THE DU E DATE OF FILING OF THE RETURN, THEREFORE, ASSESSEE COULD NOT CLAIM THE DED UCTION OF SUCH SALES-TAX DUES UNDER SEC. 43B OF THE ACT. ASSESSING OFFICER, IN THIS WAY DISALLOWED A SUM OF RS.24,96,679. 3. THE NEXT ITEM WHICH HAS BEEN CONSIDERED FOR VISI TING THE ASSESSEE WITH PENALTY, IS AN ADDITION OF RS. 10 LACS. ON SCR UTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT A LOAN OF RS .10 LACS IS APPEARING. THE ASSESSEE HAS CONTENDED THAT RS. 8 LACS IS THE OPENI NG BALANCE AND RS. 2 LACS HAS BEEN TAKEN FRESH IN THIS YEAR. HOWEVER, IT COUL D NOT PROVE THE INGREDIENTS OF SECTION 68 I.E. GENUINENESS OF THE TRANSACTION, CREDITWORTHINESS OF THE CREDITORS. ASSESSING OFFICER HAS MADE THE ADDITION OF RS.10 LACS. ASSESSING OFFICER HAD INITIATED THE PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT AND ISSUED A NOTICE UNDER SEC. 274 READ WITH SEC. 2 71(1)(C) WHEREBY HE INVITED THE EXPLANATION OF THE ASSESSEE AS TO WHY P ENALTY UNDER SEC. 271(1)(C) BE NOT IMPOSED FOR CONCEALMENT OF INCOME BY FILING INACCURATE PARTICULARS. THE ASSESSEE DID NOT FILE ANY REPLY TO THE SHOW-CAUSE NOTICE 3 ISSUED BY THE ASSESSING OFFICER IN THE PENALTY PROC EEDINGS. ASSESSING OFFICER HAS OBSERVED THAT SALES-TAX DUES WERE NOT P AID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF THE RETURN, THEREFORE, DE DUCTION IN RESPECT OF SALES- TAX WAS NOT ALLOWABLE UNDER SEC. 43B OF THE ACT. TH E AUDITOR WHO WAS AWARE THAT THERE WAS UNPAID LIABILITY AS ON 31.3.2005 OF THE SALES-TAX AND NOT DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETU RN WAS REQUIRED TO ADD BACK IN THE TOTAL INCOME OF THE ASSESSEE. HE SHOULD HAVE SHOWN THIS ASPECT IN COL. NO.21 OF FORM NO.3CD I.E. THE AUDIT REPORT BUT NEIT HER THIS AMOUNT WAS ADDED BACK IN THE TOTAL INCOME NOR IT WAS REPORTED IN THE AUDIT REPORT. THUS, ACCORDING TO THE ASSESSING OFFICER, IT IS A DELIBER ATE ATTEMPT AT THE END OF THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS IN O RDER TO CONCEAL THE INCOME. 4. WITH REGARD TO THE UNEXPLAINED CASH CREDITS, ASS ESSING OFFICER HAS OBSERVED THAT AN ADDITION OF RS.2 LACS IN RESPECT O F FRESH CREDITS INTRODUCED IN THE BOOKS HAS BEEN CONFIRMED BY THE LEARNED CIT( APPEALS). ASSESSEE FAILED TO GIVE ANY REPLY TO THE QUERY PUT BY HIM. H E IMPOSED A PENALTY OF RS.9,35,000. 5. ON APPEAL, LEARNED CIT(APPEALS) HAS DELETED THE PENALTY QUA THE ADDITION MADE UNDER SECTION 43B OF THE ACT. LEARNED CIT(APPEALS) IS OF THE OPINION THAT AS FAR AS DISALLOWANCE OF RS.24,90,679 UNDER SEC. 43B IS CONCERNED, ASSESSEE HAS PAID THE AMOUNT TO THE STAT E EXCHEQUER IN 4 SUCCEEDING YEAR. IT HAS CLAIMED THE DEDUCTION IN TH IS YEAR ITSELF BECAUSE THERE WAS NO BUSINESS OR INCOME IN THE SUCCEEDING Y EAR. LEARNED CIT(APPEALS) FURTHER OBSERVED THAT THE ASSESSEE DIS CLOSED ALL PARTICULARS IN RESPECT OF THE SALES-TAX DUES. HENCE, IT CANNOT BE BRANDED THAT IT HAS FURNISHED INACCURATE PARTICULARS WHICH LEAD TO CONC EALMENT OF INCOME. WITH REGARD TO THE ADDITION OF RS.2 LACS, LEARNED FIRST APPELLATE AUTHORITY HAS CONFIRMED THE PENALTY. 6. IN RESPONSE TO THE NOTICE OF HEARING, NO ONE HAS COME PRESENT, BUT SHRI KC MOONDRA, MOVED AN APPLICATION FOR AN ADJOURNMENT ON THE GROUND THAT HE IS NOT WELL AND THE DOCTOR HAS ADVISED HIM A BED REST. FROM THE RECORD, WE FIND THAT IN THE PAST, SHRI KC MOONDRA HAS SOUGHT N UMBER OF ADJOURNMENTS FOR THE ONE OR THE OTHER REASONS. HE HAS NOT FILED ANY MEDICAL PRESCRIPTION ALONG WITH THE ADJOURNMENT APPLICATION. CONSIDERING THE RECORD AND THE NUMBER OF ADJOURNMENTS TAKEN BY THE ASSESSEE IN THE PAST, WE DO NOT SEE ANY REASON TO ADJOURN THE HEARING. 7. WITH THE ASSISTANCE OF LEARNED DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY AND PROCEED TO DECIDE THE APPEAL EX PARTE QUA THE ASSESSEE. 8. LEARNED DR WHILE IMPUGNING THE ORDER OF LEARNED CIT(APPEALS) SUBMITTED THAT ADMITTEDLY SALES-TAX DUES WERE NOT P AID BY THE ASSESSEE BEFORE 5 THE DUE DATE OF FILING OF THE RETURN. IT IS SUCH AN ELEMENTARY ISSUE WHICH CANNOT ESCAPE THE ATTENTION OF ANY TAX CONSULTANT T HAT UNPAID SALES-TAX LIABILITY WOULD REQUIRE TO BE ADDED BACK IN THE INC OME. IT CANNOT BE CLAIMED AS A DEDUCTION IN VIEW OF SEC. 43B WHICH IS NOT A N EW PROVISION, IT IS QUITE OLD ONE. BY MAKING A CLAIM OF SUCH AN ITEM, ASSESSE E HAS MADE A DELIBERATE ATTEMPT TO CLAIM A DEDUCTION WHICH IS PRIMA FACIE N OT ADMISSIBLE. IT IS AKIN TO THE FACT THAT SOMEBODY CLAIMED THE DEDUCTION OF INC OME-TAX PAID BY HIM. HE RELIED UPON THE PENALTY ORDER AND PRAYED THAT THE O RDER OF LEARNED CIT(APPEALS) BE SET ASIDE. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE ACT HAS A DIRECT BEARING ON THE CONTROVERSY AND, THEREFORE, IT IS SALUTARY UPON US TO TAKE NOTE OF THE RELEVANT PROVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANAT ION 1 WHICH READ 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. 6 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 OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER(APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED. 10. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED 7 INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUA NTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION C AN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERTAIN SITUATION, EVEN WITHOUT THERE BEING ANYTHIN G TO INDICATE SO, STATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INT O PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)( C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FAC TS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISION S OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OF FERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARN ED CIT(APPEALS); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPU TATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NO T ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SU CH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS R ELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UN DER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAYA IF THE ASSESSEE FAILED TO GIVE ANY 8 EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO TH E COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEE MING FICTION 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 IN COME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANA TION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. T HESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1 )(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN T HE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUT ING THE TOTAL INCOME OF THE ASSESSEE, FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCUR ATE PARTICULARS HAVE BEEN FURNISHED. 11. ON PERUSAL OF THE PENALTY ORDER, IT REVEALED TH AT IN THE AUDIT REPORT, ASSESSEE HAS NOT SHOWN THE UNPAID LIABILITY WHICH D ESERVES TO BE DISALLOWED UNDER SEC. 43B. ASSESSING OFFICER HAS MENTIONED THA T AT COL. NO.21 OF FORM NO,3CD, THE AUDITOR OUGHT TO HAVE MAKE A MENTION AB OUT THE SALES-TAX LIABILITY WHICH WAS NOT PAID AND DUE ON THE DATE WH EN HE CERTIFIED HIS AUDIT 9 REPORT. HE HAS SHOWN THE LIABILITY AS NIL. ASSESSEE WAS AWARE ABOUT THE FACT THAT LIABILITY HAS NOT BEEN DISCHARGED AND ITS DEDU CTION CANNOT BE CLAIMED. INSPITE OF ALL THESE FACTS, IT HAS CLAIMED THE DEDU CTION. TO OUR MIND, THIS IS A BRAZEN ATTEMPT TO CLAIM AN ITEM WHICH IS PRIMA FACI E NOT ALLOWABLE TO THE ASSESSEE IN VIEW OF SECTION 43B OF THE ACT. IT CANN OT BE A POSSIBLE HUMAN ERROR, THEREFORE, ASSESSEE HAS KNOWINGLY CLAIMED TH E DEDUCTION OF AN ITEM WHICH IS NOT ADMISSIBLE TO IT. LEARNED CIT(APPEALS) HAS OBSERVED THAT ASSESSEE HAS DISCLOSED ALL THE PARTICULARS IN RESPE CT OF SALE-TAX DUES. WHAT PARTICULARS ASSESSEE HAS DISCLOSED? IT SHOULD HAVE ACTED IN ACCORDANCE WITH THE REQUIREMENT OF LAW. IT HAS SHOWN THE SALE-TAX L IABILITY AS NIL IN ITS AUDITED ACCOUNT WHICH SUGGEST THAT INACCURATE ACCOUNTS WERE FURNISHED BY THE ASSESSEE. TAKING INTO CONSIDERATION ALL THE FACTS A ND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEA LS) HAS ERRED IN DELETING THE PENALTY. WE SET AIDE THE FINDING OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THAT OF ASSESSING OFFICER. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 29.08.201 1 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29/08/2011 MOHAN LAL 10 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR