Jay Jalaram Motors, Anand V. The Income tax Officer,Ward-2, Anand

ITA 561/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94669 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Unexplained cash credit; Wrong claim; Bad and doubtful debts; Third party statement
• Section: 143(3); 68; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 561/AHD/2012 (ASSESSMENT YEAR: 2005-06) M/S. JAY JALARAM MOTORS CHIKHODRA CHOKDI, AT & POST:-ANAND V/S INCOME TAX OFFICER, WARD- 2, ANAND (APPELLANT) (RESPONDENT) PAN: AABFJ4169Q APPELLANT BY : NONE RESPONDENT BY : SHRI DINESH SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 20-10-201 5 DATE OF PRONOUNCEMENT : 29 -10-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-IV, BARODA DATED 07.12.2011 FOR A.Y. 2005-06. ITA NO 561/A HD/2012 . A.Y. 2005-06 2 2. IN THIS CASE, NONE APPEARED ON BEHALF OF ASSESSEE T HOUGH THE NOTICE OF HEARING WAS SERVED ONASSESSEE. WE THEREFORE PROCEED TO DECIDE THE APPEAL, EX PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF TRADING AUTO RICKSHAWS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2005-06 ON 31.10.2005 DECLARING TOTAL INCOME AT RS. 8,47,310/- . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) VIDE ORDER DATED 11.12.2007 AND THE TOTAL INCOME WA S DETERMINED AT RS. 42,16,824/- INTERALIA BY MAKING ADDITION OF RS. 5 L ACS U/S. 68 AND DISALLOWING THE CLAIM OF BAD DEBTS. ON THE ADDITION OF RS. 5 LACS MADE U/S. 68 AND THE DISALLOWANCE OF BAD DEBTS OF RS. 96,254/ -, A.O VIDE ORDER DATED 30.03.2010 HELD THAT ASSESSEE HAD FURNISHED INACCUR ATE PARTICULARS OF INCOME AND WAS THEREFORE LIABLE FOR PENALTY U/S. 27 1(1)(C) AND ACCORDINGLY LEVIED PENALTY OF RS. 2,18,183/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 07.12.2011 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HA S RAISED THE FOLLOWING GROUND:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV , BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY LEVIED BY INCOME TAX OF FICER, WARD-2, ANAND OF RS. 2,18,183/- U/S. 271(1)(C) OF THE I.T. ACT, 1961. ITA NO 561/A HD/2012 . A.Y. 2005-06 3 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD TAKEN LOAN OF RS. 5 LACS FROM RAVINDRABHAI JASHBHAI PATEL. ASSESSEE WAS ASKED TO PROVE THE IDENTITY, CREDITWORTHINESS AND G ENUINENESS OF THE LOAN TO WHICH IT WAS SUBMITTED THAT JASHBHAI PATEL HAD AGRI CULTURAL INCOME AND SUBMITTED HIS BANK STATEMENT ALONG WITH THE COPY OF 8A AND 7/12 EXTRACT. A.O WAS OF THE VIEW THAT MERELY HOLDING OF LAND DOE S NOT PROVE THE GENERATION OF AGRICULTURAL INCOME AND THE PERUSAL O F BANK ACCOUNT SHOWED ONLY CASH DEPOSITS AND SUBSEQUENT TRANSFER TO ASSES SEES ACCOUNT. HE ACCORDINGLY HELD THAT ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF LOAN OF RS. 5 LACS AS THE SOURCE OF CASH DEPOSITS I NTO THE BANK ACCOUNT REMAINED UNEXPLAINED AND ACCORDINGLY ADDITION WAS M ADE U/S. 68. WITH RESPECT TO THE CLAIM OF BAD DEBTS OF RS. 1,72,733/- , A.O NOTED THAT ASSESSEE HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE OF ITS C LAIM OF BAD DEBTS WHICH WERE WRITTEN OFF AND WHICH WERE OUT OF THE SALES MA DE DURING THE YEAR. HE ACCORDINGLY DISALLOWED THE CLAIM OF BAD DEBTS OF RS . 1,72,733/-. IN APPEAL BEFORE LD. CIT(A), ASSESSEE WAS GRANTED RELIEF ON I TS CLAIM OF BAD DEBTS TO THE EXTENT OF RS. 76,479/- ONLY AND THE BALANCE ADD ITION OF RS. 96,254/- WAS CONFIRMED BY LD. CIT(A). ON THE AFORESAID TWO ADDIT IONS NAMELY ADDITION OF RS. 5 LACS U/S. 68 AND OF RS. 96,254/- OF DISALLOWA NCE OF CLAIM OF BAD DEBTS, PENALTY U/S. 271(1)(C) WAS LEVIED BY A.O WHICH WAS ALSO CONFIRMED BY LD. CIT(A) VIDE ORDER DATED 07.12.2011.AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. BEFORE US, LD . D.R. SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 6. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED U/S. 271(1)(C ) ON THE ADDITION OF RS. 5 LACS MADE U/S. 68 AND THE DISALLOWANCE OF CLAIM OF BAD DEBTS OF RS. 96,254/-. ITA NO 561/A HD/2012 . A.Y. 2005-06 4 ON PERUSING THE MATERIAL ON RECORD, WE FIND THAT WI TH RESPECT TO THE LOAN OF RS. 5 LACS, ASSESSEE HAD SUBMITTED THE COPY OF 8A & 7/12 EXTRACT AND IT WAS SUBMITTED THAT THE SOURCE OF LOAN TO THE ASSESSEE W AS OUT OF THE AGRICULTURAL INCOME. AS FAR AS BAD DEBTS IS CONCERNED IT WAS DIS ALLOWED FOR THE REASON THAT ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM OF B AD DEBTS. THE SUBMISSIONS OF THE ASSESSEE ON THE AFORESAID ISSUES HAVE NOT FO UND TO BE FALSE. ON THE ADDITION MADE U/S. 68, WE FIND THAT ASSESSEE HAD FI LED THE DETAILS ABOUT THE NAME, PAN NUMBER, CONTRA CONFIRMATION ETC OF THE DE POSITORS WHICH HAVE NOT BEEN FOUND TO BE UNTRUE BY THE A.O. IT IS ALSO A FACT THAT THE A.O HAS ALSO NOT BROUGHT ANY EVIDENCE ON RECORD TO DEMONSTRATE T HAT THE AMOUNT OF UNEXPLAINED CREDIT REPRESENTS CONCEALED INCOME OF A SSESSEE. AS FAR AS LEVY OF PENALTY ON DISALLOWANCE OF BAD DEBTS IS CONCERNE D, IT IS NOT THE CASE OF REVENUE THAT THE CLAIM MADE BY ASSESSEE WAS A BOGUS CLAIM. THE ACT OF ASSESSEE OF NOT PREFERRING APPEAL AGAINST QUANTUM A DDITION CANNOT BE CONSIDERED TO BE A FACTOR AGAINST THE ASSESSEE MORE SO WHEN IT IS A SETTLED LAW THAT ASSESSMENT PROCEEDINGS AND QUANTUM PROCEED INGS ARE DISTINCT AND SEPARATE AND THAT ADDITION CAN BE MADE ON THE BASIS OF PREPONDERANCE OF PROBABILITY BUT FOR THE PURPOSE OF LEVY OF PENALTY, HEAVY BURDEN IS CAST ON THE REVENUE TO PROVE CONCEALMENT. WE FURTHER FIND T HAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT 249 ITR 125 HAS HELD IN ORDER TO JUSTIFY LEVY OF PENALTY FOR ADDITION OF CA SH CREDITS, THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO REASONABL E CONCLUSION THAT THE AMOUNT DOES REPRESENT ASSESSEES INCOME AND THE CIR CUMSTANCES MUST SHOW THAT THERE WAS CONSCIOUS CONCEALMENT OR ACT OF FURN ISHING OF INACCURATE PARTICULARS; EXPLN. 1 TO SECTION 271(1)(C) DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT IN THE ITA NO 561/A HD/2012 . A.Y. 2005-06 5 PRESENT CASE NO PENALTY U/S. 271(1)(C) IS LEVIABLE ON BOTH THE ADDITIONS AND THEREFORE DIRECT THE DELETION OF PENALTY. THUS THE GROUND OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED ORDER PRONOUNCED IN OPEN COURT ON 29 - 10- 201 5. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD