PRABHU DAYAL CHAWLA, MUMBAI V. ASST CIT CEN CIR 29, MUMBAI

ITA 5763/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2988 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 12-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: WRITTEN SUBMISSION DT
• Keywords: Unexplained cash credit
• Section: 153A; 68; 132

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL CBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER ./I.T.A./5763& 5764/MUM/2014 , /ASSESSMENT YEAR: 2006-07& 2010-11 PRABHU DAYAL CHAWLA A-407, SHREE RAMCHANDRA DARSHAN CO- PERATIVE SOCIETY, MAHADA, CHANDIVALI ANDHERI(E),MUMBAI-400 072. PAN:AGAPC 4806 E VS. ACIT, CENTRAL CIRCLE-29 4 TH FLOOR, AAYAKAR BHAVAN MUMBAI-20. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI NAVEEN GUPTA-DR ASSESSEE BY: WRITTEN SUBMISSION DT.8.6.2016 / DATE OF HEARING: 22.06.2016 / DATE OF PRONOUNCEMENT: 29.06.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS DATED 27/06/2014 OF CIT(A)-4 0,MUMBAI, THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEALS.THE EFFECTIVE GROUND RAISED BY THE ASSESSEE,FOR BOTH THE AY.S.,IS WITH REGARD TO LEVY OF PENALTY U/S. 271(1)(C),AMOUN TING TO RS.1,51,674/- AND RS.2,29,942/-. ITA NO.5763/MUM/2014 (A.Y.2006-07) : 2. ASSESSEE,AN INDIVIDUAL FILED HIS RETURN ON 30.10.20 06 DECLARING TOTAL INCOME AT RS.1,11, 290/-.THE ASSESSMENT ORDER,U/S.143(3) R.W.S. 153A O F THE ACT,WAS PASSED ON 25.03.2013, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS .7,37,000/-. AN ACTION U/S. 132 OF THE ACT WAS CARRIED OUT IN VAKRANGEE SOFTWARE LTD. AND GROU P ENTITIES ON 13.12.2010 ACCORDINGLY, A NOTICE U/S. 153A WAS ISSUED TO THE ASSESSEE.DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT AN AMOUNT OF RS.3.00 LAKHS WAS DEPOSITED IN CA SH IN BANK ACCOUNT.HE DIRECTED THE ASSESSEE TO PROVIDE FULL BANK ACCOUNT STATEMENT AND ALSO THE EXPLANATION ABOUT THE CASH DEPOSITED IN THE BANK FOR THE YEAR UNDER CONSIDERAT ION. AFTER COMPLETING THE ASSESSMENT THE AO ISSUED A NOTICE U/S. 271(1)(C) FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME. IN RESPONSE TO THE PENALTY NOTICE,THE AR,VIDE HIS LETTER DATED 17.4.2013, STATED THAT HE WAS QUITE FASTIDIOUS ABOUT LEGAL COMPLIANCE THAT ALL THE FACTS HAD BEEN DISCLOSED AT THE TIME OF HEARING, THAT NECESSARY DETAILS WERE SUBMITTED PROMPTLY,THAT NON ACCEPTANCE OF HIS SUBMISSION WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. HE RELIED UPON THE CASE OF RELIANCE PETRO - PRODUCTS PVT. LTD. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,THE AO HELD THAT ASSESSEE 5763-64/M/14-PRABHU DAYAL 2 HAD NOT SUBMITTED ANY DOCUMENTARY EVIDENCE IN SUPPO RT OF THE CLAIM MADE BY HIM. VIDE HIS ORDER,DATED 18.9.2013,HE LEVIED A PENALTY OF RS.1.5 1 LAKHS IN RESPECT OF ADDITION OF RS.5 LAKHS THAT WAS MADE IN RESPECT OF CASH DEPOSIT IN THE BAN K ACCOUNT. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FAA. BEFORE HIM, IT WAS CONTENDED THAT ALL THE FACTS AND DETAILS WER E SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS,THAT THERE WAS NO CONCEALMENT OF INCOME, THAT SOURCE OF CASH DEPOSIT WAS THE CASH SALES MADE DURING THE YEA R.AFTER CONSIDERING THE ASSESSMENT ORDER, PENALTY ORDER AND THE SUBMISSION OF THE ASSESSEE, T HE FAA HELD THAT THE AO HAD MADE AN ADDITION OF RS.5 LAKHS WITH REGARD TO CASH DEPOSIT IN BANK ACCOUNT,THAT THE ASSESSEE HAD FAILED TO EXPLAIN THE DEPOSIT DURING THE ASSESSMENT PROCEE DINGS,THAT THE AO HAD MADE TWO OTHER ADDITIONS,THAT HE DID NOT LEVY PENALTY WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS AND ADMINISTRATIVE EXPENSES, THAT THE ADDITION MADE BY THE AO HAD REACHED FINALITY, THAT THE ASSESSEE DID NOT CHALLEN GE THE QUANTUM ORDER PASSED BY THE AO, THAT THERE WERE CERTAIN CASH DEPOSITS IN THE BANK ACCOUN T OF THE ASSESSEE, THAT THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF BANK DEPOSITS,THA T SUCH DEPOSITS WERE TREATED AS UNEXPLAINED CASH DEPOSITS IN ACCORDANCE WITH PROVISIONS OF SECT ION 68 OF THE ACT,THAT FAILURE OF THE ASSESSEE TO EXPLAIN THE SOURCES LED TO THE CONCLUSI ON THAT AMOUNT DEPOSITED IN THE BANK ACCOUNT REPRESENTED HIS UNDISCLOSED INCOME, THAT TH E ASSESSEE DID NOT DISPUTE THE ADDITIONS MADE BY THE AO,THAT THE AMOUNT DEPOSITED IN THE BAN K ACCOUNT REPRESENTED HIS TAXABLE INCOME, THAT HE DID NOT OFFER THE SAME TO TAX IN TH E RETURN OF INCOME FILED, THAT HE HAD CONCEALED THE PARTICULARS OF INCOME, THAT DURING TH E APPELLATE PROCEEDINGS THE ASSESSEE HAD CONTENDED THAT CASH DEPOSITED IN THE BANK ACCOUNT H AD BEEN GENERATED FROM CASH SALES MADE DURING THE YEAR, THAT HE FAILED TO SUBSTANTIATE THE CLAIM WITH THE HELP OF SALE INVOICES/CASH BOOK/CASH FLOW STATEMENT, THAT THE CLAIM OF THE ASS ESSEE TOWARDS MAKING CASH SALES WAS HIGHLY DOUBTFUL, THAT IN THE OTHER YEARS (AY.S 2008 -09 AND 2010-11) HAD CLAIMED THAT HE WAS ONLY ENGAGED IN CHEQUE DISCOUNTING BUSINESS WITHOUT ANY REAL BUSINESS, THAT HE WAS RECEIVING CHEQUES AND TRANSFERRING MONEY TO OTHER GROUP CONCE RNS, THAT THE ASSESSEE HAD FAILED TO ESTABLISH THAT HE HAD SUFFICIENT CASH AVAILABLE FRO M BUSINESS OPERATIONS AS ON THE DATES OF DEPOSITS,THAT NO SUCH CLAIM WAS MADE APPARENTLY IN THE COURSE OF ASSESSMENT PROCEEDINGS, THAT THE AMOUNT DEPOSITED IN CASH REPRESENTED ASSES SEES UNDISCLOSED INCOME, THAT THE ONUS IN THIS REGARD WAS ON THE ASSESSEE TO EXPLAIN THE SOUR CES OF INCOME TO THE SATISFACTION OF THE AO, THAT THE ASSESSEE HAD FAILED TO DO SO, THAT THE CLA IM MADE BY IT WAS AN AFTER THOUGHT.REFERRING TO THE CASE OF RELIANCE PETROPORDUCTS LTD., THE FAA HELD THAT THE RATIO OF THE JUDGMENT WAS 5763-64/M/14-PRABHU DAYAL 3 NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSI DERATION, THAT IN THE CASE BEFORE HIM THE ISSUE AT HAND WAS UNEXPLAINED CASH CREDIT IN THE BA NK ACCOUNTS OF THE ASSESSEE. FINALLY, HE UPHELD THE ORDER OF THE AO. 4 .AS STATED EARLIER NO BODY APPEARED ON BEHALF OF TH E ASSESSEE.HOWEVER, WRITTEN SUBMISSIONS WERE MADE ON HIS BEHALF.IN THE WRITTEN SUBMISSIONS THE ASSESSEE STATED THAT HE HAD NOT CONTESTED THE QUANTUM ADDITION TO AVOID FURTHER LIT IGATION,THAT HE HAD FILED ALL THE NECESSARY DETAILS BEFORE THE AO,THAT IT WAS EXPLAINED THAT SO URCE OF THE CASH DEPOSITED WAS CASH SALES DURING THE YEAR,THAT HE HAD NEITHER CONCEALED THE I NCOME NOT HAD SUBMITTED INACCURATE PARTICULARS.ASSESSEE RELIED UPON THE CASE OF RELIAN CE PETROPRODUCTS PVT. LTD. (230CTR320) AND THE CASE OF G. RAMKUMAR(132ITD195).THE DEPARTME NTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO AND THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT WHILE COMPLETING THE ASSESSMENT,THE AO HAD MADE CERTAIN A DDITIONS WITH REGARD TO THE CASH DEPOSITS MADE IN THE BANK ACCOUNTS OF THE ASSESSEE, THAT PENALTY PROCEEDINGS WERE INITIATED WITH REGARD TO RS.5 LAKHS, THAT IN HIS REPLY THE AS SESSEE MADE GENERAL SUBMISSIONS ONLY,THAT HE DID NOT DISCLOSE SOURCES OF CASH DEPOSITS,THAT BEFO RE THE FAA HE STATED THAT CASH WAS GENERATED OUT OF THE CASH SALES MADE,THAT HE DID NO T PRODUCE ANY DOCUMENTARY ABOUT THE ALLEGED CASH PURCHASE/SALES, THAT DURING THE ASSESS MENT PROCEEDINGS ALSO THE ASSESSEE HAD NOT ARGUED THAT CASH DEPOSITED IN THE BANK ACCOUNT WAS OUT OF CASH SALES. WE ARE OF THE OPINION THAT THE FAA HAD RIGHTLY HELD THE ASSESSEE FAILED TO DISCHARGE ITS ONUS WITH REGARD TO SOURCES OF CASH DEPOSITS. THE PRINCI PLES OF TAXATION JURISPRUDENCE STIPULATE THAT ONUS IS ON THE ASSESSEE TO PROVE THE SOURCES OF REC EIPTS RECEIVED DURING A PARTICULAR YEAR. AS THE ASSESSEE HAS MISERABLY FAILED TO DISCHARGE THE ONUS CAST UPON HIM SO THE AO/FAA WAS FULLY JUSTIFIED IN LEVYING THE PENALTY/CONFIRMING T HE PENALTY ORDER. THEREFORE, IN OUR OPINION THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE FAA.CONFIRMING HIS ORDER WE,DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ITA 5764/MUM/2014(A.Y.2010-11) : 6. WHILE COMPLETING THE ASSESSMENT FOR THE YEAR UNDER APPEAL,THE AO MADE ADDITION OF RS.7.39 LAKHS AS COMMISSION INCOME IN THE HANDS OF THE ASSESSEE WHICH WAS WORKED OUT AT 1% OF THE TOTAL TRANSACTIONS APPEARING IN THE BANK ACCOUNT CASH DEPOSIT/OTHER DEPOSITS. THE ASSESSEE HAD CLAIMED THAT HE WAS ENGAGED IN THE BUS INESS OF CHEQUE DISCOUNTING. 5763-64/M/14-PRABHU DAYAL 4 ACCORDINGLY,THE AO TOOK 1% OF SUCH ENTRIES TOWARDS INCOME AND MADE AN ADDITION OF RS.7,39,049/-.IN ADDITION TO IT THE AO ALSO REJECTE D A CLAIM MADE BY THE ASSESSEE FOR DEDUCTION UNDER CHAPTER VI-A OF THE ACT,AMOUNTING T O RS.5,100/-.BESIDES,THE AO ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1) (C) OF TH E ACT. SINCE THE ASSESSEE DID NOT DISPUTE THE ABOVE ADDITIONS,THE AO LEVIED PENALTY OF RS.2.29 LA KHS U/S. 271(1)(C ) OF THE ACT. WHILE LEVYING THE PENALTY THE AO OBSERVED THAT THE PERUSA L OF BANK ACCOUNT,STATEMENT OF THE ASSESSEE REVEALED HIGH VALUE TRANSACTION AMOUNTING TO RS.7.39 CRORES, THAT THE ASSESSEE WAS ASKED TO EXPLAIN THE MODUS OPERNADI OF TRANSACTIONS IN QUESTION, THAT IN ABSENCE OF ANY CONCRETE EVIDENCE HE HAD ADDED 1% I.E. 7.39 LAKHS A S INCOME OF THE ASSESSEE ON ACCOUNT OF COMMISSION EARNED ON CHEQUE DISCOUNTING, THAT THE A SSESSEE HAD CLAIMED DEDUCTION OF 5,100/- AS PER THE PROVISIONS OF CHAPTER VI-A ,THAT THE ASS ESSEE DID NOT SUBMIT ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM. 7. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA.BEFORE HIM IT WAS STATED THAT ASSESSEE HAD RECEIVED MONEY IN THE NORMAL COURSE OF BUSINESS IN ADVANCE FOR SUPPLY OF GOODS, THAT THE SUPPLY COMMIT MENT COULD NOT BE FULFILLED, THE AMOUNT IN QUESTION WERE RETURNED BACK, THE ASSESSEE HAD NO T RECEIVED ANY COMMISSION, THAT THE ASSESSEE HAD DISCLOSED ALL RELEVANT DETAILS DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOT A CASE OF FILING OF INACCURATE PARTICULARS. THE ASSES SEE RELIED ON THE CASE OF RELIANCE PETRO PRODUCTS LTD.(SUPRA), AND EAGLE IRON AND METAL INDU STRIES LTD.(11DTR384). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE AO THE FAA HELD THAT THE AO MADE AN ADDITION OF RS.7.39 LAKHS AS COMMISSION INC OME ON CHEQUE DISCOUNTING, THAT THERE WERE HUGE DEPOSITS IN BANK ACCOUNT OF THE ASSESSEE, THAT ASSESSEE HAD MADE SUBSEQUENT WITH - DRAWALS/TRANSFERS TO THE ASSOCIATE CONCERNS, THAT H E HAD FAILED TO EXPLAIN THOSE TRANSACTIONS, THAT HE DID NOT DISPUTE THE ADDITIONS MADE BY THE A O, THAT THE ADDITIONS HAD REACHED FINALITY, THAT INITIALLY THE ASSESSEE CLAIMED TO HAVE BEEN EN GAGED IN SOME BUSINESS, THAT HE FAILED TO EXPLAIN AS TO WHERE FROM THE CHEQUES WERE RECEIVED, THAT ON CONFRONTATION BY THE AO THE ASSESSEE CHANGED HIS STAND, THAT HE CLAIMED THAT HE WAS ENGAGED IN CHEQUE DISCOUNTING BUSINESS AND THAT INCOME FROM SUCH DEPOSITS COULD B E TAKEN AT ONLY 1%, THAT THE AO HAD MADE AN ADDITION OF RS.7.39 LAKHS ACCORDINGLY, THAT IF AN ASSESSEE WOULD FAIL TO EXPLAIN ANY CREDIT APPEARING IN THE BANK ACCOUNT/BOOKS OF ACCOU NT THE SAME WAS LIABLE TO BE TAXED AS UNEXPLAINED CASH CREDIT AS PER PROVISIONS OF SECTIO N 68 OF THE ACT, THE AO HAD TAKEN A VERY LIBERAL AND LENIENT VIEW AND HAD ESTIMATED THE INCO ME FROM SUCH TRANSACTION AT 1% ONLY, THAT THE ASSESSEE HAD NOT SHOWN ANY INCOME FROM CHEQUE D ISCOUNTING FROM ITS RETURN OF INCOME, 5763-64/M/14-PRABHU DAYAL 5 THAT HE HAD CONCEALED ITS PARTICULARS OF INCOME, TH AT THE TAXABLE INCOME WOULD HAVE GONE UNTAXED HAD THE CASE OF THE ASSESSEE HAD NOT BEEN P ICKED FOR SCRUTINY, THAT HE HAD CLAIMED DEDUCTION UNDER CHAPTER VI-A AMOUNTING TO RS.5,100/ -,THAT HE HAD NOT FURNISHED BASIC DETAILS OF INVESTMENTS/PAYMENTS MADE, THAT IN ABSENCE OF AN Y EVIDENCE HE MADE THE CLAIM FOR THE DEDUCTION, THAT THE AO WAS JUSTIFIED IN LEVYING THE PENALTY. THE FAA DISTINGUISHED THE CASES RELIED UPON BY THE ASSESSEE. 8. IN THE WRITTEN SUBMISSIONS,FILED BEFORE US,THE ASSE SSEE CLAIMED THAT HE HAD DISCLOSED NECESSARY DETAILS WHILE FILING RETURN OF INCOME,THA T ALL THE TRANSACTIONS APPEARING IN THE BANK STATEMENT WERE RELATED TO THE BUSINESS OF THE ASSE SSEE, THAT HE COULD NOT SUPPLY THE GOODS, THAT HE RETURNED BACK THE MONEY TO THE CUSTOMERS OR TO THE THIRD PARTIES UNDER THE INSTRUCTIONS OF THE CUSTOMERS, THAT THERE WAS NO CONCEALMENT OF INCOME, THAT TO AVOID FURTHER LITIGATION HE DID NOT CONTEST THE QUANTUM ADDITION. HE RELIED UPO N THE CASE OF RELIANCE PETROPRODUCTS P. LTD. (SUPRA) AND EAGLE & IRON METAL INDUSTRIES LTD. (11ITR-TRIB.384). THE DR SUPPORTED THE ORDER OF THE FAA. 9. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD.WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE AO HAD FOUND THAT HUGE AMOUNTS WERE APPEARING IN THE BANK ACCOUNTS OF THE ASSESSEE, THAT HE HAD NOT OFFERED ANY EXPLANATION I N THAT REGARD, THAT NO EVIDENCE WAS PRODUCED ABOUT CARRYING OUT ANY BUSINESS DURING THE YEAR UNDER CONSIDERATION, THAT THE AO HAD CALCULATED THE INCOME @ 1% OF THE AMOUNT APPEAR ING IN THE BANK ACCOUNT, THAT THE ASSESSEE HAD NOT OFFERED THE INCOME FROM BILL DISCO UNTING ACTIVITIES.THE RETURN OF INCOME IS NOT A MERE PIECE OF PAPER BUT IT HAS TO BE VERIFIED IN A PARTICULAR MANNER.THE ASSESSEES ARE SUPPOSED TO DECLARE THEIR INCOME RECEIVED DURING A PARTICULAR YEAR AND TO PAY TAXES ACCORDINGLY. FAILURE ON PART OF THE ASSESSEE TO DIS CLOSE HIS INCOME HAS TO BE PENALIZED .IN THE CASE UNDER CONSIDERATION THE ASSESSEE HAS NOT DISCL OSED THE INCOME AND THUS HAD FILED INACCURATE PARTICULARS OF HIS INCOME.THE FAA DISTIN GUISHED THE CASE LAWS REFERRED BY THE ASSESSEE. IN OUR OPINION THERE IS NO SIMILARITY BET WEEN THE FACTS OF THE CASE AND THE CASES REFERRED BY THE ASSESSEE. THEREFORE, WE HOLD THAT T HE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY. CONFIRMING HIS ORDE R, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESULT, APPEALS FILED BY THE ASSESSEE FOR BOTH THE AY.S STAND DISMISSED. . . . ORDER PRONOUNCED I N THE OPEN COURT ON 29 TH JUNE, 2016. 5763-64/M/14-PRABHU DAYAL 6 29 , 2016 SD/- SD/- /JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 29.06.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.