VILBER FOODS, MUMBAI V. ACIT 19(3), MUMBAI

ITA 5810/MUM/2012

• Counselvise Citation: 581019914 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 1997-1998
• Appeal Filed On: 20-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: PRA DN YA SHALIGRAM
• Keywords: Unexplained cash credit
• Section: 68; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , , BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 5810 /MUM./ 2012 ( / ASSESSMENT YEAR : 1997 98 ) . / ITA NO. 5811 /MUM./ 2012 ( / ASSESSMENT YEAR : 1998 99 ) . / ITA NO. 5812 /MUM./ 2012 ( / ASSESSMENT YEAR : 1999 00 ) . / ITA NO. 5813 /MUM./ 2012 ( / ASSESSMENT YEAR : 2000 01 ) M/S. VILBER FOODS FRIDAUS, CHAMBAI ROAD OLD KANTWADI, BANDRA (W) MUMBAI 400 050 .. / APP ELLANT V/S ASSTT. COMMISSIONER OF INCOME TA X RANGE 19(3), PIRAMAL CHAMBERS LALBAUG, PAREL, MUMBAI 400 012 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAAFV1555B / ASSESSEE BY: MR. S.C. TIWARI A/W MS. NATASHA MANGAT & MS. PRA DN YA SHALIGRAM / RE VENUE BY : O.P. SINGH / DATE OF HEARING 2 3 .0 1 .201 4 / DATE OF ORDE R 24.01.2014 M/S. VILBER FOODS 2 / ORDER / PER BENCH THE PRESENT APPEAL S HA VE BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED SEPARATE BUT IDENTICAL ORDER S OF EVEN DATE 16 TH JULY 2012, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX XXX , MUMBAI, FOR THE ASSESSMENT YEAR 1997 98, 1998 99, 1999 2000 AND 2000 01 . THE SOLE COMMON ISSUE INVOLVED IN ALL THE YEARS UNDER APPEALS IS, WHETHER OR NOT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF ` 1,84,000 FOR THE ASSESSMENT YEAR 1997 98, ` 1,82,000 FOR THE ASSESSMENT YEAR 1998 99, ` 2,76,845 FOR THE ASSESSMENT 1999 2000 AND ` 85,142 FOR THE ASSESSMENT YEAR 2000 01 RESPECTIVELY. 2 . SINCE THE GROUNDS RAISED BY ASSESSEE IN ALL THE YEARS UNDER APPEAL ARE COMMON, THEREFORE, AS A MATTER OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. HOWEVER, IN ORDER TO UNDERSTAND THE IMPLICATION, IT WOUL D BE NECESSARY TO TAKE NOTE OF FACTS OF ONE APPEAL AND, ACCORDINGLY, WE ARE NARRATING THE FACTS, AS THEY APPEAR IN ITA NO. 5810/MUM./2012, FOR THE ASSESSMENT YEAR 1997 98. 3 . FACTS IN BRIEF : IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 19997 98, THE ASSESSMEN T WAS COMPLETED ON 30 TH MARCH 2005, UNDER SE CTION 143(3) R/W 147 OF THE ACT AFTER MAKING HUGE ADDITIONS OF ` 3.33 M/S. VILBER FOODS 3 CRORES ON ACCOUNT OF UNEXPLAINED CREDIT IN THE FORM OF LOAN TAKEN FROM VARIOUS PARTIES WHICH WERE ADDED UNDER SECTION 68 OF THE ACT. IN THE FI RST APPEAL, SUBSTANTIAL RELIEF WAS GIVEN AND FOR THE BALANCE ADDITION, THE MATTER HAD TRAVELED UP TO THE STAGE OF SECOND APPEAL BEFORE THE TRIBUNAL . DURING THE SECOND APPELLATE PROCEEDINGS, THE TRIBUNAL , IN ASSESSEES CASE, RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR PASSING FRESH ASSESSMENT ORDER. 4 . BEFORE US, THE LEARNED COUNSEL, MR. S.C. TIWARI, ON BEHALF OF THE ASSESSEE SUBMITTED THAT IN ALL THE YEARS UNDER APPEAL, THERE WERE 259 PARTIES FROM WHOM THE ASSESSEE HAS TAKEN LOAN AGGREGATING TO ` 3,33,45,328. SUBSTANTIAL AMOUNT OF ADDITION WAS DELETED BY THE LEARNED COMMISSIONER (APPEALS) AFTER CALLING FOR THE REMAND REPORT BY THE ASSESSING OFFICER. ONLY WITH REGARD TO THE 20 PERSONS FROM WHOM THE LOAN AGGREGATING TO ` 17,90,000, WAS SUSTAINE D BY HIM. THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE ASSESSING OFFICER WITH REGARD TO THE EXAMINATION OF LOAN TAKEN FROM THE 20 PERSONS. THE MAIN CONTENTION OF THE ASSESSING OFFICER IN THE SET ASIDE PROCEEDINGS WAS THAT THE ASSESSEE COULD NOT PRODUCE THE SE PERSONS. OTHERWISE, THE ASSESSEE HAS GIVEN ALL THE DETAILS WITH REGARD TO THE GENUINENESS OF THE LOAN RECEIVED VIZ. CONFIRMATION LETTERS WHEREIN THESE PERSONS HAVE CONFIRMED THE LOAN WERE GIVEN TO THE ASSESSEE AND THESE LOANS HAVE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES . THE ASSESSEE DID NOT CONTEST THE APPEAL BECAUSE ASSESSEES BUSINESS HAS BEEN CLOSED DOWN LONG TIME BACK AS THE ASSESSEE WAS INCURRING HUGE LOSSES YEAR AFTER YEAR , EVEN THOUGH ITS INCOME WAS EXEMPT UNDER SECTION 10. THE MAIN CONTENTIO N OF THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE COURSE OF M/S. VILBER FOODS 4 PENALTY PROCEEDINGS HA S BEEN THAT THESE LOANS WERE RECEIVED THROUGH BROKERS AT BHAVNAGAR AND TRANSACTIONS WERE MORE THAN 10 YEARS OLD. THESE LOANS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND THE DETAILS OF THE BANK ACCOUNT OF THE CREDITORS WERE ALSO GIVEN . AFTER A GAP OF LONG TIME, IT WAS DIFFICULT TO PRODUCE THESE PERSONS AND/OR OBTAIN FURTHER DETAILS. THE ADDITION HAS BEEN MAD E PURELY ON THE GROUND THAT FIRSTLY, THE PERMANENT ACCOUNT NUMBER OF THESE PERSONS HA S NOT BEEN PROVIDED AND SECONDLY THEY WERE NOT PRODUCED. THIS IPSO FACTO DOES NOT LEAD TO ANY INFERENCE THAT THE ASSESSEES EXPLANATION WITH REGARD TO THE LOAN RECEIVED HA S BEEN FOUND TO BE FALSE OR NOT BONAFIDE. IN THIS CASE, THE PENALTY HAS BEEN LEVIED FOR FURNISHING OF INACCURATE PARTICULARS AND ALSO FOR CONCEALMENT OF TAXABLE INCOME , AFTER INVOKING EXPLANATION 1 TO SECTION 271(1)(C). IN THIS CASE, NONE OF THE CONDITIONS PRECEDENT FOR LEVY OF PENALTY ARE APPLICABLE. DURING THE COURSE OF THE ARGUMENT, HE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN ANIS AHMAD AND SONS V/S CIT, [2008] 297 ITR 441 (SC) IN SUPPORT OF HIS CONTENTION THAT IF THE ASSESSEE IS UNABLE T O PRODUCE SOME OF THE CREDITORS OUT OF VARIOUS CONDITIONS ON SAME NATURE OF TRANSACTIONS, THEN IT CANNOT BE HELD THAT ANY ADVERSE INFERENCE SHOULD BE DRAWN AGAINST THE ASSESSEE. HE FURTHER RELIED UPON VARIOUS DECISIONS IN SUPPORT OF HIS ARGUMENT THAT EVEN IF THE ADDITIONS HAVE BEEN MADE IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT DOES NOT LEAD TO AN INFERENCE THAT THE ASSESSEE HAS ADMITTED TO THE SAME OR ITS EXPLANATION IS NOT BONAFIDE. HE THUS, SUBMITTED THAT ON THE FACTS OF THE CASE WHEREIN THE ASSESSEE H AS DISCHARGED ITS PRIMARY ONUS AND NO OTHER MATERIAL HAS BEEN BROUGHT ON RECORD TO DISBELIEVE THE ASSESSEES EXPLANATION THAT IT IS NOT BONAFIDE, THEN NO PENALTY CAN BE LEVIED OR CONFIRMED. M/S. VILBER FOODS 5 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRON GLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AND SUBMITTED THAT IN THE PRESENT CASE, THE ASSESSEE HAS NEITHER FURNISHED PERMANENT ACCOUNT NUMBER NOR HAS PRODUCED THESE PERSONS, THEREFORE, THE ONLY INFERENCE IS THAT THE ASSESSEE HAS NO T DISCHARGED THE PRIMARY BURDEN AND, THEREFORE, PENALTY LEVIED BY THE ASSESSING OFFICER IS FULLY JUSTIFIED. HE ALSO STRONGLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). 6 . WE HAVE HEARD THE RIVAL CONTENTION, PERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE, THE PENALTY HAS BEEN LEVIED ON THE ADDITIONS MADE UNDER SECTION 68 WITH REGARD TO SOME OF THE PERSONS WHO HAVE GIVEN LOAN TO THE ASSESSEE WHICH, ACCORDING TO THE REVENUE , HAS NOT BEEN SATISFACTORY EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAS TAKEN LOAN FROM 259 PERSONS FOR SUMS AGGREGATING TO ` 3,33,45,328 . OUT OF SUCH A HUGE AMOUNT, ONLY LOAN AGGREGATING TO ` 17,90,000 WAS CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) . THIS AMOUN T HAS ALSO BEEN CONFIRMED BY THE ASSESSING OFFICER IN THE SET ASIDE PROCEEDINGS. WITH REGARD TO THE GENUINENESS OF THESE LOANS, THE ASSESSEE HAD SUBMITTED THAT IT HAS FURNISHED THE CONFIRMATION LETTERS FROM ALL THE PERSNOS AND ALSO THE DETAILS OF ACCOUNT P AYEE CHEQUES THROUGH WHICH THESE LOANS WERE RECEIVED ALONG WITH THE BANK DETAILS OF THE CREDITORS. ONCE THAT IS SO, THEN IT CANNOT BE HELD THAT FOR THE PURPOSE OF PENALTY PROCEEDINGS, THE ASSESSEES BURDEN HAS NOT BEEN DISCHARGED OR THE EXPLANATION HAS BEE N FOUND TO BE FALSE , UNLESS CONTRARY MATERIAL IS BROUGHT ON RECORD TO SHOW THAT THE ASSESSEES EXPLANATION IS NOT TENABLE AT ALL. IT IS A SETTLED LAW THAT THE PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM THE M/S. VILBER FOODS 6 ASSESSMENT PROCEEDINGS AND EVEN THOUGH IN THE QUANTUM PROCEEDINGS, THE MATTER HAS BEEN DECIDED AGAINST THE ASSESSEE , THEN ALSO , IN THE PENALTY PROCEEDINGS, THE ASSESSEE CAN RELY UPON THE SAME MATERIAL AND THE PLEA THAT HE IS NOT GUILTY OF FURNISHING OF EITHER INACCURATE PARTICULARS OF INCOME OR CO NCEALMENT OF INCOME AND THE MATTER HAS TO BE EXAMINED AFRESH . ONCE THE PARTIES HAVE CONFIRMED THE LOAN AND THE AMOUNT HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE S , THEN FOR THE PURPOSE OF PENALTY PROCEEDINGS, IT CANNOT BE HELD THAT THE ASSESSEE IS GUILT Y OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME , MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE CREDITORS THAT TOO AFTER A GAP OF MORE THAN TEN YEARS AND HAS NOT PROVIDED THE DETAILS OF PERMANENT ACCOUNT NUMBER. EVEN IF THE EXPLANATION 1 IS INVOKED, THEN IT RAISES A REBUTTABLE PRESUMPTION AND THERE IS ALWAYS PREPONDERANCE OF PROBABILITY . I F THE ASSESSEES EXPLANATION IS FOUND TO BE PROBABLE , THEN IT HAS TO BE ACCEPTED UNLESS SUCH AN EXPLANATION IS DISLODGED BY SOME CONCRETE E VIDENCE AFTER ENQUIRY. ONCE THE PROBABLE EXPLANATION HAS BEEN TENDERED THEN IN THE PENALTY PROCEEDINGS, THE ONUS SHIFTS UPON THE REVENUE TO SHOW THAT SUCH AN EXPLANATION IS PURELY MALAFIDE AND FALSE . T HIS CAN BE DONE ONLY IF THERE ARE COGENT MATERIAL ON RE CORD TO DISPROVE THE ASSESSEES EXPLANATION. THUS, ON THE PRESENT FACTS OF THE CASE, WHEN SUBSTANTIAL LOAN TAKEN FROM THE CREDITORS HAVE BEEN ACCEPTED AND ONLY IN VERY FEW CASES, THE ASSESSEES EXPLANATION COULD NOT BE CORROBORATED WITH FURTHER EVIDENCE, T HIS CANNOT BE LEAD TO AN INFERENCE OF LEVY OF PENALTY UNDER SECTION 271(1)(C). CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) FOR THE ASSESSMENT YEAR 19997 98, 1998 98, 1999 2000 AND 2000 01 AND DELETE THE PENALT Y CONFIRMED BY HIM. M/S. VILBER FOODS 7 7 . 19997 98, 1998 98, 1999 2000 2000 01 7 . IN THE RESULT, ASSESSEES APPEAL FOR THE A.Y. 19997 98, 1998 98, 1999 2000 AND 2000 01 ARE TREATED AS ALLOWED. 24 TH JANUARY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY 2014 SD/ - . . R.C. SHARMA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 24 TH JANUARY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI