PANNABEN NILESH SHAH, Mumbai V. ITO WARD 25 (3)(2), Mumbai

ITA 5854/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2415 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 11-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income
• Section: 271(1)(c); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH MUMBAI BEFORE : SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI M.BALAGANESH, A CCOUNTANT MEMBER ITA NO. 5854 /MUM/ 20 19 ( ASSESSMENT YEAR : 2008 - 09 ) PANNABEN NILESH SHAH FLAT NO.7,8,9, 3 RD FLOOR WAMAN CHS LTD., M.G. ROAD, VILE PARLE (E) MUMBAI 400 057 VS. INCOME TAX OFFICER WARD 25(3)(2) KAUTILYA BHAVAN G - BLOCK, BANDRA KURLA COMPLEX, BANDRA EAST MUMBAI 400 051 PAN/GIR NO. AOMPS6784D (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI MANOJ P ANDIT REVENUE BY MS.SHREEKALA PARDESHI DATE OF HEARING 10/06/ 2021 & 22/10/2021 DATE OF PRONOUNCEMENT 27 / 10 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 5854/MUM/2019 FOR A.Y. 2008 - 09 ARISES OUT OF THE O RDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 37, MUMBAI IN APPEAL NO. CIT(A) - 37/IT - 10003/ITO - 25(3)(2)/2018 - 19 DATED 19/06/2019 (LD. CIT(A) IN SHORT) IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED TO AS ACT. ITA NO . 5854/MUM/2019 SHRI PANNABEN NILESH SHAH 2 2. THE ONLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. 3. WE HAVE HEARD RIVAL SUBM ISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS AN INDIVIDUAL AND HAD FILED HER RETURN OF INCOME FOR THE A.Y.2008 - 09 ON 19/09/2008 DECLARING TOTAL INCOME OF RS.1,56,782/ - CONSISTING OF INCOME FROM HOUSE PROPERTY, INTEREST IN COME FROM BANK, INCOME FROM PART TIME TRADING AND SHARE TRADING. THE ASSESSEE FILED A REVISED COMPUTATION OF INCOME DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS REQUESTING THE LD. AO TO TREAT THE INCOME FROM PART TIME TRADING AS BUSINESS INCOME AS AGAINST INCOME FROM OTHER SOURCES OFFERED IN THE RETURN . THE ASSESSEE STATED THAT THE PART TIME RETAIL BUSINESS IN DRESS MATERIAL WAS CARRIED ON BY HER AND THE BUSINESS INCOME HAD BEEN DERIVED THEREON. WITH REGARD TO THE CASH DEPOSITS MADE IN THE BANK ACCO UNT TO THE TUNE OF RS.10,36,000/ - , T HE ASSESSEE EXPLAINED BEFORE THE LD. AO THAT THE SOURCE OF SAID DEPOSITS WERE OUT OF SALE PROCEEDS OF TRADING BUSINESS CARRIED OUT BY THE ASSESSEE. SINCE THE ENTIRE TRADING INCOME HAS BEEN OFFERED TO TAX BY THE AS SESSEE, THESE CASH DEPOSITS HAS BEEN DULY EXPLAINED ACCORDING TO ASSESSEE. THE ASSESSEE ALSO VIDE LETTER DATED 09/12/2010 FILED BEFORE THE LD. AO STATED THE FACT THAT MATERIAL S WERE SUPPLIED TO THE ASSESSEES PLACE. THE ASSESSEE ALSO FILED COMPLETE DETAILS OF THE BROKERS ALONG WITH THEIR NAMES, ADDRESSES TOGETHER WITH CONFIRMATION LETTERS BEFORE THE LD. AO TO DRIVE HOME THE POINT THAT THIS TRADING BUSINESS WAS CARRIED ON BY HER AND THE SALES THEREON WERE MADE IN CASH . THE ASSESSEE ALSO FILED THE DETAILS TO WHOM GO ODS WERE SOLD BY THE ASSESSEE BEFORE THE LD. AO. THE ASSESSEE ITA NO . 5854/MUM/2019 SHRI PANNABEN NILESH SHAH 3 ALSO PRODUCED THE COMPLETE CASH FLOW STATEMENT EXPLAINING THE SOURCE OF CASH DEPOSITS OF RS.10,36,000/ - BEFORE THE LD. AO. 3.1. THE LD. AO HOWEVER, DID NOT HEED TO THE CONTENTIONS OF THE ASSESS EE AND MADE ADDITION OF RS.10,36,000/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT IN THE SUM OF RS.10,36,000/ - WHILE COMPLETING THE ASSESSMENT. THIS ADDITION WAS PRIMARILY MADE DISBELIEVING THE FACT THAT ASSESSEE HAD CARRIED ON BUSINESS IN TRADING OF DRE SS MATERIALS. THE LD. AO ALSO OBSERVED IN HIS ASSESSMENT ORDER THAT ASSESSEE MADE PURCHASES FROM UNREGISTERED DEALERS AND PURCHASE BILLS SUBMITTED BY THE ASSESSEE WERE WITHOUT COMPLETE ADDRESS AND MOST OF THE BILLS HAD S A ME DESCRIPTION OF ARTICLES, RATE, A ND AMOUNT WITH THE SAME HAND WRITING. FURTHER NOTICES U/S.133(6) OF THE ACT ISSUED TO THE SAID PURCHASES WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH REMARKS NOT KNOWN. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHICH WAS DISMISSED BY THE L D. CIT(A). THE ASSESSEE FURTHER PREFERRED AN APPEAL BEFORE THIS TRIBUNAL AGAINST THE QUANTUM PROCEEDINGS WHICH WAS ALSO DISMISSED. THEREAFTER, THE LD. AO LEVIED PENALTY U/S.271(1)(C) OF THE ACT SINCE THE QUANTUM PROCEEDINGS HAD ATTAINED FINALITY UP TO THE LEVEL OF THE TRIBUNAL AGAINST THE ASSESSEE. 3.2. IT WAS POINTED OUT BY THE LD. AR THAT ASSESSEE HAD FILED AFFIDAVITS BEFORE THE LD. AO TO PROVE THE NATURE AND SOURCE OF THE CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT FROM ALL THE PARTIES TO WHOM AS SESSEE HAD SOLD THE DRESS MATERIALS TO DRIVE HOME THE POINT THAT THE SALE PROCEEDS RECEIVED THEREON IN CASH WERE DEPOSITED IN THE BANK ACCOUNT. THE LD. AR POINTED OUT THAT THESE AFFIDAVITS WERE NEVER EXAMINED BY THE LD. AO IN ANY MANNER WHATSOEVER. ITA NO . 5854/MUM/2019 SHRI PANNABEN NILESH SHAH 4 4. PER CONTRA, THE LD. DR VEHEMENTLY ARGUED THAT SINCE THE QUANTUM APPEAL HAS BEEN CONFIRMED UP TO THE TRIBUNAL, THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT IS AUTOMATIC AND WARRANTED AND HAD BEEN VALIDLY MADE BY THE LD. AO. WE FIND THAT ASSESSEE HAD INDULGED IN TRADING OF DRESS MATERIALS AND THESE FACTS ARE EVIDENCED BY THE FACT THAT ASSESSEE HAD MADE PURCHASES FROM CERTAIN PARTIES AND HAD MADE SALES TO VARIOUS PARTIES WHICH ARE DULY REFLECTED IN TRADING AND PROFIT AND LOSS ACCOUNT PREPARED BY THE ASSESSEE AND ALSO SUPPORTED BY THE CONFIRMATION LETTERS BY THOSE PARTIES AND ALSO BY AFFIDAVITS FROM THE CONCERNED PARTIES WHICH ARE ALREADY ON RECORD. THE LAW IS VERY WELL SETTLED THAT ONCE, THE AFFIDAVIT IS PLACED ON RECORD BY THE ASSESSEE, IT IS THE DUTY OF THE ASS ESSING OFFICER TO PUT THAT AFFIDAVIT TO TEST IN ORDER TO PROVE THAT THE CONTENTS IN THE SAID AFFIDAVIT ARE FALSE. ONCE, THE LD. AO CHOOSES NOT TO EXAMINE THOSE AFF IDAV ITS IN THE MANNER KNOWN TO LAW, THEN THE CONTENTS OF THE SAID AFFIDAVITS ARE TO BE ACCEPT ED AS TRUE. HENCE, NO ADVERSE INFERENCE COULD BE DRAWN ON THE SAID AFFIDAVITS. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MEHTA PARIKH AND CO., VS. C IT REPORTED IN 30 ITR 181. WE ALSO HOLD THAT LEVY OF PEN ALTY IS NOT AUTOMATIC MERELY BECAUSE ADDITION HAS BEEN CONFIRMED IN THE QUANTUM PROCEEDINGS. THIS IS A CLEAR CASE OF EXPLANATION GIVEN BY THE ASSESSEE NOT BEING ACCEPTED BY THE LD. AO LEADING TO DIFFERENT INTERPRETATION AND NOT EXAMINING THE AFFIDAVITS FIL ED ON RECORD TO SUPPORT THE CONTENTIONS OF THE ASSESSEE . HENCE, THERE CANNOT BE ANY ALLEGATION THAT COULD BE LEVELLED ON THE ASSESSEE FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THESE FACTS AND CIRCUMSTANCES, WE DIRECT T HE LD. AO TO DELETE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. ITA NO . 5854/MUM/2019 SHRI PANNABEN NILESH SHAH 5 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 27 / 10 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( MAHAVIR SINGH ) SD/ - (M .BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 27 / 10 / 2021 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//