The ITO, Ward-9(4), Ahmedabad V. Shri Atul S. Mehta, Ahmedabad

ITA 589/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8059 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 26-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Source of fund; Corroborative evidences; Onus to prove
• Section: 194C; 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, WARD - 9(4), AHMEDABAD (APPELLANT) VS SHRI A T UL S. MEHTA, M.K. HOUSPATEL ESTATE, NR. OLD CHANDOLA, OCTROI NAKAS, NAROL, AHMEDABAD - 382405 PAN AFQPM2370G (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 20 - 11 - 2 017 DATE OF PRONOUNCEMENT : 27 - 11 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2007 - 08 , AR ISES FROM ORDER OF THE CIT(A) - XV, AHMEDABAD DATED 26 - 12 - 2013 , IN PROCEEDINGS UNDER SECT ION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I T A NO . 589 / A HD/20 14 A SSE SSMENT YEAR 200 7 - 08 I.T.A NO. 589 /AHD/20 14 A.Y. 2007 - 08 PAGE NO ITO VS. SHRI ATUL S. MEHTA 2 1A). THE LD. COMMISSIO NER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELET ING THE PENALTY OF RS.74,18,771/ - LEVIED U/S. 271(1)(C) OF THE ACT. 1B). THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS TO IGNORE EXPLANATION 1 OF PROVISION OF SECTION 271(1) (C) OF THE ACT, WHICH LAYS DOWN THAT WHERE ASSESSEE'S EXPLANATION IN RESPECT OF ANY MATTER WAS NOT FOUND 'SATISF ACTORY' , PROVISION OF SECTION 2 71(1) (C) OF THE ACT, WERE ATTRACTED FOR FURNISHING INACCURATE PARTI CULARS OF INCOME. 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3). IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMM ISSIONER OF INCOME - TAX (APPEALS) - XV, AHMEDABAD MAY BE SET - ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 9 , 95 , 990/ - WAS FILED ON 26 TH OCTOBER, 2007. SUBSEQUENTLY, THE CASE WAS SELECTED UN DER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF T HE ACT ON 25 TH SEPTEMBER, 2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS INTRODUCED CAPITAL TO THE AMOUNT OF RS. 39 , 30 , 624/ - THE ASSESSEE WAS ASKED TO PRODUCE THE DETAIL IN RESPECT OF SOURCE OF INTRODUCTION OF CAPITAL DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE FAILED TO FURNISH THE SUPPORTING EVIDENCES OF CAPITAL INTRODUCTION . CONSEQUENTLY, ADDITION OF RS. 39 , 30 , 624/ - WAS MADE TO THE TOTAL INCOM E OF THE ASSESSEE . P ENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WAS INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . DURING THE COURSE OF ASSESSMENT PROCEEDINGS O N FURTHER VERIFICATION OF THE BOOKS OF ACCOUNT AND DETAILS, THE ASSESSING OF FICER HAS ALSO NOTICED THAT ASSESS EE HAS OBTAINED FRESH LOAN OF RS. 9 LACS DURING THE YEAR UNDER CONSIDERATION FROM SMT. RATANKUNVAR . TO PROVE THE I.T.A NO. 589 /AHD/20 14 A.Y. 2007 - 08 PAGE NO ITO VS. SHRI ATUL S. MEHTA 3 GENUINENESS OF THE AFORESAID LOAN TRANSACTIONS THE ASSESSEE WAS ASKED TO PRODUCED DE TAILS SUCH AS CONFIRMAT ION, BANK STATEMENT AND PAN ETC. B UT THE ASSESSEE FAILED TO SUBMIT THE AFORESAID INFORMATION , THEREFORE, THE ASSESSING OFFICER HAD ADDED THE AMOUNT U/S. 68 AS UNACCOUNTED CASH CREDIT TO THE TOTAL INCOME OF THE ASSESSEE . THE PENALTY PROCEEDINGS U/S. 271(1)( C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME WAS INITIATED . ON FURTHER VERIFICATION OF PROFIT AND LOSS ACCOUNT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS PAID FREIGHT PAYMENT OF 2,50, 86,492/ - TO TRUCK OWNER S . OUT OF THE TOTAL PAYMENT , TH E ASSESSEE HAS DEDUCTED TDS ON RS. 11 , 61 , 679/ - AND FOR RS. 5 , 52 ,275 / - . THE ASSESSEE CLAIMED REMAINING AMOUNT NOT LIABLE TO DEDUCT TDS AS HE HAS COLLECTED FORM NO. 15J AND FURTHER EXPLAINED THAT THE PAYMENTS WERE BELOW 20,000/ - . T HE ASSESSING OFFICER ON V ERIFICATION OF LEDGER ACC OUNT OF EVERGREEN TRANSPORT AND MOVEX LOGISTIC (MAIN CONTRACTOR OF ASSESSEE) FROM THE BOOKS OF T HE ASSESSEE STATED THAT ALL THE PAYMENTS MADE WAS ABOVE RS. 20,000/ - ON WHICH THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S. 194C OF THE A CT. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE AMOUNT O F RS. 2 , 39 , 24 , 763/ - U/S. 40(A)(IA) FOR NOT DEDUCTING TDS ON WHICH PENALTY PROCEEDINGS U/S. 271(1)(C) WAS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD. CIT(A) HAS CONFIRMED T HE ADDITION TO THE EXTENT OF FOLLOWING AMOUNT: - (I) ADDITION OF RS. 39 , 30 , 624/ - U/S. 68 (II) ADDITION OF RS. 9, 00 ,000/ - (III) ADDITION OF RS . 2 , 19 , 64 , 923/ - I.T.A NO. 589 /AHD/20 14 A.Y. 2007 - 08 PAGE NO ITO VS. SHRI ATUL S. MEHTA 4 THEREAFTER, THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS.90,44,758 U/S 271(1)(C) OF ACT ON THE QUANTUM ADDITION OF RS.2,67,95,547 SUSTAINED BY THE CIT(A) . 4. THE ASSESSEE PREFERRED APPEAL BEFORE T HE LD. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEEE BY OBSERVING AS UNDER: - I AM INCLINED WITH THE CONTENTION OF A.O THAT IN THE ABSENCE OF ANY REPLY/EXPLANATION AGAINST THE SHOW CAUSE N OTICE FOR PENALTY U/S. 271(1)(C ) OF T HE ACT, EXPLANATION 1 TO 271 (1)(C ) OF THE ACT COMES IN PICTURE AND A.O IS JUSTIFIED IN LEVYING THE PENALTY . BUT, EVEN IN THESE CIRCUMSTANCES, THE A.O HAS T O DRAW A PROPER SATISFACTION IN RESPECT OF VARIOUS ISSUES FOR WHICH PENALTY HAS TO BE IMPOSED. IT IS A SETTLED LEGAL PREPOSITION THAT ASSESSMENT AND PENALTY ARE TWO DIFFERENT AND DISTINCT PROCEEDINGS AND IT IS NOT IN EACH AND EVERY CASE WHERE ADDITION IS M ADE, THE PENALTY IS EXIGIBLE. IN REFERENCE TO ADDITION FOR DISALLOWANCES U/S. 40(A)(IA) OF THE ACT FOR AN ADDITION OF RS. 2,19,64,923/ - AIL THE DETAILS WERE SUBMITTED BY APPELLANT AND WERE BEFORE THE A.O AS WELL AS LD. CIT(A). IT IS FROM THE SAID DETAILS O NLY, DEFAULT OF NON DEDUCTION OF TDS WAS FOUND. AS FAR AS GENUINELY OF SUCH TRANSACTION WITH AMOUNT THERE WAS NO AMBIGUITY I.E. BOTH A.O AND LD . CIT(A) ADMITTED THE SAME AS GENUINE AND ALLOWABLE EXPENDITURE WHICH APPELLANT CLAIMED IN HIS BOOKS OF ACCOUNT. IT IS ONLY BECAUSE OF DEEMING FICTION OF SECTION 40(A)(IA) OF THE ACT, SUCH EXPENDITURE WERE DISALLOWED. THE APPELLANT'S BOOKS OF ACCOUNTS WERE AUDITED AND THE AUDITOR HAS NOT MADE ANY ADVERSE REMARKS IN THE TAX AUDIT REPORT. FURTHER APPELLANT DO COMPLIED (THOUGH PARTLY AS HELD BY A.O. AS WELL AS LD . CIT(A) PROVISIONS OF TDS BY DEDUCTING TDS ON RS. 11,61,679/ - AND COLLECTING FORM 151'FROM FREIGHT EXPENSES OF RS. 552275 BUT FAILED IN DEDUCTING TDS FROM OTHER EXPENDITURE BECAUSE MAJOR PAYMENTS WERE MADE BY CO NTRACTORS ON BEHALF OF APPELLANT WHO HAD NOT DEDUCTED TDS. IT IS ALSO TRUE THAT THESE EXPENDITURE ARE ALLOWABLE IN ANY SUBSEQUENT YEAR ON THE BASIS OF TDS PAYMENT. IT IS THEREFORE, IN MY VIEW THE SATISFACTION OF FURNISHING INACCURATE PARTICULARS CANNOT BE DRAWN FOR SUCH GENUINE AND ALLOWABLE TRANSACTIONS FOR WHICH ALL THE DETAILS WERE REFLECTED AND SUBMITTED. THE A.O IN A MECHANICAL WAY AFTER THE ADDITION BEING CONFIRMED APPLIED EX PLANATION 1 TO SECTION 271(1)(C ) OF THE ACT AND IMPOSED THE PENALTY W HICH IS NOT SUSTAIN ABLE AS FAR AS LEGAL PREPOSITION FOR IMPOSITION OF PENALTY FOR SUCH LARGE AMOUNT IS CONCERNED. IN REFERENCE TO DISALLOWANCES OF SUCH EXPENSES, THE APPELLANT IS ALREADY SUFFERING HUGE TAX LIABILITY FOR ALMOST ENTIRE EXPENDITURE AND AGAIN IMPOSITI ON OF PENALTY FOR SUCH ADDITION WILL BE STRETCHING THE PURPOSE OF SECTION 40(A)(IA) OF THE ACT TO UNREASONABLE LIMIT. IT IS THEREFORE, THE PENALTY SO IMPOSED ON D ISALLOWANCES OF RS. 2,19,64,923/ - IS DIRECTED TO BE DELETED. I N REFERENCE TO OTHER ADDITION U/ S. 68 OF THE ACT, THE APPELLANT FAILED TO GISCNARGE ITS ONUS TO PROVE SOURCE OF FUNDS. I AM INCLINED WITH A.O THAT THE SAME BEING OUT OF THE PREVIEW OF TAX AUDIT AND IN THE AB SENCE OF ANY SATISFACTORY REPLY , INVOCATION OF PROVISION OF EXPLANATION 1 T O SECT ION 271(1)(C ) OF THE ACT IS JUSTIFIED. PENALTY SO IMPOS ED ON ADDITION OF RS. 39,30,624/ - AND RS. 900000/ - IS THEREFORE UPHELD AND CONFIRMED. 6. THE APPELLANT'S GROUND IS PARTLY ALLOWED. I.T.A NO. 589 /AHD/20 14 A.Y. 2007 - 08 PAGE NO ITO VS. SHRI ATUL S. MEHTA 5 5 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DEPARTM ENTAL REPRESENTATIVE HAS STATED IN RESPECT OF QUANTUM ADDITION NOBODY HAS APPEARED BEFORE THE CO - ORDINATE BENCH O F THE ITAT, THEREFORE, THE QUANTUM ADDITION ORDER IN THE CASE OF THE ASSESSEE WAS DISMISSED BY THE HON BLE ITAT VIDE ITA NO. 2806/AHD/2010 DA T ED 22 ND NOVEMBER, 2013. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSAL OF THE MATERIAL ON RECORD, WE OBSERVED THAT THAT LD. CIT(A) HAS ALLOWED PART RELIEF TO THE ASSSESSEE ON THE PENALTY LEVIED BY THE ASSESSING OFFICER PERTAINING TO THE DEF AULT OF NON - REDUCTION OF TDS . THE LD. CIT(A) HELD THAT BECAUSE OF DEEMING FICTION OF SECTION 40(A)(IA) OF THE ACT, SUCH EXPENDITURE WERE DISALLOWED. HE HAS , HOWEVER , STATED THESE EXPENDITURE ARE ALLOWABLE IN ANY SUBSEQUENT YEAR ON THE BASIS OF TDS PAYMENT . THEREFORE, HE CONCLUDED THAT PART OF THE PENALTY LEVIED ON THIS ISSUE IS NOT BASED ON FURNISHING OF INACCURATE PARTICULARS OF INCOME. AFTER CONSIDERING THE DETAILED FINDINGS OF THE LD. CIT(A), WE ARE NOT INCLINED TO INTERFERE IN THE DECISION OF THE LD. CIT(A) . THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 27 - 11 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 27 /11 /2017 I.T.A NO. 589 /AHD/20 14 A.Y. 2007 - 08 PAGE NO ITO VS. SHRI ATUL S. MEHTA 6 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER / , / ,