SUBODH R. NEMLEKAR, MUMBAI V. ITO - 13(2)(4), MUMBAI

ITA 5972/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6377 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Assessee Lawyers: SHAILESH S SHAH
• Keywords: Unexplained cash credit; Difference of opinion
• Section: 271(1)(c); 143(3); 131; 68

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5972/MUM/2016 (ASSESSMENT YEAR 2010-11 ) MR. SUBODH R. NEMLEKAR 1206, OBEROI WOOD, TOWER C, M.G. ROAD, GOREGAON (E), MUMBAI-400063. PAN: AAAPN6889N VS. ITO- 13(2)(4) MUMBAI. APPELLANT RESPONDE NT ASSESSEE BY : SHRI SHAILESH S. SHAH (AR) REVENUE BY : SHRI RAJEEV GUBGOTRA (DR) DATE OF HEARING : 01.02.2019 DATE OF PRONOUNCEMEN T : 06.02.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THE APPEAL BY ASSESSEE UNDER SECTION 253 OF THE INC OME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-21, MUM BAI DATED 27.06.2016 FOR ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HE REINAFTER REFERRED TO AS 'CIT (A)'] ERRED IN CONFIRMING THE FOLLOWING PENALT Y LEVIED BY THE LD. ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS AN D CIRCUMSTANCES OF THE CASE: SR. NO. PARTICULARS AMOUNT (RS.) A LEVYING PENALTY UNDER SECTION 271(1)(C) ON ACCOUNT OF ON INCOME SOUGHT TO BE EVADED OF RS. 5,00,000/- U/S 68 OF THE I.T. ACT AS UNEXPLAINED CASH CREDIT. 1,54,500 A. LEVYING PENALTY OF RS. 1,54,500/- UNDER SECTION 271 (1)(C) ON ACCOUNT OF ON INCOME SOUGHT TO BE EVADE OF RS. 5,00,000/- U/S 68 OF THE I.T. ACT AS UNEXPLAINED CASH CREDIT. THE LD. CIT (A) ERRED IN CONFIRMING THE PENALTY OF RS. 1,54,500/- UNDER SECTION 271(1)(C) OF THE I.T. ACT LEVIED BY THE LD. ASSESSING OFFICER ON ITA NO. 5972 MUM 2016-MR. SUBODH R. NEMLEKAR 2 ACCOUNT OF ON INCOME SOUGHT TO BE EVADED OF RS.5,00 ,000/- U/S 68 OF THE I. T. ACT AS UNEXPLAINED CASH CREDIT WITHOUT APPRECIATING THE FACT AND CIRCUMSTANCES OF THE CASE. THE PENALTY INVOKING THE PROVISIONS OF SECTION 271(1)(C) IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 ON 23.09.2011 DECLARING TOT AL INCOME OF RS. 18,00,640/-.THE RETURN OF INCOME WAS SELECTED FOR S CRUTINY. THE ASSESSMENT ORDER WAS PASSED ON 31.03.2015 UNDER SEC TION 143(3) OF THE ACT. THE ASSESSING OFFICER WHILE PASSING THE ASSESS MENT ORDER MADE ADDITION UNDER SECTION 68 OF RS. 20,00,000/- ON ACC OUNT OF UNSECURED LOAN. THE AO ADDED RS. 2.00 LAKHS RECEIVED FROM ARVIND GA NDHI, RS.1.00 LAKH RECEIVED FROM DILIP GANDHI, RS.2.00 RECEIVED LAKH FROM HIREN GANDHI & RS. 15.00 LAKHS FROM SHRI SUDODH NAMLEKAR AND TREA TED THE INCOME OF ASSESSEE UNDER SECTION 68. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION OF RS. 2.00 LAKHS RECEIVED FROM ARVIND GANDHI, RS.1.0 0 LAKH RECEIVED FROM DILIP GANDHI, RS.2.00 LAKHS RECEIVED FROM HIREN G ANDHI WAS SUSTAINED AND REMAINING RS. 15,00,000/- RECEIVED FROM SUDODH NAMLEKAR HUF WAS DELETED. AFTER DISMISSAL OF APPEAL ON QUANTUM ASSES SMENT, THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE FOR INITIATING PEN ALTY PROCEEDINGS UNDER SECTION 271(1)(C) DATED 16.03.2015. NO REPLY WAS FI LED BY ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 271(1)(C). THE ASSESSING OFFICER LEVIED A PENALTY OF RS. 1,54,500/- BEING 100% OF TAX SOUGH T TO BE EVADED VIDE ITS ORDER DATED 31.05.2015. ON APPEAL BEFORE THE LD. CI T(A), THE ACTION OF ITA NO. 5972 MUM 2016-MR. SUBODH R. NEMLEKAR 3 ASSESSING OFFICER IN LEVYING THE PENALTY WAS CONFIR MED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE SUBMITS THAT THE PENALTY WAS LEVIED BY ASSESSING OF FICER ON ACCOUNT OF ADDITION SUSTAINED ON ACCOUNT OF UNSECURED LOAN OF RS. 5,00,000/- FROM ARVIND GANDHI, DILIP GANDHI AND HIREN GANDHI. THE L D. AR OF THE ASSESSEE SUBMITS THAT ALL THREE PARTIES APPEARED BE FORE THE ASSESSING OFFICER AND FILED THE CONFIRMATION. THE ASSESSING O FFICER DOUBTED THE GENUINENESS OF TRANSACTION. THE ASSESSING OFFICER L EVIED THE PENALTY ON ADDITION UNDER SECTION 68 OF RS. 5,00,000/-. THE LD . AR OF THE ASSESSEE FURTHER SUBMITS THAT THE ASSESSEE HAS NEITHER CONCE ALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. THE PEN ALTY WAS LEVIED ON ACCOUNT OF DIFFERENCE OF OPINION. THE LD. AR OF THE ASSESSEE ALSO SUBMITS THAT ALL THE PARTIES WERE SUMMONED BY ASSESSING OFF ICER UNDER SECTION 131 OF THE ACT. IN RESPONSE TO THE SUMMONS, THE CREDITO RS NAMELY ARVIND GANDHI, DILIP GANDHI AND HIREN GANDHI FURNISHED THE IR COPY OF RETURN FOR ASSESSMENT YEAR 2008-09 TO ASSESSMENT YEAR 2012-13, STATEMENT OF BANK ACCOUNT ETC. THEREFORE, THE ASSESSEE HAS PROVED THE IDENTITY OF CREDITWORTHINESS AND GENUINENESS OF TRANSACTION. IT WAS SUBMITTED THAT IN ITA NO. 5972 MUM 2016-MR. SUBODH R. NEMLEKAR 4 QUANTUM APPEAL THE TRIBUNAL HAS ALREADY DELETED THE ADDITION OF RS. 2.00 LAKHS RECEIVED FROM ARVIND GANDHI IN ITA NO. 6457/M /2013 DATED 06.04.2018. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FOR THE REVENUE FURTH ER SUBMITS THAT THE ADDITION OF RS.3.00 LACKS IN THE QUANTUM ASSESSMENT HAVE BEEN UPHELD BY TRIBUNAL, THEREFORE, THE PENALTY ORDER IS LIABLE TO BE UPHELD TO THAT EXTENT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT WHILE FILING THE RETURN OF INCOME, THE ASSESSEE HAS FURNISHED TH E DETAILS OF LOAN AVAILED FROM VARIOUS PARTIES. THE ASSESSING OFFICER WHILE P ASSING THE ASSESSMENT ORDER TREATED THE LOAN FROM THREE PARTIES THAT THRE E CREDITORS NAMELY ARVIND GANDHI, DILIP GANDHI AND HIREN GANDHI AS UNEXPLAINE D CASH CREDIT UNDER SECTION 68 OF THE ACT. THE ASSESSING OFFICER INITIA TED THE PENALTY FOR FURNISHING INACCURATE PARTICULAR OF INCOME. THE ASS ESSING OFFICER LEVIED THE PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON IN ACCURATE PARTICULARS OF RS. 5,00,000/-. WE HAVE FURTHER NOTED THAT DURIN G THE ASSESSMENT, THE ASSESSEE HAS FURNISHED THE COPY OF RETURN OF INCOME , BANK STATEMENT OF ARVIND GANDHI, DILIP GANDHI AND HIREN GANDHI. THE A SSESSEE HAS AVAILED UNSECURED LOAN OF RS. 2,00,000/- FROM ARVIND GANDHI , RS. 2,00,000/- FROM DILIP GANDHI AND RS. 1,00,000/- FROM HIREN GANDHI. THOUGH THE ASSESSEE FURNISHED THE COMPLETE DETAILS OF THE TRANSACTION, HOWEVER, THE EXPLANATION ITA NO. 5972 MUM 2016-MR. SUBODH R. NEMLEKAR 5 AND THE DOCUMENTARY EVIDENCES FURNISHED BY ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER ON HIS OBSERVATION THAT CREDI TORS ARVIND GANDHI SHOWN INCOME OF RS. 1,56,762/-, DILIP GANDHI HAS SH OWN THE INCOME OF RS. 17,41,999/- AND HIREN GANDHI HAS SHOWN THE INCO ME OF RS. 1,61,129/-, WHICH IS JUST ABOVE THE TAXABLE INCOME. WE HAVE SEE N THAT THAT IN QUANTUM APPEAL THE TRIBUNAL HAS ALREADY DELETED THE ADDITIO N OF RS. 2.00 LAKHS RECEIVED FROM ARVIND GANDHI IN ITA NO. 6457/M/2013 DATED 06.04.2018. 6. THE ONLY ADDITION OF RS. 2,00,000/- FROM DILIP GAND HI AND RS. 1,00,000/- FROM HIREN GANDHI IS SUSTAINED BY TRIBUNAL UNDER SE CTION 68. THE ADDITIONS WERE SUSTAINED BY THE TRIBUNAL OBSERVING THAT THE ASSESSEE WAS FAILED TO SUBSTANTIATE THE GENUINENESS OF TRANSACTI ON QUA LOAN FROM DILIP GANDHI AND HIREN GANDHI. 7. IT IS SETTLED LAW THAT THE PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT OF THE ASSESSMENT PROCEEDINGS AND DESPITE CONFIRMAT ION OF ADDITION BY TRIBUNAL IN THE ASSESSMENT ORDER, THE ASSESSEE HAS A RIGHT TO CLAIM AND JUSTIFY THAT HE HAS ESTABLISHED THE IDENTITY, CREDI TWORTHINESS AND GENUINENESS OF THE LOAN. AS WE HAVE ALREADY NOTED T HAT OUT OF THE FOUR LOANS AVAILED BY ASSESSEE, THE TRIBUNAL CONFIRMED T HE ADDITION IN RESPECT OF LOAN RECEIVED FROM DILIP GANDHI AND HIREN GANDHI . THE HONBLE APEX COURT IN CIT VS. KHODAY ESWARSA & SONS [1972] 83 IT R 369 (SC) HELD THAT WHEREIN THE ADDITIONS MADE BY ASSESSING OFFICE R TO THE INCOME RETURNED BY THE ASSESSEE WERE SUSTAINED IN THE APPE LLATE PROCEEDING BUT ITA NO. 5972 MUM 2016-MR. SUBODH R. NEMLEKAR 6 PENALTY LEVIED UNDER SECTION 271(1)(C) WAS DELETED BY THE TRIBUNAL HOLDING THAT THERE MIGHT BE JUSTIFICATION IN MAKING ADDITIO N IN THE ASSESSMENT ORDER, THESE ADDITIONS, BY THEMSELVES, COULD NOT LE AD TO THE CONCLUSION THAT RESPONDENT HAD CONCEALED ITS INCOME OR THAT IT HAD FURNISHED DELIBERATELY INACCURATE PARTICULARS. FURTHER THE HONBLE APEX CO URT IN DILIP N. SHROFF [291 ITR 519] HELD THAT IN PENALTY PROCEEDING, THE AUTHORITIES MUST CONSIDER THE MATTER AFRESH AS THE QUESTION HAS TO B E CONSIDERED FROM DIFFERENT ANGLES. THEREFORE, IN VIEW OF THESE TWO L EADING DECISION OF HONBLE SUPREME COURT, WE HAVE CONSIDERED THE FACT OF THE ASSESSEES CASE AFRESH DESPITE THE ADDITION HAVE BEEN CONFIRME D IN RESPECT OF QUANTUM ASSESSMENT QUA THE LOAN OF DILIP GANDHI AND HIREN GANDHI. BEFORE US, THE ASSESSEE HAS FILED LOAN CONFIRMATION OF DILIP GANDHI AND HIREN GANDHI ( AS PER PAGE 13 & 14 OF THE PAPER BOO K). THE ASSESSEE HAS ALSO FILED BANK STATEMENT OF THE ASSESSEE SHOWING T HE PAYMENT OF INTEREST TO DILIP GANDHI AND HIREN GANDHI FROM FINANCIAL YEA R 2009-10 TO 1917- 18 (PAGE NO. 16 TO 26 OF PAPER BOOK). THE ASSESSEE HAS ALSO FILED COPY OF CAPITAL ACCOUNT, BANK STATEMENT OF DILIP GANDHI AND HIREN GANDHI, COPY OF BANK STATEMENT OF BANK OF MAHARASHTRA OF HIREN G ANDHI REFLECTING THE LOAN AMOUNT OF RS. 2,00,000/- PAID TO THE ASSESSEE ON 12.06.2009 (PAGE NO. 35 OF PAPER BOOK) AND THE COPY OF BANK STATEMENT OF DILIP GANDHI REFLECTING THE PAYMENT OF LOAN OF RS. 1,00,000/- O N 12.06.2009. AFTER CONSIDERING THE VARIOUS DETAILS FURNISHED BY ASSESS EE IN RESPECT OF LOAN ITA NO. 5972 MUM 2016-MR. SUBODH R. NEMLEKAR 7 AVAILED FROM DILIP GANDHI AND HIREN GANDHI, THE ASS ESSEE PRIMA FACIE DISCHARGED HIS ONUS. THE ASSESSING OFFICER NOT ACCE PTED THE CONTENTION OF THE ASSESSEE HOLDING THAT THE TRANSACTION WAS NOT P ROVED BY THE ASSESSEE. IN OUR VIEW, THE ASSESSING OFFICER HAS GIVEN HIS FINDI NG WITHOUT PROPERLY APPRECIATED THE VARIOUS EVIDENCES FURNISHED BY ASSE SSEE. IN OUR VIEW THE DISALLOWANCE OF LOANS RECEIVED FROM DILIP GANDHI AN D HIREN GANDHI CANNOT BE BASIS FOR LEVYING THE PENALTY UNDER SECTI ON 271(1)(C) SPECIALLY WHEN THERE IS SUFFICIENT DOCUMENTARY EVIDENCE IN SU PPORT OF GENUINENESS OF LOAN. THEREFORE, IN OUR VIEW THE ASSESSEE CANNOT BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS SO AS TO MAKE HIM LIABLE FOR PENALTY UNDER SECTION 271(1)(C). 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COUR T ON 06/02/2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 06.02.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI