DASADIA DEVELOPERS P. LTD, MUMBAI V. ITO WD 8(1)(3), MUMBAI

ITA 6003/MUM/2011

• Counselvise Citation: 600319914 RSA 2011
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-12-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 29-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: S K GOPAL
• Keywords: Unexplained cash credit; Depreciation; Wrong claim; Onus to prove
• Section: 68

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH , ! ' # # # # !$% , $! ' BEFORE S/SH.JOGINDER SINGH, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.6003/MUM/2011, &! &! &! &! ' ' ' ' / ASSESSMENT YEAR-2001-02 DASADIA DEVELOPERS PVT. LTD. 9/C, LAXMI INDUSTRIAL ESTATE, LINK ROAD, ANDHERI (WEST), MUMBAI-400053 PAN: AAACD3800G &! VS. ITO, WARD 8(1)(3), 5TH FLOOR, AAYAKAR BHAVAN, R.NO. 544, MUMBAI-400020 ( !() / APPELLANT) ( *+() / RESPONDENT) &!,- &!,- &!,- &!,- . . . . $ $$ $ / ASSESSEE BY : SHRI S.K.GOPAL !' / . $ / REVENUE BY : SHRI AKHILENDRA YADAV &! &! &! &! / // / -! -! -! -! / DATE OF HEARING :29 -12-2014 0' ! / -! / DATE OF PRONOUNCEMENT :16 -01-2015 & & & & , 1961 / // / !! !! !! !! 254(1) $ $$ $ -- -- -- -- $1 $1 $1 $1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. $! ' !$% $ &! : CHALLENGING THE ORDER DTD. 27.06.2011 OF THE CIT(A) -16,MUMBAI THE ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: PENALTY ORDER U/S.271(1)(C) OF THE ACT IS TIME BARR ED, HENCE BAD IN LAW & LIABLE TO BE QUASHED 1. THE LD. CIT(A) ERRED IN CONFIRMING & THE LD. AO ERRED IN PASSING THE PENALTY ORDER U/S.271(L)(C) OF THE ACT DATED 25/2/2010 WITHOUT AP PRECIATING THAT THE TIME LIMIT FOR PASSING THE PENALTY ORDER U/S.275(1)(A) WAS WITHIN ONE YEAR FROM THE END OF FINANCIAL YEAR IN WHICH THE CIT(A) PASSED THE QUANTUM ORDER, WHICH IN THIS CASE WAS PASSED ON 30 6 2006 AND HENCE. THE PENALTY ORDER COULD HAVE BEEN PASSED ON OR BEFORE 3 132008 AND THUS THE PENALTY ORDER PASSED ON 25/2/2010 IS BAD IN LAW AND LIABLE TO BE QUASHED. B.WITHOUT PREJUDICE TO ABOVE, ON MERITS,PENALTY LEV IED OF RS.248,896/- IS UNJUSTIFIED AND LIABLE TO BE DELETED 2. THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S.271(L)(C) OF THE ACT OF RS.2,48,896/- IN RESPEC T OF ADDITION U/S.68 OF RS.5,65,000/- & DISALLOWANCE OF DEPRECIATION ON MOTOR CAR OF RS.64, 320/WITHOUT APPRECIATING THAT THE APPELLANT HAD DULY GIVEN THE EXPLANATION IN RESPECT OF BOTH THE ISSUES AND THE SAME IS NOT FOUND TO BE FALSE AND MERELY BECAUSE THE EXPLAN ATION WAS NOT ACCEPTED IN THE QUANTUM PROCEEDINGS DOES NOT AUTOMATICALLY LEAD TO CONCEALM ENT OF INCOME FURNISHING INACCURATE PARTICULARS OF INCOME AND HENCE, THE PEN ALT Y LEVIED U S2TH 1 C OF THE ACT OF RS.2,48,896/- IS UNJUSTIFIED AND LIABLE TO BE DELET ED. THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER OR DE LETE ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL. DURING THE COURSE OF HEARING BEFORE US, THE ASSESSE E DID NOT PRESS GROUND OF APPEAL NO.1 AND SAME STAND DISMISSED AS NOT PRESSED. 2. GROUND NO.2 IS ABOUT PENALTY LEVIED U/S.271(1)(C) O F THE ACT,AMOUNTING TO RS. 2,84,896/- IN RESPECT OF ADDITION MADE U/S.68(RS. 5.65 LAKHS) AND DISALLOWANCE AND DEPRECIATION ON MOTOR CAR (RS.64,320/-).THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON 29.10.2001,DECLARING LOSS OF RS.28, 029/-.THE ASSESSING OFFICER(AO) COMPLETED THE ASSES SMENT ON 10.03.2004 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.6,42,801/-.IN THE ASSE SSMENT ORDER,PENALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED IN RESPECT OF TWO ADDITIONS MENTIONE D ABOVE.THE FIRST APPELLATE AUTHORITY (FAA) 2 ITA NO. 6003/M/2011 DASADIA DEVELOPERS PVT. LTD. AND THE ITAT CONFIRMED THE ADDITION MADE BY THE AO. AFTER RECEIVING THE ORDER OF THE TRIBUNAL, THE AO ISSUED A FRESH PENALTY NOTICE TO THE ASSESSE E.IN RESPONSE TO THE NOTICE THE ASSESSEE ARGUED THAT BECAUSE CERTAIN ADDITIONS WERE MADE U/S. 68 IT COULD NOT BE SAID THAT PARTICULARS FURNISHED BY IT WERE WRONG,THAT THE SAME DID NOT ATTRACT PENALTY U/S. 271(1)(C) EXPLANATION 1.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,THE AO HELD THAT TH E ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT WERE CONFIRMED BY BOT H THE APPELLATE AUTHORITIES,THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE LOAN TRANSAC TION AND THE IDENTITY OF THE CREDITORS.INVOKING THE PROVISIONS OF CLAUSE A TO EXPLANATION 1 TO SECT ION271(1)(C),HE LEVIED PENALTY OF RS.2,48,896/-. 3. IN THE APPELLATE PROCEEDINGS,AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,ASSESSMENT ORDER AND THE PENALTY ORDER,THE FAA HELD THAT IF AN ASSES SEE MADE A CLAIM WHICH WAS NOT AS PER LAW AND WAS WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FU RNISHED BY IT WAS FOUND NOT TO BE BONAFIDE,IT WOULD BE LIABLE TO PAY PENALTY U/S. 271(1)(C)OF THE ACT,THAT IN RESPECT OF CASH CREDITS INFERENCE OF DEEMED CONCEALMENT UNDER EXPLANATION WOULD APPLY,TH AT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION, THAT IT DID NOT FUR NISH ANY COGENT EXPLANATION FOR THE LAPSE, THAT THE AO HAD RIGHTLY LEVIED THE PENALTY.HE REFERRED TO TH E CASES OF ZOOM COMMUNICATION (P) LTD.(40 DTR 249),MASTER SUNIL R. KALRO (292 ITR 86),RAJASTH AN SPINNING & WEAVING MILLS (224 CTR), ATUL MOHAN BINDAL(317ITR1)AND PRATHI HARDWARE STORE S (203 ITR 641), 4. BEFORE US,AUTHORISED REPRESENTATIVE (AR) STATED THA T CONCEALMENT PENALTY SHOULD NOT BE LEVIED FOR ADDITIONS MADE/UPHELD DURING THE ASSESSMENT PRO CEEDINGS/APPELLATE PROCEEDINGS,THAT ALL THE NECESSARY DETAILS WERE FILED BY THE ASSESSEE ABOUT THE CASH CREDITS,THAT REJECTION OF A CLAIM SHOULD NOT RESULT IN AUTOMATIC LEVY OF PENALTY U/S. 271(1) (C),THAT IT HAD DISCHARGED ITS ONUS TO PROVE THE CREDITWORTHINESS OF THE PARTIES,THAT ADDITIONS MADE DUE TO UNEXPLAINED CASH CREDIT AND DISALLOWAN -CE OF DEPRECIATION DID NOT MEAN THAT THE ASSESSEE HAD CONCEALED ANY INCOME/HAD FURNISHED INACCURATE PARTICULARS.HE REFERRED TO CASES OF RELI ANCE PETROPRODUCTS(322ITR158),NATIONAL TEXTILES(249ITR125)AND BHARATESH JAIN(323ITR358).DE PARTMENTAL 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 THE AO HAD ADDITION U/S.68 OF THE ACT AS THE ASSESSEE COUL D NOT PROVE THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION.WHILE DECIDING THE A PPEAL FILED BY THE ASSESSEE THE TRIBUNAL HELD THAT THERE WAS VARIATION IN THE EXPLANATION OF THE ASSESSEE AT EACH STAGE OF THE PROCEEDING APART FROM THE FACT THAT THE CREDITWORTHINESS OF THE CRED ITORS WERE FROM THE ABOVE IT IS CLEAR THAT THE ASSESSEE HAD FA ILED BEFORE ALL THE THREE AUTHORITIES I.E.THE AO, THE FAA AND THE TRIBUNAL TO PROVE THAT THE CLAIM MA DE BY IT ABOUT THE LOAN TAKEN WAS GENUINE. IN THE CASE UNDER CONSIDERATION,IT WAS DUTY OF THE ASS ESSEE TO PROVE THE GENUINENESS OF THE TRANSACT - TION.IF THE ASSESSEE DID NOT AVAIL OPPORTUNITY TO P ROVE BASIC INGREDIENT OF LOAN TRANSACTION BY PRODUCING CORROBORATING EVIDENCES,AO HAD NO OPTION BUT TO LEVY PENALTY FOR FURNISHING INACCURATE PARTICULARS RESULTING IN CONCEALMENT OF PARTICULARS .COURTS ARE OF THE VIEW THAT THE OBJECT BEHIND THE ENACTMENT OF SECTION 271(1)(C)READ WITH THE EXPLANA TIONS IS TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. IN OTHER WORDS,SECTION 271(1)(C) HAS TO BE STRICTLY APPLIED IN THE LARGER INTEREST OF DISCIPLINE IN FILING CORRECT RETURNS BY THE ASSESSE ES.CLAIMING NON-GENUINNE DEDUCTIONS/ REBATE/ EXPENDITURE IN THE RETURN OF INCOME IS ONE OF THE M ETHOD TO AVOID PAYMENT OF DUE TAXES. TO DISCOURAGE SUCH PRACTICES,PENAL PROVISIONS HAVE BEE N INTRODUCED IN THE CHAPTER XXI OF THE ACT.IT IS SAID THAT IN VIEW OF PROVISIONS OF SECTION 271(1 )(C) OF THEACT,PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS CAN BE IMPOSED IF AN ASSESSEE OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE BY THE AO/FAA,OR IF THE ASSESSEE OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE.IN SUCH MATTERS,THE ONUS IS 3 ITA NO. 6003/M/2011 DASADIA DEVELOPERS PVT. LTD. ALWAYS ON THE ASSESSEE TO OFFER AN EXPLANATION IN R ESPECT OF THE CLAIMS MADE BY HIM IN THE RETURN OF INCOME. WE ARE AWARE THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM THE ASSESSMENT PROCEEDINGS AND AN ADDITION IN QUANTUM ASSESSMENT DOES NOT AUTOMATICAL LY BRINGS PENAL PROVISIONS IN TO PLAY, AS ARGUED BY THE ASSESSEE.BUT,IT IS ALSO TRUE THA FURN ISHING OF INACCURATE PARTICULARS IN THE RETURN OF INCOME ATTRACTS CONCEALMENT PENALTY.DURING THE PENA LTY PROCEEDINGS,THE ASSESSEE HAD NOT PRODUCED ANY POSITIVE EVIDENCE THAT PARTICULARS FIL ED BY IT IN THE RETURN WERE TRUE.ONCE A CLAIM WAS FILED BY THE ASSESSEE ABOUT THE CREDITOR (RS.5. 65 LAKHS)AND DEPRECIATION OF ASSETS,IT SHOULD HAVE LED SOME EVIDENCE THAT A REASONABLE AND PRUDEN T PERSON WOULD CONSIDERED SUFFICIENT.IN THE APPEAL BEFORE US,THE ISSUE IS NOT ABOUT SUFFICIENCY OF EVIDENCES,BUT NON EXISTENCE OF EVIDENCES ON BOTH THE COUNTS.THE ASSESSEE HAD MADE A CLAIM ABOUT CREDITORS WORTH RS.5.65 LAKHS AND THE CLAIM WAS PART OF THE BOOKS OF ACCOUNTS. NOT ONLY THIS TH E CLAIM WAS VERIFIED TO BE TRUE IN THE RETURN FILED BY IT.A RETURN OF INCOME IS NOT A JUST PIECE OF PAPER-RATHER IT IS A DOCUMENT THAT GIVES DETAILS OF INCOME,POSITIVE OR NEGATIVE,OF AN ASSESSEE.IT IS CONSIDERED AN ADMISSIBLE EVIDENCE IN THE COURTS.THEREFORE,IT IS EXPECTED FROM THE ASSESSEES THAT THEY WOULD FILE TRUE AND ACCURATE PARTICULARS OF THEIR INCOME.IN THE MATTER UNDER CONSIDERATION D ETAILS FILED BY THE ASSESSEE WERE NOT TRUE AND SAME AMOUNTED TO FURNISHING OF INACCURATE PARTICULA RS.ONCE BASIC FACTS WERE CONSIDERED BY THE TWO APPELLATE AUTHORITIES AND BOTH HAVE REACHED TO A LOGICAL CONCLUSION,THERE REMAINS NO DOUBT THAT IT IS A FIT CASE FOR LEVYING PENALTY. THEREFOR E,WE ARE OF THE OPINION THAT THE PARTICULARS FILED BY THE ASSESSEE ABOUT THE CREDITORS AND DEPRECIATION W ERE NOT ACCURATE AND TO THAT EXTENT WERE FALSE.WE FIND THAT TWIN CONDITIONS FOR LEVYING PENA LTY U/S.271(1)(C)OF THE ACT-AMOUNT IN QUESTION TO BE PART AND PARCEL OF THE INCOME OF THE ASSESSEE AND FILING OF INACCURATE PARTICULARS/CONCEALING OF PARTICULARS OF SUCH INCOME-EXIST IN THE CASE UND ER CONSIDERATION. NOW,WE WOULD LIKE TO CONSIDER THE CASE RELIED UPON BY THE ASSESSEE.IN THE MATTER OF RELIANCE PETRO-PRODUCTS PVT.LTD.(SUPRA) THE ASSESSEE HAS DUL Y DISCLOSED ABOUT THE CLAIM OF INTEREST UNDER SECTION 36(1)(III) AND IN EARLIER YEAR CLAIM WAS AL LOWED.NO STATEMENT OR DETAILS SUPPLIED BY THE ASSESSEE HAD BEEN FOUND TO BE FACTUALLY INCORRECT B Y THE AO.CONSIDERING THE FACTS OF THAT CASE HONBLE COURT HAD DELETED THE ADDITION.BUT,IN THE C ASE BEFORE US,A PATENTLY WRONG CLAIM WAS MADE ABOUT TWO ITEMS.AS FAR AS THE MATTER OF NATIONAL TE XTILES(SUPRA)IS CONCERNED WE WANT TO STATE THAT THE MATTER IS BASED ON PECULIAR FACTS OF THE CASE.T HERE THE AO HAD ADMITTED GENUINENESS OF CREDIT OF RS.50,000/-OUT OF THE RS.1.40 LAKHS AND ACCOUNT WAS ONE OF THE SQUARED UP ACCOUNT.LOANS TAKEN WERE TEMPORARY LOANS AND WERE ARRANGED BY THE ACCOUNTANT.IN THAT MATTER IT WAS HELD THAT THE BECAUSE OF STRAINED RELATION WITH THE ACCOUNTAN T,THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE PERSON WHO HAD ADVANCED LOAN TO THE ASSESSEE TH ROUGH THE ACCOUNTANT.CLEARLY,FACTS OF BOTH THE CASES ARE ENTIRELY DIFFERENT.SIMILARLY,IN THE CASE OF BHARTESH JAIN(SUPRA),THE ISSUE WAS TREATMENT OF LOSS AND NOT THE GENUINENESS OF THE CREDITORS.IN SH ORT,CASES RELIED UPON BY THE ASSESSEE ARE OF NO HELP.ON THE OTHER HAND,THE CASE RELIED BY THE FAA S UPPORT THE STAND TAKEN BY HIM. AS THE FACTS AND THE CONDUCT OF THE ASSESSEE CLEARL Y ESTABLISH THAT IT HAD FILED INACCURATE PARTICULAR S OF INCOME AND HAD THUS CONCEALED PARTICULARS OF INC OME,SO WE DO NOT WANT DISTURB THE ORDER OF THE FAA.THEREFORE,UPHOLDING HIS ORDER,GROUNDS NO.9 AND 10 ARE DECIDED AGAINST THE ASSESSEE. AS A RESULT,APPEAL FILED B Y THE ASSESSEE STANDS DISMISSED. 2-3 &!,- 4!! !5 / &!6 / !- 7 . ORDER PRONOUNCED IN THE OPEN COURT ON 16TH, JANUARY ,2015. $1 / 0' ! $ !! 8 9&! 16 & , ,, , 201 5 / = SD/- SD/- ( /JOGINDER SINGH) ( !$% / RAJENDRA) ! ' / JUDICIAL MEMBER $! $! $! $! ' ' ' ' / ACCOUNTANT MEMBER 4 ITA NO. 6003/M/2011 DASADIA DEVELOPERS PVT. LTD. / MUMBAI, 9&! /DATE: 16.01.2015 SK $1 $1 $1 $1 / // / *-> *-> *-> *-> ?$>'- ?$>'- ?$>'- ?$>'- / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / !() 2. RESPONDENT / *+() 3. THE CONCERNED CIT(A)/ @ A , 4. THE CONCERNED CIT / @ A 5. DR D BENCH, ITAT, MUMBAI / >B! *-& , . . !! . 6. GUARD FILE/ ! 2! +!>- *- //TRUE COPY// $1!&! / BY ORDER, C / ! ! DY./ASST. REGISTRAR , /ITAT, MUMBAI