KAVITA K. SALIAN, MUMBAI V. ITO 20(1)(4), MUMBAI

ITA 6149/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8081 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-03-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 21-10-2013
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Unexplained cash credit; Source of fund; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.6149/MUM./2013 ( ASSESSMENT YEAR :1997 - 98 ) KAVITA K. SALIAN PROP: VEEM ENGINEERING & SUCCESSFUL, MULTIPLIER FINANCE INVESTEMENT, 5/70 DEEP CO. HOUSING SOCEITY LTD. D.N NAGAR, J.P. ROAD, ANDHERI (W) MUMBAI 400 058 PAN AALPS8892F . APPELLANT V/S ITO 20(1)(4) MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI. RAJESH KUMAR YADAV DATE OF HEARING 02.03.2017 DATE OF ORDER 07.03.2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LD. CIT - A , DATED 31.07.2013, PERTAINING TO ASSESSMENT YEAR 1997 - 98, WHEREIN THE LD. CIT - A HAS AFFIRMED THE LEVY OF PENALTY OF RS.1,49,600/ - U/S. 271(1) C OF INCOME TAX ACT. 2. IN THIS CASE AO LEVIED PENALTY AS ABOVE BY OBSERVING AS UNDER; KAVITA K. SALIAN ITA NO.6149/MUM./2013 2 IN THIS CASE THE ASSESSMENT WAS COMPLETED U/ S.143(3) R . W . S 254 OF THE ACT ON 27 - 12 - 2010, THE TOTAL INCOME HAVE ASSESSED AT RS.13,96,6101 - . WHILE PASSING THE ORDER, THE ADDITIONS WAS MADE OF RS.2,00,000/ - ON ACCOUNT OF CASH CREDIT IN HANDS OF THE ASSESSEE. THIS ADDITIO N WAS MADE SINCE THE ASSESSEE HAS NOT EXPLAINED SATISFACTORILY THE CASH PAYMENT OF RS.2,00000/ - MADE TO THE VARIOUS LABORS AT THE SIGHT OF M/S. SHAKTI ACQVA AND ALSO BY M/ S. SHAKTI ACQVA ON BEHALF OF THE ASSESSEE. THE ANOTHER ADDITION WAS MADE ON ACCOUNT O F UNPROVED LOANS TO THE EXTENT OF RS.1,75,000/ - SINCE THE ASSESSEE HAS FAILE D TO PROVE THE GENUINENESS OF LOA NS TRANSACTIONS FOR LOAN TAK EN FROM THE LOAN CREDITORS ALONGWITH THEIRS SOURCES OF INCOME , CREDIT WORTHINESS AND CAPACITY OF ISSUING LOANS. AS THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HER INCOME AND ALSO FILED INACCURATE PARTICULARS OF HER INCOME I N THE MANNER AS EXPLAINED IN ABOVE THE PENALTY PROCEEDINGS U/S.271(1 )(C) HAVE BEEN INITIATED BY ISSUE OF NO TICE U/S.271(1)(C) DATED 27 - 12 - 2010 AND THE SAME WAS DULY SERVED ON THE ASSESSEE. SINCE THE ASSESSEE COULD NOT COM PLY THE NOTICE ISSUE U/S.271(J)(C) , A ANOTHER OPPORTUNITY IS GIVEN TO THE ASSESSEE FOR FI LING OF HER WRITTEN REPLY BY I SSUE OF LETTER DATED 07 - 06 - 2011 WHICH IS ALSO DULY SERVED ON THE A SSESSEE. IN RESPONSE TO THE ABOVE NOTICES, THE ASSESSEE HAS KAVITA K. SALIAN ITA NO.6149/MUM./2013 3 FILED HER SUBMISSIONS VIDE HER LETTER, RECEIVED IN THIS OFFICE ON 20 - 06 - 2011, AS UNDER: ALSO, THE AMOUNT OF UNPROVED LOAN OF RS.1,74,000/ - WAS RIGHTLY CONSIDERED AS THE ASSESSEE'S INCOME FROM UND I SCLOSED SOURCES, AS THE ASSESSEE HAS FAILED TO SUBSTANTIATE THIS LOAN TRANSACTION A L ONGWITH THE SOURCES OF INCOME OF THE LOAN CREDITORS, THEIR CREDIT WORTHINESS AND CAPACITY OF ISSUANCE OF LOANS. SINCE THE GENUINENESS OF THE LOAN TRANSACTIONS AMOUNTING TO RS.1,74,000 / - WAS NOT EXPLAINED BY THE ASSESSEE AS THE BURDEN OF PROOF TO PROVE THE GENUINENESS OF LOAN TRANSACTION LIES OR THE ASSESSEE, THE SAME WAS RIGHTLY CONSIDERED AS THE ASSESSEE S INCOME FROM OTHER SOURCES FOR THE CURRENT YEAR. I.E. A.Y. 1997 - 98. 3. UPON ASSESSEE S APPEAL THE LD. CIT - A NOTED THE EARLIER SUBMISSION OF THE ASSESSEE IN THE PENALTY PROCEEDINGS AS UNDER; I HAVE RECEIVED YOU NOTICE FOR IMPOSING A PENALTY U/S. 271(1)(C). IT SEEMS THAT YOU ARE PROPOSING TO IMPOSE PENALTY U/S/ 271(1)(C) IN RESPECT OF ADDTIONS MADE ON TWO COUNTS IN THE ASSESSMENT ORDER NAMERLY; UNEXPLAINED CASH CREDIT OF RS. 2LACS. UNPROVED L OANS TO THE EXTENT OF RS. 1.74LACS I WISH TO SUBMIT THE FOLLOWING FACTS FOR YOUR KIND PERUSAL. CASH CREDIT OF RS. 2 LACS KAVITA K. SALIAN ITA NO.6149/MUM./2013 4 RS.2,00,000/ - WERE RECEIVED FROM M/S SHAKTI A QUACUL TURE LTD TO TIDE OVER THE FINANCIAL CRISES FACED BY ME ON 05 - 04 - 1 996, SUBSEQUENTLY RS.2 L ACS WERE WITHDRAWN ON 14 - 08 - 1996 AND RETURNED TO M /S SHAKTI AQUACULTURE LTD. THE LD. AO WITHOUT TAKING COGNIZANCE OF HARD REALITIES OF FISHING BUSINESS GONE TOWARDS THE DIFFERENT DIRECT/OR, AND TRIED TO DIS APPROVE THE HAPPENING OCCURRED IN APRIL & A UGUST, 1996. UNDER THESE CIRCUMSTANCES, THE SO CALLED ADDITIONS OF RS.2 L ACS CANNOT BE CONSTRUED AS FILING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. UNSECURED LOANS OF RS.1.74 LACS DURING THE ASSESSMENT PROCEEDINGS, I HA D SUBMITTED ALL THE DETAILS OF LOAN CREDITORS OF RS.3.04LACS. OUT OF WHICH, THE 14 AO HAD DISALLOWED CREDITORS WORTH RS.1.74 LACS AND ADDED BACK TO THE RETURNED INCOME UNDER THE PRETEXT OF INCOMPLETE DETAILS. I RESPECTFULLY THAT ADDITIONS OF UNSECURED LOANS ON ACCOUNT OF INCOMPLETE DETAILS CANNOT BE CONSTRUED AS FLING OF INACCURATE OR FALSE DETAILS. I HAD SUBMITTED ALL THE DETAILS - A DDRESS, LOAN CONFIRMATIONS, GIR NOS (PREVALENT IDENTIFICATION NUMBER IN INCOME TAX DEPARTMENT WHICH WA S SIMILAR TO PAN). HOWEVER, THE LOANS WERE NOT PROVEN AS FALSE. SINCE MANY YEARS HAVE BEEN PASSED, IT WAS VERY DIFFICULT TO TRACK THE KAVITA K. SALIAN ITA NO.6149/MUM./2013 5 PEOPLE AND OBTAIN EVIDENCE OF LOAN AND PROOF OF THEIR ABILITY TO PROVIDE LOAN. THIS CANNOT BE INTERPRETED AS UNSECURED LOAN S WERE FAKE. FURTHER, THE LOAN AMOUNT WAS VERY SMALL. THE DEPARTMENT COULD HAVE SUMMONED THE RESPECTIVE LOAN CREDITORS TO PROVE THAT THEY WERE FALSE. I AM , ALREADY PENALIZED THROUGH TAX LEVIED ON ADDITIONS MA DE IN THE SCRUTINY ASSESSMENT. FURTHER, PENALTY WILL BE TOO HARSH AND WILL PUT ME IN FINANCIAL HARDSHIPS. FURTHER, THERE IS NO SPECIFIC WRONG SHOW TO HAVE BEEN COMMITTED ATTRACTING THE PENALTY PROVISIONS. IN MY CASE, THE CONCEPT OF 'MENS REA' IS COMPLETELY ABSENT AND IT IS NOT PROVED. 'MENS REA' IS THE BASK FOUNDATION FOR IMPOSITION OF PENALTY. MENS R EA' I S EVIL INTENTION OF KNOWLEDGE OF THE WRONGFULNESS OR THE ACT THAT A PERSON COMMITS. IT IS SAID TO BE PRESENT IN A PERSON DOES SOMETHING INCORRECTLY DELIBE RATELY KNOWING THAT HIS ACTION I S AGAINST LAW. IN OTHER WORDS, THE PERSON HAS GUILTY MIND IN COMMITTING THE RELEVANT ACT. ONLY WHEN SUCH MENTAL ATTITUDE IS PRESENT IN AN ACT, THE PERSON WHO COMMITS IT IS SAID TO HAVE ACTED DELIBERATELY IN DEFIANCE OF LAW OR IS GUILTY OF DISHONEST CONDUCT WHICH IS NOT T HE CASE IN THIS MATTER. GUILTY MIND, OR DELIBERATE EFFORTS TO CONCEAL THE FACT IS NEVER ARGUED OR PUT ON RECORD. KAVITA K. SALIAN ITA NO.6149/MUM./2013 6 4. HOWEVE R THE LD. CIT - A WAS NOT CONVINCED . LD. CIT - A WENT ON TO HOLD THAT A DIFFERENCE BETWEEN THE RETURNED AND ASSESS ED INCOME LEA DS TO INF ERENCE OF CONCEALMENT. LEARNED CIT - A PROCEEDED TO CONFORM THE PENALTY. AGAINST ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US . 5. WE HAVE HEARD THE LD. DR . NONE APPEARED ON BEHALF OF THE ASSESSEE. BUT IN OUR CONSIDERED OPINION THE ISSUE CAN BE ADJUDICATED BY HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. 6. WE FIND THAT IN THIS CASE PENALTY HAS BEEN LEVIED ON ACCOUNT OF ADDITION OF 4.74 LACKS. THESE WERE HELD TO BE UNCONFIRMED /UNSUBSTANTIATED CASH CREDIT. ASSESSEE S CLAIM IS THAT THE NECESSARY PARTICULARS WERE DULY SUBMITTED. THE LACK OF RESPONSE FROM THE CREDITORS CANNOT LEAD TO AN INFERENCE OF CONCEALMENT. AS R EGARDS THE CASH CREDIT OF RS. 2 LACKS IT HAS BEEN SUBMITTED THAT NAME OF THE PARTY WAS DULY DISCLOSED AND ASSESSING OFFICER HAS FAILED TO TAKE COGNIZANCE OF THE SAME. IN THE SE CIRCUMSTANCES IN OUR CONSIDERED OPINION ASSESSEE CANNOT BE HELD GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PA RTICULARS OF INCOME. LD. CIT WAS AWARE OF THIS ASPECT BUT HAS HELD THAT THE DIFFERENCE BETWEEN ASSESSED I NCOME AND THE RETURNED INCOME LEAD S TO AN INFERENCE THAT THERE WAS CONCEALMENT. KAVITA K. SALIAN ITA NO.6149/MUM./2013 7 THIS IS TOTALLY AGAINST THE EXPOSITION OF TH E HONBLE APEX C OURT IN THE CASE OF RELIANCE PETRO PROD UCT. FURTHERMORE WE NOTE THAT A LARGER BENCH OF THE HONBLE APEX C OURT IN THE CASE OF HINDUSTAN STEEL LTD VS S TATE OF ORISSA 83 ITR 26 HAD EXPOUNDED THAT PENALTY NEED NOT BE LEVIED IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. IN THE FACT S AND CIRCUMSTANCES OF THIS CASE IN OUR CONSIDERED OPINION THE ASSESSEE'S CONDUCT IS NOT CONTUMACIOUS TO WARRANT LEVY OF PENALTY. 7. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT'S WE SET ASIDE THE ORDER'S OF LD. CIT - A AND DELETE THE LEVY OF PENALTY. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 07.03.2017 SD/ - SD/ - RAVISH SOOD SHAMIM YAHIYA JUDICIAL MEMBER ACCOUNTANT MEMBER KAVITA K. SALIAN ITA NO.6149/MUM./2013 8 MUMBAI, DATED: 07.03.2017 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 NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI