AKBAR J MOMIN, MUMBAI V. ITO 21(3)(1), MUMBAI

ITA 6256/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3714 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

1 MR . AKBAR J MOMIN ITA 6256/MUM/2013 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMB ER ITA NO. : 6256 /MUM/20 1 3 (ASSESSMENT YEAR: 200 6 - 0 7 ) MR. AKBAR J MOMIN , C/O M.S. V B GOYAL & CL 102 UNIQUE TOWER, OFF S V ROAD, GOREGAON (WEST), MUMBAI - 400 062 .: PAN: AAOPM 7808 E VS IT O - 21 (3) (1) , MUMBAI (APP ELLANT) (RESPONDENT) APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : SHRI RAJENDRA KUMAR /DATE OF HEARING : 01 - 0 3 - 201 6 / DATE OF PRONOUNCEMENT : 04 - 03 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 29.08 .2013, PASSED BY C OMMISSIONER OF I NCOME T AX (A PPEALS ) - 3 2, MUMBAI [CIT(A)] IN RELATION TO THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE IS AGGRIEVED BY LEVY OF PENALTY OF RS.5,37,292/ - ON ACCOUNT OF ADDITION MADE UNDER SECTION 68 ON ACCOUNT OF UNEXPLAINED CA SH CREDIT OF SUMS AGGREGATING TO RS.17,62,900/ - . 2. BEFORE US, LD. COUNSEL SUBMITTED THAT , TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 HAS DELETED 2 MR . AKBAR J MOMIN ITA 6256/MUM/2013 THE PENALTY LEVIED ON SIMILAR ADDITION MADE IN THE ASSESSMENT YEAR 2005 - 06. TH EREFORE, IN THIS YEAR ALSO, FOLLOWING THE SAME RATIO PENALTY SHOULD BE DELETED. 3. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE AO AS WELL AS THE CIT(A). 4. AFTER CONSIDERING THE AFORESAID SUBMISSIONS AND ON PERUSAL OF THE RELEVANT FINDI NG GIVEN IN THE IMPUGNED ORDERS, WE FIND THAT ASSESSEES CASE WAS SELECTED FOR SCRUTINY BASED ON AIR INFORMATION THAT, ASSESSEE HAD DEPOSITED CASH OF RS.31,86,000/ - IN HIS SAVING BANK ACCOUNT WITH DEVELOPMENT CREDIT BANK, JOGESHWARI BRANCH, MUMBAI. OUT OF THE SAID AMOUNT, THE AO HAD ADDED SUMS AGGREGATING TO RS 17,62, 900/ - , AS UNEXPLAINED CASH CREDIT S UNDER SECTION 68 ON ACCOUNT OF CASH DEPOSITS / CASH LOANS TAKEN FROM VARIOUS PERSONS. THE ADDITIONS WERE MADE IN THE ASSESSMENT ORDER IN THE FOLLOWING MANNER: A. RS. 7,75,000/ - THE ASSESSEE HAD SUBMITTED THAT HE HAD RECEIVED CASH LOAN OF AN AMOUNT OF RS. 7,75,000/ - FROM DIFFERENT PARTIES AND THE SAME WERE DEPOSITED IN HIS SAVING BANK ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUI RED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS OF THE CASH LOANS AGGREGATING TO RS.7,75,000/ - . SINCE THE ASSESSEE FAILED TO FURNISH THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS THE ASSESSING OFFICER TREATED THIS SUM OF RS.7,75,000/ - AS U NEXPLAINED CASH CREDIT UNDER SECTION 68 AND ADDED BACK TO THE INCOME OF THE ASSESSEE. B. RS. 2,50,000/ - THE ASSESSEE HAD SUBMITTED THAT AN AMOUNT OF RS. 2,50,000/ - DEPOSITED IN THE BANK ACCOUNT WAS FAMILY BORROWINGS AND EARLIER SAVINGS. THE ASSESSEE REQUI RED TO SUBSTANTIATE HIS CLAIM WITH PROPER SUPPORTING DOCUMENTARY EVIDENCES. IN THE ABSENCE OF ANY SUPPORTING .. THE ASSESSING OFFICER TREATED THIS SUM OF RS.2,50,000/ - AS UN EXPLAINED CASH CREDIT UNDER SECTION 68 AND ADDED BACK TO THE INCOME OF THE ASSESSE E. C. RS. 4,00,000/ - THE ASSESSEE HAD SUBMITTED THAT AN AMOUNT OF RS. 4,00,000/0 DEPOSITED IN THE BANK ACCOUNT WAS BORROWINGS FROM MRS. ZARINA A MOMIN. THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE HIS CLAIM WITH PROPER SUPPORTING DOCUMENTARY EVIDENCES. IN TH E ABSENCE OF ANY SUPPORTING, THE ASSESSING OFFICER TREATED THIS SUM OF RS. 4,00,000/ - 3 MR . AKBAR J MOMIN ITA 6256/MUM/2013 AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 AND ADDED BACK TO THE INCOME OF THE ASSESSEE. D. RS. 3,37,900/ - THE ASSESSEE HAD SUBMITTED THAT HE WAS NOT IN A POSITION TO O FFER ANY EXPLANATION IN RESPECT OF AN AMOUNT OF RS. 2,37,900/ - . FURTHER, THE ASSESSING OFFICER FOUND OUT A DIFFERENCE OF RS. 1,00,000/ - IN THE CASH DEPOSITS AND TOTAL CASH DEPOSITED IN THE BANK ACCOUNT AND TREATED THIS TOTAL SUM OF RS. 3,37,000/ - AS UNEXPL AINED CASH CREDIT UNDER SECTION 68 AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE SOURCES OF FUND OF THE DEPOSITS AS EXPLAINED BY ASSESSEE DURING THE YEAR WERE IN THE FOLLOWING MANNER: TOTAL DEPOSITS DURING THE YEAR RS.31,86,000 SOURCES OF FUN DS: A) WITHDRAWALS FROM BANK RS. 14,23,100 B) LOAN FROM VARIOUS PARTIES SHOWN IN BALANCE SHEET I ) SAMRUDDIN ALI RS.2,00,000/ - II ) ZARINA AKBAR RS.1,75,000/ - III ) MOHAMMED KHANRS.1,50,000 IV ) KASIM NOORABHAIRS.1,75,000/ - V ) RUBIN MAKNOKJIARS. 75,000/ - RS. 7, 75,000 C) FAMILY BORROWINGS & EARLIER SAVINGS FROM AGRICULTURE INCOME RS. 2,50,000 D) BORROWED FROM MRS. ZARINA A MOMIN (PAN AGBPM 8118N) RS. 4,00,000 E) OTHER MIXED FUNDS RS. 3,37,900 RS.31,86,000 IN THE WRITTEN SUBMISSIONS FILED BEFORE US, T HE ASSESSEE HAS RAISED VARIOUS LEGAL CONTENTIONS AS TO WHY THE PENALTY ON SUCH AN ADDITION CANNOT BE LEVIED. THE TRIBUNAL IN THE AY 2005 - 06 VIDE ORDER DATED 27 TH APRIL, 2015 IN ITA NO. 6693/MUM/2011 HAS DELETED THE PENALTY AFTER OBSERVING AND HOLDING AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD HELD THAT THE ASSESSEE HAD OFFERED EXPLANATION ABOUT RS.20.36 LAKHS OUT OF THE CASH DEPOSIT OF RS.26.42 LAKHS, THAT A CLAIM ABOUT CASH WITHDRAWAL FROM THE BANK ACCOUNT OF THE WIFE OF THE ASSESSEE WAS MADE BEFORE THE AO AND THE FAA, THAT RELEVANT DOCUMENTS WERE FURNISHED IN SUPPORT OF THE CLAIM, THAT WHILE LEVYING THE PENALTY THE CASH AVAILABLE IN THE BANK ACCOUNT OF THE WIFE OF THE ASSESSEE WAS NOT CONSIDERED. IF THE PEAK AMOUNT AVAILABLE IN THE BANK ACCOUNT OF THE WIFE OF THE ASSESSEE IS TAKEN IN TO CONSIDERATION IT BECOMES CLEAR THAT THE ASSESSEE HAD LOGICALLY EXPLAINED THE SOURCES OF RS.26.42 LAKHS. THE AO AND THE FAA HAD MIXED THE ISSUE OF SECTIO N 269SS AND CONCEALMENT PENALTY. WE ARE OF THE OPINION THAT BOTH THE ISSUES ARE SEPARATE AND HAVE NO RELATION. FOR CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS A PENALTY 4 MR . AKBAR J MOMIN ITA 6256/MUM/2013 U/S.271(1)(C) CANNOT BE IMPOSED. ONE OF THE BASIC PRINCIPLE GOVERNING PENALTY PROV ISIONS IS THAT AN ADDITION MADE DURING ASSESSMENT PROCEEDINGS SHOULD NOT RESULT IN AUTOMATIC LEVY OF PENALTY. IN THE CASE UNDER CONSIDERATION, THE AO HAD LEVIED THE PENALTY AS A RESULT OF THE ADDITION MADE DURING QUANTUM PROCEEDINGS. BUT, IN OUR OPINION, F OR LEVYING CONCEALMENT PENALTY EXPLANATION OFFERED BY THE ASSESSEE HAS TO BE CONSIDERED AND IT HAS TO BE DECIDED AS TO WHETHER THE EXPLANATION IS PLAUSIBLE OR NOT. IF THE EXPLANATION OF THE ASSESSEE IS SUBSTANTIATED AND IS BONAFIDE, THEN NO PENALTY CAN BE LEVIED FOR CONCEALING THE PARTICULARS OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME. WE FIND THAT THE ASSESSEE HAD OFFERED AN EXPLANATION AND SAME IS SUBSTANTIATED BY THE BANK ACCOUNT OF HIS WIFE. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE REVERSING THE ORDER OF THE FAA AND DECIDING THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . H O W EVER, WE FIND THAT FACTS ARE SLIGHTLY DIFFERENT , WHICH MAY NOT APPLY COMP LETELY. HERE THE SOURCE OF BANK DEPOSITS HAVE BEEN SHOWN THROUGH LOANS TAKEN FROM FAMILY MEMBERS AND RELATIVES. THOUGH IN THE QUANTUM PROCEEDINGS, THE ASSESSEE COULD NOT SUBSTANTIATE THE CREDITWORTHINESS , BUT , IN THE PENALTY PROCEEDINGS, THE MATTER HAS TO BE RE - EXAMINED AFRESH AND EVEN IF IN THE QUANTUM PROCEEDINGS THE ASSESSEES EXPLANATION HAS NOT FOUND TO BE TENABLE BUT THAT FINDING ITSELF DOES NOT LEAD TO ANY INFERENCE THAT ASSESSEE IS GUILTY OF FURNISHING OF INACCURATE PARTICULARS. THE NATURE OF CREDIT HAS BEEN SHOWN OUT OF LOANS AND OWN FUNDS AND SOURCE HAS BEEN EXPLAINED FROM FAMILY MEMBERS AND RELATIVES. THE CREDITWORTHINESS MAY NOT HAVE BEEN ESTABLISHED BUT THAT FACTUM ITSELF COULD NOT BE THE CASE F OR FURNISHING OF INACCURATE PARTICULARS. THE AO HER E IN THIS CASE HAS LEVIED THE PENALTY F O R FURNISHING OF INACCURATE PARTICULARS AND NOT FOR CONCEALMENT OF INCOME , ALBEIT THERE COULD BE A CASE FOR CONCEALMENT OF INCOME, BUT I N THE FACTS OF THE CASE IT CANNOT BE HELD THAT THE PARTICULARS OF INCOME HAS NOT BEEN FURNISHED , BECAUSE THE N ATURE OF DEPOSITS AND ITS SOURCE HAVE BEEN GIVEN AND DULY DISCLOSED. THUS, PENALTY CANNOT BE LEVIED FOR FURNISHING OF INACCURATE PARTICULARS AND IT IS NOT THE CASE OF THE REVENUE BEFORE US THAT PENALTY SHOULD BE LEVIED FOR CONC EALMENT OF INCOME. THUS PENALTY IS DIRECTED TO BE DELETED. 5 MR . AKBAR J MOMIN ITA 6256/MUM/2013 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH , 2016. SD/ - SD/ - ( ) ( ) ( RAJE NDRA ) ( AMIT SHUKLA ) ACCOU NTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 4 TH MARCH , 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 3 2 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME TAX - CITY - 21 , MUMBAI . 5 ) , , / THE D.R. A BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS