M/s. Panchsheel Glass Co., Ahmedabad V. The Income tax Officer,Ward-2(2), Ahmedabad

ITA 662/AHD/2011

• Counselvise Citation: 66220514 RSA 2011
• Duration Of Justice: 2 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 01-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Gross profit estimation; Unexplained cash credit; Opportunity of being heard; Reasonable cause
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 662/AHD/2011 ASSESSMENT YEAR :2003-04 M/S. PANCHSHEEL GLASS COPORATION 1754, OPP: BALA HANUMAN, GANDHI ROAD, AHMEDABAD V/S . THE INCOME TAX OFFICER, WARD-2(2), AHMEDABAD. PAN NO. A AEFP6110R (APPELLANT) .. (RESPONDENT) / BY APPELLANT NONE /BY RESPONDENT SHRI P. L. KUREEL, SR. D.R. /DATE OF HEARING 17.02.2014 /DATE OF PRONOUNCEMENT 21.02.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF ASSESSEE WHICH H AS EMANATED FROM THE ORDER OF CIT(A)-XVI, AHMEDABAD, DATED 20.12.201 0 FOR ASSESSMENT YEAR 2003-04. THE SOLE GROUND OF ASSESSEES APPEAL IS A GAINST CONFIRMING PENALTY OF RS.94,448/- LEVIED BY THE A.O. U/S. 271(1)(C) OF THE IT ACT. 2. THE A.O. MADE ADDITION IN ASSESSMENT PROCEEDING UNDER THE HEAD CASH CREDITOR U/S. 68 AT RS.3,39,000/- AND ADDITI ON DUE TO GROSS PROFIT AT RS.2,89,230/-, IN TOTAL RS.6,28,230/-. THE LD. A.O . INITIATED PENALTY PROCEEDING U/S.271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD BEFORE IMPOSI NG PENALTY U/S.271(1)(C) ON VARIOUS DATES. IN THIS CASE, THE RETURN OF INCO ME FOR A.Y. 2003-04 WAS FILED ITA NO. 662/AHD/11 A.Y. 03-04 M/S. PANCHSHEEL GLASS CORPORATION VS. ITO PAGE 2 ON 24.10.2003 DECLARING TOTAL INCOME OF RS.32,780/- . THE ASSESSMENT ORDER U/S. 143(3) OF THE IT ACT PASSED ON 24.03.2006 ASS ESSING TOTAL INCOME OF RS.6,61,010./-, WHEREIN IN ADDITION OF RS.3,39,000/ - WAS MADE INTER ALIA, IN RESPECT OF THE UNEXPLAINED CASH CREDITOR U/S. 68 OF THE IT ACT DURING THE ASSESSMENT PROCEEDING. IT WAS NOTICED THAT THE ASS ESSEE HAD TAKEN LARGE NUMBER OF LOANS AND OUTSTANDING BALANCE AGAINST LOA N WAS RANGING FROM RS.15,000/- TO 18,000/- AND IT WAS ALSO NOTICED THA T INTEREST WAS NOT PAID TO ANY OF THESE CREDITORS. THE ASSESSEE SUBMITTED CON FIRMATION OF THE CREDITOR IN CERTAIN CASES. BUT NONE OF THEM WERE HAVING PAN AN D WERE NOT FILING INCOME TAX RETURN. MOREOVER, NONE OF THEM HAD PROVIDED AN Y EVIDENCE TO PROVE THEIR CREDITWORTHINESS. THUS, THE ASSESSEE WAS NOT ABLE TO ESTABLISH EITHER THE CREDITWORTHINESS OF THE CREDITORS AND THE GENUI NENESS OF THE TRANSACTIONS. IN VIEW OF THESE FACTS, CASH CREDITOR OF RS.3,39,00 0/- WAS HELD AS UNEXPLAINED. ON APPEAL BEFORE THE LD. CIT(A) WHO HAD CONFIRMED T HE ADDITION OF RS.3,39,000/- MADE U/S. 68 OF THE IT ACT. THEREAFT ER, SECOND APPEAL FILED BY THE ASSESSEE BEFORE THE HONBLE ITAT, AHMEDABAD. I T HAS ALSO CONFIRMED THE ADDITION OF RS.2,57,000/- OUT OF ABOVE CASH CREDITO R OF RS.3,39,000/-. THE ASSESSEE HAD PROVIDED A FURTHER SHOW CAUSE NOTICE U /S. 271(4) R.W.S. 271(1)(C) ISSUED TO THE ASSESSEE ON 09.07.2009. TH E ASSESSEE NEITHER APPEARED ON THE SCHEDULED DAY NOR DID FILE ANY COMP LIANCE TO THE SHOW CAUSE NOTICE. THE ASSESSEE FAILED TO SHOW ANY REASONABLE CAUSE AS TO WHY THE PENALTY U/S.271(1)(C) SHOULD NOT BE LEVIED ON IT. THE LOANS TAKEN BY THE ASSESSEE ARE AS UNDER: ITA NO. 662/AHD/11 A.Y. 03-04 M/S. PANCHSHEEL GLASS CORPORATION VS. ITO PAGE 3 SR. NO. NAME OF THE DEPOSITOR MODE OF PAYMENT & AMOUNT ANALYTICAL REMARKS AFTER THE SCRUTINY BY THE CIT(A) AND ITAT 1. HANSABEN CHIMANLAL DESAI (NOT ASSESSE TO TAX) CHEQUE RS. 30,000/- NO EVIDENCE HAS BEEN FILED TO PROVE GENUINENESS 2. BIRJU PATEL (NOT ASSESSE TO TAX) CASH RS.18,000/- -DO- 3. SNEHAL SHAH (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 4. MAULIN SHAH (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 5. MAYUR J. BHATT (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 6. MILAP A. SHAH (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 7. PRATIK V. SHAH (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 8. HARDIK B. GANDHI (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 9. BHAVIN A. SHAH (NOT ASSESSE TO TAX) CASH RS.17,000/ -DO- 10 HARSHAD J. RASANIYA (NOT ASSESSE TO TAX) CASH RS.15,000/ -DO- 11. MUKUNDRAI DAVE (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 12. NIRANJANABEN DAVE (NOT ASSESSE TO TAX) CASH RS.18,000/ -DO- 13. KAMLABEN MANISHANKER (NOT ASSESSE TO TAX) CASH RS.15,000/ -DO- 14. SEVANTIBHAI N. SHAH CASH RS.18,000/ -DO- TOTAL RS. 2,57,000 /- THE A.O. WAS CONVINCED THAT THE ASSESSEE HAD CONCEA LED ITS INCOME BY FILING INACCURATE PARTICULARS. THE INCOME CONCEALED BY TH E ASSESSEE WAS RS.2,57,000/-. THEREFORE, HE IMPOSED 100% PENALTY OF TAX SOUGHT TO BE EVADED AT RS.94,448/-. ITA NO. 662/AHD/11 A.Y. 03-04 M/S. PANCHSHEEL GLASS CORPORATION VS. ITO PAGE 4 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD PARTLY ALLOWED THE APPEAL BY OBSERVING AS UNDER: 4.1 I HAVE CONSIDERED THE SUBMISSION MADE BY THE AP PELLANT AND OBSERVATION OF THE AO. FROM THE ORDER OF HONORABLE ITAT DATED 03/04/2O09 IN ITA NUMBER 3360/AHD/2008 FOR ASSESSME NT YEAR UNDER CONSIDERATION IT IS CLEAR THAT THE HONORABLE ITAT I N PARAS 5 TO 9 HAS CONFIRMED THE CASH CREDIT ADDITION OF RS. 257000/-I N ABSOLUTELY CLEAR TERMS. IN PARAS 10 AND 11, THE HONORABLE ITAT HAS CONFIRME D THE ADDITION ON ACCOUNT OF LOW GP RATE TO THE EXTENT OF 8% THERE BY CONFIRMING THE ADDITION ONLY TO THE EXTENT OF 2.35%. HOWEVER, IN PARA 12 OF THE ITAT ORDER, THE HONORABLE ITAT HAS STATED 'SINCE WE HAVE SUSTAINED THE ADDITION TO THE EXTENT OF 2.35% BY WAY OF GROSS PRO FIT IN THE SUBSEQUENT PARA, THE ADDITION ON ACCOUNT OF CASH CR EDITS AS THE SUSTAINED BY US IN THIS PARA DO NOT EXCEED THE TRAD ING ADDITION SUSTAINED BY US, NO SEPARATE ADDITION SHOULD BE MAD E FOR THE CASH CREDIT. IN CASE THE CASH CREDITS SUSTAINED BY US EX CEED THE GP ADDITION SUSTAINED BY US, THE ADDITION ON ACCOUNT O F CASH CREDITS WILL REMAIN ONLY TO THE FIGURE WHICH COMES AFTER DEDUCTI NG FROM THE CASH CREDITS THE TRADING ADDITION.' 4.2 FROM THIS IT IS VERY CLEAR THAT THE HONORABLE ITAT HAS CONFIRMED THE CASH CREDITS AND HAS USED GP ADDITION AS SUPPORTING BASE. IT IS VERY CLEAR THAT THE APPELLANT COULD NOT EXPLAIN THE CASH CREDITS ADDED IN THE BOOKS OF ACCOUNT AND HENCE, TH E APPELLANT HAS CLEARLY FURNISHED INACCURATE PARTICULARS OF INCOME THEREBY BRINGING IN THE CONCEALED THE INCOME. THE APPELLANT HAS BROU GHT BACK ITS UNEXPLAINED INCOME IN THE FORM OF CASH CREDITS AND THEREFORE THE CASH CREDIT COULD NOT BE EXPLAINED. 4.3 AS REGARDS QUANTUM OF PENALTY IS CONCERNED, THE AO HAS ISSUED DEMAND NOTICE OF ONLY MINIMUM PENALTY OF RS. 94448/ - EVEN THOUGH IN THE PENALTY ORDER IT IS STATED THAT THE PENALTY OF RS. 1.5 LAKH IS LEVIED. ITA NO. 662/AHD/11 A.Y. 03-04 M/S. PANCHSHEEL GLASS CORPORATION VS. ITO PAGE 5 CONSIDERING THE FACT THAT IN SUCH CASES, THE DEPART MENT LEVIES ONLY MINIMUM PENALTY THE PENALTY IS REDUCED TO THE MINIM UM AMOUNT OF RS. 94448/-. THE GROUNDS OF APPEAL ARE THEREFORE PARTLY ALLOWED. 4. NOW THE ASSESSEE IS BEFORE US IN RESPONSE TO NOT ICE NONE APPEARED FROM THE SIDE OF THE ASSESSEE AND NO LETTER FOR ADJ OURNMENT WAS RECEIVED. THEREFORE, WE ARE DECIDING THIS APPEAL ON THE BASIS OF WHATEVER EVIDENCE AVAILABLE IN THE FILE. AT THE OUTSET, LD. SR. D.R. ARGUED TO CONFIRM THE PENALTY AS ADDITION HAS BEEN CONFIRMED BY THE ITAT ON QUANT UM. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS FOUND THAT LOAN OF RS.2,27,000/- ARE IN CASH IN THE NAME OF 13 PARTIES AND ONE LOAN IS ALSO BY CHEQUE OF RS.30,000 /-, BUT IN RESPECT OF ALL THE 14 PARTIES, THE ASSESSEE HAD NOT BEEN ABLE TO GIVE ANY EVIDENCE TO PROVE THE GENUINENESS OF LOAN AND THEREFORE, THE SAME WERE CO NFIRMED BY THE CIT(A) AS WELL AS ITAT. EVEN AT THE STAGE OF PENALTY PROCEED ING AND APPEAL FOR PENALTY, THE ASSESSEE COULD NOT REVERT THE FINDING OF THE A. O. THE APPELLANT ARGUED BEFORE THE CIT(A) THAT HONBLE ITAT HAD CONFIRMED T HE ADDITION ON GROSS PROFIT TO THE EXTENT OF RS. 2,45,469/- AS WELL AS THE ADDI TION OF CASH CREDIT OF RS.2,57,000/-. THE APPELLANT STATED THAT THE HONB LE ITAT HAD THEREFORE SUSTAINED THE ADDITION OF GROSS PROFIT UP TO THE EX TENT OF RS.2,45,469/- AND ON THE GROUND OF CASH CREDIT ONLY RS.11,532/- AND ARGU ED THAT SINCE THE ADDITION WAS MADE IN GP ON THE BASIS OF ESTIMATION. THEREFO RE, NO PENALTY SHOULD HAVE BEEN IMPOSED. BUT ON VERIFICATION OF ITAT ORD ER, IT WAS FOUND THAT ITAT HAS CONFIRMED THE ADDITION UNDER THE HEAD CASH CRE DITOR AT RS.2,57,000/- WHICH HAS BEEN CONSIDERED BY THE LD. CIT(A). THERE FORE, IN OUR CONSIDERED ITA NO. 662/AHD/11 A.Y. 03-04 M/S. PANCHSHEEL GLASS CORPORATION VS. ITO PAGE 6 VIEW, IT IS A CLEAR CASE OF CONCEALMENT OF INCOME A ND FURNISHING INACCURATE PARTICULARS. THUS, WE CONFIRM THE ORDER OF THE CIT (A). 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 21.02.2014 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;