Radha Nutirents Limited, Ambala V. ACIT, Ambala

ITA 671/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90161 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: R BANSAL
• Keywords: Initiation of penalty proceedings
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 671/CHD/2014 (ASSESSMENT YEAR : 2007-08) RADHA NUTIRENTS LIMITED VS. THE A.C.I.T., NEAR SAHA CHOWK, AMBALA. VILLAGE TELA, DISTT. AMBALA. PAN: AAACR7985A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. BANSAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 21.05.2015 DATE OF PRONOUNCEMENT : 05.06.2015 O R D E R PER T.R. SOOD, A.M. : IN THIS APPEAL, THE ASSESSEE RAISED FOLLOWING GROUN D OF APPEAL : 1. THAT THE LD.ACIT HAS ERRED IN LAW AND ON FACTS IN IMPOSING THE PENALTY OF RS.115640/- UNDER SECTION 271(1)(C) AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE ORDER OF THE LD.ACIT. 2. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE HAS RAISED VARIOUS UNSECURED LOANS TO THE TUNE OF RS.1,11,94,359/- AND ON FURTHER ENQUIRY, IT WAS FOU ND THAT NO CONFIRMATION WAS RECEIVED REGARDING THE LOAN FROM S HRI 2 KATHIRASE KUMAR FROM WHOM A SUM OF RS.1,72,550/- AN D RS.1,71,000/- WAS RECEIVED ON 29.3.2007 AND 30.3.20 07 RESPECTIVELY. THE ASSESSEE COULD NOT FILE CONFIRM ATION, ETC. FROM THIS PERSON. THEREFORE, UNSECURED LOAN AMOUN TING TO RS.3,43,550/- FROM SHRI KATHIRASE KUMAR WAS ADDED T O THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCO ME TAX ACT. THE PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT WERE ALSO INITIATED. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSES SEE SUBMITTED THE FOLLOWING REPLY VIDE LETTER DATED 13. 5.2011, WHICH IS AS UNDER : THE PROCEEDING HAS BEEN INITIATED ON THE BASIS THA T THE ASSESSEE COULD NOT PROVE BEYOND DOUBT THE CASH CRED IT OF MR. KATHIRASH KUMAR AMOUNTING TO RS.3,43,550/-. IN THIS RESPECT IT IS SUBMITTED THAT DURING THE ASSESSMENT PROCEEDING THE ASSESSEE HAS PRODUCED THE EVIDENCE THAT THE PAYMENT HAS BEEN RECEIVED FROM THE DEPOSITOR WHO IS RESIDING AT USA. THE PAYM ENTS HAS BEEN RECEIVED THROUGH NEFT AND BANKING CHANNEL AND WAS RECEIVED ON 29-03-2007 FOR RS.1,72,550/- AND ON 30- 03-2007 FOR RS.1,71,000/-. THE COPY OF THE BANK STATEMENT IN WH ICH THE PAYMENT HAS BEEN RECEIVED IS ATTACHED. IT IS CLEARL Y STATED THAT THE AMOUNT HAS BEEN RECEIVED THROUGH NEFT ICICS. DU RING THE ASSESSMENT PROCEEDING AND THEREAFTER THE ASSESSEE I S CONTINUALLY TRYING TO CONTACT THE DEPOSITOR WHO IS AN OLD FRIEN D OF THE SON OF THE MANAGING DIRECTOR OF THE COMPANY. DUE TO ECONOM IC MELTDOWN DURING THAT PERIOD, THE DEPOSITOR SHIFTED FROM USA TO SOME OTHER COUNTRY. NOW WE CAME TO KNOW THAT HE IS IN AUSTRALIA. WE STILL TRYING TO CONNECT FOR FIR GETTI NG HIS CONFORMATION BUT IS UNABLE TO DO SO JAR. DUE TO THESE FACTS THE ASSESSEE IN ORDER TO CO-OPER ATE WITH THE DEPARTMENT AND AVOID THE LITIGATION HAS SURREND ER (HIS AMOUNT SUBJECT TO NO PENALTY. 3 ON THE POINT OF LAW IT IS RESPECTFULLY SUBMITTED TH AT THE ASSESSEE NEITHER CONCEALED ANY PARTICULARS OF ITS I NCOME NOR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. THE ASSESSEE HAS DECLARED THIS CASH CREDIT IN THE TAX AUDIT REPORT. HE HAS SHOWN THIS AMOUNT AS APPEARING IN THE BOOKS OF ACCOUNTS. THE AMOUNT HAS BEEN RECEIVED THROUGH BANKING CHANNEL AND A CER TIFICATE FROM THE HDFC BANK WHERE THE AMOUNT HAS BEEN RECEIVED CO NFIRMING THAT THE PAYMENT HAS BEEN IN THE CURRENT ACCOUNT OF THE RADHA NUTRIENTS LTD., IN THEIR BANK FROM MR. KATHIRASH KU MAR ON THE 29- 03-2007 AND ON 31-03-2007 IS ATTACHED. FROM THIS FACTS F IT CLEAR THAT THE ASSESSEE HAS RE CEIVED THE PAYMENT FROM THE DEPOSITOR AND THOROUGH THE BANKING CHANNEL. WE HAVE TRIED OUR LEVEL BEST TO CONTACT THE DEPOSIT OR FOR HIS CONFIRMATION WHICH STILL WE ARE UNABLE TO COLLECT A S THE DEPOSITOR COULD NOT HE CONTACTED. WE ARE STILL TRYING TO CONT ACT HIM. CONSIDERING THE FACTS OF THE CASE THAT THE ASSESSEE HAS SURRENDERED THE INCOME SUBJECT TO PENALTY, THE MORE OF PAYMENTS AND THE PROOF, I.E., CERTIFICATE AND COPY OF THE BANK STATEMENT THAT PAYMENT HAS BEEN RECEIVED THROUGH N. E.F.T. IT IS PRAYED THAT THE PROCEEDINGS MAY KINDLY BE DROPPED O R SOME MORE TIME BE ALLOWED TO CONTACT THE DEPOSITOR IN ORDER E NABLE US TO COLLECT THE CONFIRMATION. 4. THE ASSESSING OFFICER AFTER EXAMINING THE ABOVE REPLY CONCLUDED THAT SINCE THE ASSESSEE HAD NOT PRO DUCED ANY EVIDENCE REGARDING THE LOAN AND HAS FURTHER NOT GIV EN ANY EXPLANATION, THEREFORE, PENAL ACTION WAS ATTRACTED. ACCORDINGLY, HE LEVIED MINIMUM PENALTY @ 100% UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS.1,15,640/-. 5. ON APPEAL, IT WAS SUBMITTED THAT THE ASSESSEE H AD FURNISHED THE EXPLANATION HOW THE LOAN HAS COME THR OUGH NEFT REMITTANCE IN THE BANK. FURTHER THE ASSESSEE TRIED HIS BEST TO CONTACT THE DEPOSITOR, WHO HAD LATER ON SH IFTED FROM 4 U.S. TO AUSTRALIA. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED BONAFIDE EXPLANATION AND, THEREFORE, PENALTY COULD NOT BE LEVIED AND IN THIS REGARD HE RELIED UP ON VARIOUS DECISIONS. THE LEARNED CIT (APPEALS) DID NOT FIND ANY FORCE IN THE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE L EVY OF PENALTY VIDE PARA 5 TO 5.5 OF HIS ORDER. 6. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT RECORD ED SATISFACTION FOR INITIATING PENALTY PROCEEDINGS. FURTHER HE REITERATED EXPLANATION GIVEN DURING THE PENALTY PRO CEEDINGS BEFORE THE ASSESSING OFFICER AND THE LEARNED CIT (A PPEALS). IT WAS EMPHASIZED THAT THE ASSESSEE HAS GIVEN BONAFIDE EXPLANATION AND, THEREFORE, PENALTY COULD NOT HAVE BEEN LEVIED. HE ALSO RELIED UPON THE DECISION OF THE H ON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. AMALEND U PAUL, 145 ITR 439 AND CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158. 7. ON THE OTHER HAND, THE LEARNED D.R FOR THE REVE NUE STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT (AP PEALS). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. IT WAS EXPLAINED BEFORE US THAT THE ASSESSEE HAS TA KEN LOAN FROM SHRI KATHIRASE KUMAR. IT WAS FURTHER EXPLAIN ED THAT HE WAS PERSONAL FRIEND OF THE ASSESSEE AND HE WAS RESI DING ABROAD AND THE AMOUNT HAD BEEN REMITTED THROUGH NEF T ICICIS, WHICH WAS DULY REFLECTED IN THE BANK ACCOUN T. IN OUR OPINION, THIS CANNOT BE CALLED EXPLANATION. THIS IS ONLY A 5 FACT REGARDING THE RECEIPT OF LOAN. IF THE DEPOSI TOR WAS PERSONAL FRIEND, THEN THE ASSESSEE WAS SUPPOSED TO KNOW HIS ADDRESS. ASSUMING FOR THE SAKE OF ARGUMENTS THAT SUCH ADDRESS WAS NOT AVAILABLE DURING THE ASSESSMENT PRO CEEDINGS WHICH WAS COMPLETED ON 20.12.2009, THE ASSESSEE COU LD HAVE OBTAINED THE ADDRESS BY MAY, 2014 WHEN THE IMPUGNED ORDER WAS PASSED BY THE LEARNED CIT (APPEALS). THEREFOR E, THE ASSESSEE BASICALLY HAS NOT GIVEN ANY EXPLANATION WH Y THE CONFIRMATION, ETC. HAS NOT BEEN FILED IN RESPECT OF THE SAID LOAN. WE FIND NO FORCE IN THE SUBMISSION THAT TH E ASSESSING OFFICER HAS NOT RECORDED SATISFACTION. IN THIS RE GARD, WE WOULD LIKE TO POINT OUT THAT SUB-SECTION (1B) WAS I NTRODUCED UNDER SECTION 271 VIDE FINANCE ACT, 2008 WITH RETRO SPECTIVE EFFECT FROM 1.4.1989. THIS SUB-SECTION READS AS U NDER : (IB) WHERE ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OR LOSS OF AN ASSESSEE I N ANY ORDER OF ASSESSMENT OR REASSESSMENT AND THE SAID OR DER CONTAINS A DIRECTION FOR INITIATION OF PENALTY PROC EEDINGS UNDER CLAUSE (C) OF SUB-SECTION (1), SUCH AN ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE DEEMED TO CONST ITUTE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATIO N OF THE PENALTY PROCEEDINGS UNDER THE SAID CLAUSE (C). 8.1 A PLAIN READING OF THE PROVISION CLEARLY SHOWS THAT ONCE THE PENALTY PROCEEDINGS HAVE BEEN INITIATED IN SUCH DIRECTION AS CONTAINED IN THE ASSESSMENT ORDER, THE N IT SHALL BE DEEMED SATISFACTION OF THE ASSESSING OFFICER FOR INITIATION OF PENALTY PROCEEDINGS. FURTHER THE ASSESSING OFF ICER HAS CLEARLY MENTIONED AT THE END OF PARA 3 THAT THE PEN ALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE BEING 6 INITIATED WITH REFERENCE TO UNSECURED LOANS OF RS.3,43,550/- FROM SHRI KATHIRASE KUMAR. THEREFOR E, THIS WOULD ITSELF CONSTITUTE SATISFACTION OVER INITIATIO N OF PENALTY AND NO FURTHER SATISFACTION WAS REQUIRED TO BE RECO RDED. 9. NON-FURNISHING OF ANY EXPLANATION ITSELF WOULD LEAD TO PENAL CONSEQUENCES. IN THE PRESENT SET OF FACT THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) IS NOT APP LICABLE BECAUSE MERELY DISCLOSURE OF LOAN IS NOT SUFFICIENT . THE ASSESSEE HAS THE BURDEN OF FURNISHING IDENTITY OF T HE PARTY, GENUINENESS OF THE LOAN AND CAPACITY OF THE PARTY F ROM WHOM SUCH LOAN WAS OBTAINED, WHICH HAS NOT BEEN DONE IN THIS CASE. AS FAR AS THE DECISION OF HON'BLE CALCUTTA HIGH COU RT IS CONCERNED, THAT WAS RENDERED FOR ASSESSMENT YEAR 19 63-64 I.E. BEFORE THE INTRODUCTION OF EXPENDITURE-1 TO SE CTION 271(1)(C) OF THE ACT. THE CONSEQNENCES OF EXPLANA TION-1 TO SECTION 271(1)(C) OF THE ACT HAVE BEEN EXPLAINED BY THE HON'BLE SUPREME COURT IN THE CASE OF K.P.MADHUSUDH ANAN VS. CIT, 251 ITR 99, WHERE IT IS CLEARLY OBSERVED T HAT AFTER INTRODUCTION OF EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT, THERE IS NO BURDEN ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. IT IS FU RTHER OBSERVED THAT THIS PART WOULD BE COVERED BY THE EXP LANATION AND THE BURDEN LIES ON THE ASSESSEE TO GIVE EXPLANA TION REGARDING THE PARTICULARS ENTRY. THEREFORE, IN OU R OPINION, IN THIS CASE, PENALTY HAS BEEN RIGHTLY LEVIED AND CONF IRMED BY 7 THE LEARNED CIT (APPEALS) BECAUSE THE ASSESSEE HAS FAILED TO GIVE ANY EXPLANATION REGARDING THE SAID LOAN. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MAY, 2015. SD/- SD/- (BHAVNESH SAINI) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 5 TH MAY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH