M/s MSJ & Sons Realtors & Promoters Pvt. Ltd., Mohali V. ITO, Mohali

ITA 672/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80978 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-10-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 18-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH

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. 672/CHD/2014 ASSESSMENT YEAR: 2006-07 M/S MSJ & SONS REALTORS & VS THE INCOME TAX OF FICER PROMOTERS PVT.LTD., WARD 6(1), BOOTH NO. 15, MOHALI. PHASE-9, MOHALI. PAN: AAECM3702C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SI NGH RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 16.10.2014 DATE OF PRONOUNCEMENT : 28.10.2014 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS), CHANDIGARH DATED 23.04.2014 FOR A SSESSMENT YEAR 2006-07, CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE IT ACT. 2. THE LD. CIT(APPEALS) BRIEFLY NOTED THE FACTS IN THE IMPUGNED ORDER THAT THE ASSESSEE HAD RAISED CERTAIN UNSECURED LOANS FROM DIRECTORS AND THEIR RELATIVES. IT WAS N OTICED IN THE ASSESSMENT PROCEEDINGS THAT THE DIRECTORS OF THE AS SESSEE COMPANY SHRI KIRANJIT SINGH AND SHRI SARABJIT SINGH HAD INTER- ALIA RAISED LOANS OF RS. 2 LACS EACH FROM M/S DANIE L PHILIPS & CO. PVT. LTD., NEW DELHI AND M/S JUNEJA TRDERS PVT. LTD. FOR 2 GIVING LOAN TO THE ASSESSEE COMPANY. THE ASSESSEE COMPANY COULD NOT FILE ANY CONFIRMATION FROM THESE CONCERNS AND FINALLY SURRENDERED THE AMOUNT WHICH WAS ADDED TO TOTAL INC OME OF THE ASSESSEE. VIDE SEPARATE ORDER, PENALTY WAS LEVIED U NDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT WAS NOT A VOLUNTARY SURRENDER AND ACCORDINGLY, C ONTENTION OF THE ASSESSEE WAS REJECTED. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT SURRENDER OF RS. 4 LACS WAS MADE SUBJECT TO NO PENALTY. IT WAS SUBMITTED THAT IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINES S OF SHRI KIRANJIT SINGH AND SHRI SARABJIT SINGH HAVE BEEN PR OVED. THE LD. CIT(APPEALS), HOWEVER, FOUND THAT EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT SQUARELY APPLY TO THE FACTS OF THE CASE BECAUSE THE ASSESSEE HAS NOT BEEN ABLE TO PROVE AS TO WHY SURRENDER OF RS. 4 LACS WAS MADE. IT WAS NOT VOLUN TARY SURRENDER. THE LD. CIT(APPEALS) WAS ALSO OF THE VI EW THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE IDENTITY AS WEL L AS CREDIT WORTHINESS OF BOTH THESE TWO CONCERNS. THEREFORE, ASSESSEE HAS MADE INCORRECT CLAIM WITH THE INTENTION TO EVADE TA X AND ACCORDINGLY, APPEAL OF THE ASSESSEE WAS DISMISSED. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND REFERRED TO THE L ETTER OF SHRI PARMINDER SINGH WHO HAPPENED TO BE DIRECTOR OF BOTH THESE CONCERNS WHO HAVE WRITTEN A LETTER TO THE ASSESSEE AND APPOINTED HIS AUTHORIZED REPRESENTATIVES FOR REPAYM ENT OF THE AMOUNTS OF THE LOANS. HE HAS REFERRED TO BANK STAT EMENTS, COPIES OF WHICH ARE FILED IN THE PAPER BOOK AND SUB MITTED THAT ULTIMATELY LOANS HAVE BEEN REPAID THROUGH BANK CHAN NEL, 3 THEREFORE, IT IS NOT A CASE OF NO EXPLANATION, THER EFORE, EXPLANATION-1 WILL NOT APPLY IN THIS CASE, AND PENA LTY IS LIABLE TO BE CANCELLED. 4. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER SPECIFICALLY ASKED THE ASSESSEE TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF BOTH THE CONCERNS TO PROVE GEN UINE LOANS AND WAS ALSO DIRECTED TO FILE CONFIRMATION FROM BOT H THE PARTIES. THE ASSESSEE, INSTEAD OF FILING ANY CONFIRMATION HA S SUBMITTED THAT THESE COMPANIES ARE INOPERATIVE AND THE DIRECT ORS OF THESE COMPANIES HAVE LEFT FOR OVERSEAS. THE ASSESSEE HAS EXPRESSED ITS INABILITY TO FILE ANY CONFIRMATION FROM THESE T WO PARTIES TO PROVE THE GENUINE LOANS. IT IS, THEREFORE, CLEAR F ROM THE FACTS RECORDED ABOVE THAT ASSESSING OFFICER HAS ASKED THE ASSESSEE COMPANY TO PROVE THE GENUINE LOANS IN THE MATTER BU T THE ASSESSEE FAILED TO PROVE THE SAME. THEREFORE, IT I S A CASE WHERE ASSESSEE WAS CORNERED BY THE ASSESSING OFFICER TO P ROVE THE GENUINE LOANS AND WHEN ASSESSEE WAS NOT ABLE TO PRO VE GENUINE LOANS, THE ASSESSEE MADE SURRENDER OF RS. 4 LACS. THEREFORE, IT IS NOT A CASE OF VOLUNTARY SURRENDER OF RS. 4 LACS AT THE ASSESSMENT STAGE. THE ASSESSEE WAS COMPELLED BY IN VESTIGATION AND ONLY IN THAT EVENT, ASSESSEE MADE THE SURRENDER . FURTHER, THE CONCEPT OF VOLUNTARY SURRENDER IS NO MORE APPLI CABLE AND PENALTY HAS TO BE LEVIED IN THE FACTS AND CIRCUMSTA NCES OF THE CASE. 4 6. WE RELY UPON DECISION OF HON'BLE SUPREME COURT I N THE CASE OF MAK DATA PVT. LTD. 358 ITR 593. FURTHER, T HE ASSESSEE HAS FILED COPY OF THE APPELLATE ORDER OF LD. CIT(AP PEALS), CHANDIGARH DATED 30.08.2010 FOR ASSESSMENT YEAR UND ER APPEAL IN WHICH THE LD. CIT(APPEALS) DECIDED THE QUANTUM A PPEAL OF THE ASSESSEE WITH REGARD TO ADDITION OF RS. 4 LACS AS WELL IN WHICH THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENC ES WHICH WERE REFERRED TO THE ASSESSING OFFICER AND ASSESSIN G OFFICER IN THE REMAND REPORT HAS CONFIRMED THAT IN BOTH THE CO NCERNS OF M/S DANIEL PHILIPS & CO. P. LTD. AND M/S JUNEJA TRA DERS PVT. LTD., THERE WERE NEGLIGIBLE AMOUNTS LYING IN THEIR BANK ACCOUNTS AND THE DATE OF THE ISSUE OF CHEQUES IS DA TED 03.05.2005 AND CASH OF RS. 2 LACS EACH HAVE BEEN DE POSITED IN THEIR BANK ACCOUNTS ON 04.05.2005 AND AS SUCH THE C HEQUES HAVE BEEN ISSUED AFTER MAKING DEPOSIT OF RS. 2 LACS EACH IN THEIR BANK ACCOUNTS. THE REMAND REPORT WAS REFERRED TO THE ASSESSEE AND THE ASSESSEE HAS NOT DISPUTED THE CONT ENTS OF THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER. THE LD. CIT(APPEALS), THEREFORE, HELD THAT ASSESSEE HAS FAI LED TO PROVE GENUINE LOAN IN BOTH THE CASES. IT IS, THEREFORE, CLEAR THAT IT IS A CASE WHERE CASH OF THE EQUIVALENT AMOUNT OF LOAN HAS BEEN DEPOSITED IN THE BANK ACCOUNTS OF BOTH THE CONCERNS FOR ISSUE OF THE CHEQUES AND LOANS IN FAVOUR OF THE ASSESSEE. THUS, THE CREDIT WORTHINESS OF BOTH THE CONCERNS HAVE NOT BEE N PROVED TO THE SATISFACTION OF THE ASSESSING OFFICER. THERE W ERE NO SUFFICIENT AMOUNTS LYING IN THEIR BANK ACCOUNTS FOR GIVING LOAN TO THE ASSESSEE. THE GENUINENESS OF THE TRANSACTIO N HAS, THUS NOT BEEN PROVED BY THE ASSESSEE AT ANY STAGE. SUCH A COURSE 5 WAS FOUND ADVERSE IN NATURE AGAINST THE ASSESSEE BY ITAT AGRA BENCH IN THE CASE OF SMT. SUMAN GUPTA V ITO REPORTE D IN 138 ITD 153 AND THE ORDER OF THE TRIBUNAL IS CONFIRMED BY THE HON'BLE ALLAHABAD HIGH COURT IN IT APPEAL NO. 680/2 012 DATED 07.08.2012 IN THE CASE OF SMT. SUMAN GUPTA V CIT. THE HON'BLE GUJRAT HIGH COURT ALSO IN THE CASE OF BLESS ING CONSTRUCTION V ITO 32 TAXMAN.COM 366 HELD THAT WHER E SIZEABLE AMOUNTS WERE DEPOSITED IN CASH IN ACCOUNT OF THE DEPOSITORS ONLY BEFORE THEIR WITHDRAWALS THROUGH CH EQUES IN FAVOUR OF THE ASSESSEE, ADDITION WAS JUSTIFIED. 7. CONSIDERING THE ABOVE FACTS, IT IS CLEAR THAT AS SESSEE HAS FAILED TO PROVE CREDIT WORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION IN THE MATTER. THER EFORE, EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT WILL SQUARELY APPLY IN THE CASE OF THE ASSESSEE BECAUSE THE ASSESSEE HA S FAILED TO OFFER ANY EXPLANATION OR THE EXPLANATION, IF ANY WA S SUBMITTED BY THE ASSESSEE, WAS FOUND TO BE FALSE. WHATEVER C ONTENTION WAS RAISED BY THE ASSESSEE, WAS NOT SUBSTANTIATED T HROUGH ANY EVIDENCE OR MATERIAL ON RECORD. MERE RETURN OF AMO UNT OF THE LOAN TO THE AUTHORIZED REPRESENTATIVES OF THE CREDI TORS THROUGH CHEQUES SUBSEQUENTLY, WOULD NOT ABSOLVE THE ASSESSE E FROM PROVING THE CREDIT WORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE SUBSEQUENT E VENT, AS EXPLAINED BY LD. COUNSEL FOR THE ASSESSEE OF REPAYM ENT THUS, WOULD NOT PROVE THE CASE OF THE ASSESSEE. THEREFOR E, WE ARE OF THE VIEW THAT LEVY OF THE PENALTY UNDER SECTION 271 (1)(C) OF THE ACT IS JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. WE, 6 ACCORDINGLY DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY, DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER,2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAIN I) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH OCTOBER,2014. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH