Sh. Sandeep Mehra, Amritsar. V. The Income tax Officer, Amritsar.

ITA 701/ASR/2013

• Counselvise Citation: 70120914 RSA 2013
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained cash credit; Opportunity of being heard
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 701(ASR)/2013 ASSESSMENT YEAR: 2007-08 PAN: AASPM4707G SHRI. SANDEEP MEHRA, VS. THE INCOME TAX OFFICER, 225, BASANT AVENUE, WARD -2(2), AMRITSAR AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA, ADVOCATE RESPONDENT BY: SH. MAHAVIR SINGH, SR.DR DATE OF HEARING: 27.02.2014 DATE OF PRONOUNCEMENT: 28.02.2014 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINS T THE IMPUGNED ORDER DATED 08.10.2013 PASSED BY LEARNED CIT(A), AM RITSAR, FOR THE ASSESSMENT YEAR 2007-08, ON THE FOLLOWING GROUNDS: I. THAT THE ORDER OF THE ASSESSING OFFICER THEREBY LEV YING PENALTY OF RS. 30,82,246/- UNDER SECTION 271(1)(C) OF THE INCO ME-TAX ACT, 1961, AS WELL AS THE ORDER OF THE LEARNED CIT(APPEA LS), THEREBY SUSTAINING THE PENALTY @ 100% ON THE ADDITION OF RS . 300000/- ON ACCOUNT OF CASH CREDITS ARE BOTH AGAINST THE FACTS OF THE CASE AND UNTENABLE IN LAW. II. THAT NO REASONABLE OPPORTUNITY OF BEING HEARD WAS A LLOWED BEFORE LEVYING THE PENALTY AND AS SUCH THE ORDER LEVYING P ENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 BY TH E A.O. IS BAD IN LAW AND THE SAME SHOULD HAVE BEEN CANCELLED BY T HE LEARNED 2 I.T.A. NO. 701(ASR)/2013 ASSESSMENT YEAR: 2007-08 CIT(APPEALS) AND THE LEARNED CIT(APPEALS) HAS GROSS LY ERRED IN CONFIRMING THE SAME. III. THAT THERE WAS NO DEFAULT UNDER THE SECTION 271(1)( C) OF THE INCOME-TAX ACT, 1961, AND THE LEARNED CIT(APPEALS) WAS NOT AT ALL JUSTIFIED IN SUSTAINING THE PENALTY UNDER SECTION 2 71(1)(C) OF THE INCOME-TAX ACT, 1961, AT 100% ON THE ADDITION OF RS . 3,00,000/- ON ACCOUNT OF CASH CREDITS. THE LEARNED CIT(APPEALS ) DID NOT APPRECIATE THAT ALL THESE CASH CREDITS WERE GENUINE AND NECESSARY PROOF WAS DULY FILED BEFORE THE AUTHORITIES BELOW. THUS, THE PENALTY SUSTAINED @ 100% BY THE LEARNED CIT(APPEALS) IS NOT AT ALL CALLED FOR ON THE FACTS & CIRCUMSTANCES OF THE CASE AND TH E PENALTY SUSTAINED BY THE LEARNED CIT(APPEALS) MAY BE CANCEL LED. IV. ANY OTHER GROUND OF APPEAL WHICH MAY BE URGED AT TH E TIME OF HEARING OF THE APPEAL. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE INCOME TAX OFFICER, WARD-2(2), AMRITSAR, INITIATED THE PENALTY PROCEEDINGS BY ISSUING A NOTICE TO THE ASSESSEE ON 30.12.2009 IN THE ASSES SMENT ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT) DATED 24.12.2009 AT RS. 89,52,087/-, AFTER MAKING A N ADDITION OF RS. 86,28,395/-. OUT OF THIS, AN ADDITION OF RS. 65,44, 047/- WAS MADE ON ACCOUNT OF REJECTION OF ASSESSEES CLAIM OF EXEMPT ION U/S 10A AND RS. 20,84,348/- ON ACCOUNT OF UNSECURED LOANS. NET DEM AND OF RS. 38,88,540/- AFTER GIVING CREDIT OF PREPAID TAXES A T RS. 34,973/- WAS CREDITED. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS CONCEALED THE PARTICULAR OF INCOME OUT OF THE ADDITION MADE A T RS. 65,44,047/-, THE ADDITION TO THE TUNE OF RS. 1,56,418/- AND OUT OF THE ADDITION OR RS. 20,84,348/- MADE UNDER SECTION 68 OF THE ACT, THE A DDITION OF RS. 3 I.T.A. NO. 701(ASR)/2013 ASSESSMENT YEAR: 2007-08 3,00,000/- WAS CONFIRMED BY THE COMMISSIONER OF INC OME TAX(APPEALS), AMRITSAR, VIDE ORDER DATED 18.07.2012. THE PENALT Y PROCEEDINGS WAS INITIATED AND THE OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE AND THE ASSESSEE CONTENDED THAT THE APPEAL HAS BEEN ACCEPTE D BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), AMRITSAR, VIDE ORDER DATED 18.07.2012 AND THE ADDITION MADE HAS BEEN DELETED B Y THE WORTHY CIT(APPEALS), AMRITSAR. THEREFORE, THERE IS NO CONC EALMENT AT THIS STAGE, AS SUCH, THE PENALTY PROCEEDINGS UNDER SECTION 271( 1)(C) OF THE ACT MAY KINDLY BE DROPPED. THE ASSESSEE REQUESTED THAT STIL L IF THE ASSESSING OFFICER IS NOT SATISFIED THEN ONE MORE OPPORTUNITY OF HEARING MAY BE GIVEN TO THE ASSESSEE. THE ASSESSING OFFICER HAD GI VEN OPPORTUNITY TO THE ASSESSEE BUT THE ASSESSEE FAILED TO PRODUCE THE SAM E BEFORE HIM. LASTLY, THE ASSESSING OFFICER HAS LEVIED THE PENALTY @ 200% OF THE TAX SOUGHT TO BE EVADED ON INCOME TO THE EXTENT OF RS. 4,56,418/- WHICH WORKS OUT TO RS. 3,08,246/- BY PASSING THE ORDER DATED 05.03.201 3 UNDER SECTION 271(1)(C) OF THE ACT. 3. AGGRIEVED WITH THE PENALTY ORDER DATED 05.03.201 3, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED FIRST A PPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 08.10.2013, PARTLY ALLOW ED THE APPEAL OF THE ASSESSEE BY REDUCING PENALTY @ 100% OF THE TAX SOUG HT TO BE EVADED. 4 I.T.A. NO. 701(ASR)/2013 ASSESSMENT YEAR: 2007-08 THE ASSESSEE AGAIN, BEING AGGRIEVED WITH THE ORDER OF LEARNED FIRST APPELLATE AUTHORITY, FILED THE PRESENT APPEAL. 4. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE PENALTY IN DISPUTE HAS WRONGLY BEEN LEVIED AGAINST THE ASSESSEE ON ACCOUNT OF UNEXPLAINED CASH CREDITS WHICH ARE AP PEARING IN THE BALANCE SHEET UNDER THE HEAD UNSECURED LOANS IN T HE NAME OF MR. RAJESH BHASIN AT RS. 75,000/-; SH. RAJU AT RS. 75,0 00/-; SH. SAJAN KUMAR AT RS. 70,000/-; AND SH. MUKESH KUMAR AT RS. 80,000 /-. HE FURTHER STATED THAT THE ASSESSING OFFICER HAS NOT APPLIED ITS MIND AND WRONGLY MADE THE ADDITION IN DISPUTE AND THEREAFTER THE PENALTY IN D ISPUTE. HE FURTHER STATED THAT IT IS SETTLED LAW THAT BOTH THE PENALTY PROCEE DINGS AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDING S THOUGH FINDINGS RECORDED IN THE ASSESSMENT ORDER LAY DOWN A FOUNDAT ION FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE ORDER OF THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT (F.B.) IN THE CASE OF VISHWAKARMA INDUSTRIES VS. CIT, REPORTED IN 135 ITR 652. HE FURTHER STATED THAT THE SAME VIEW H AS ALSO BEEN TAKEN BY THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE O F SMT. PADMA VATI JAIN, REPORTED IN 245 ITR 818. IN THE CASE OF CIT V S. INDEN BISLERS (240 ITR 943), THE HON'BLE MADRAS HIGH COURT HAS ALSO HE LD THAT MERELY 5 I.T.A. NO. 701(ASR)/2013 ASSESSMENT YEAR: 2007-08 BECAUSE ADDITIONS HAVE BEEN MADE TO INCOME DOES NOT MEAN THAT THERE HAS BEEN CONCEALMENT OF INCOME. THIS QUESTION ALSO CAME UP FOR CONSIDERATION BEFORE I.T.A.T., AMRITSAR BENCH, IN T HE CASE OF ACIT, CIRCE-V, ASR. VS. SH. BALDEEP SINGH SWANI IN ITA NO . 302(ASR)/2004 FOR THE ASSESSMENT YEARS 2001-02, ORDER DATED 31.03 .2006 AND IN THE CASE OF DCIT, CIRCLE-V, AMRTISAR VS. BABA NAGA RICE & GE NERAL MILLS, IN ITA NO. 171(ASR)/2010 FOR THE ASSESSMENT YEARS 1998 -99, ORDER DATED 24.09.2010. HE HAS ALSO FILED COPIES OF THESE JUDGM ENTS BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS PASSED BY THE REVENUE AUTHORITIES ALONG WITH THE CASE-LAWS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS THE ORD ER PASSED BY THIS BENCH ON THE ISSUE IN DISPUTE AND WE ARE OF THE CONSIDERE D VIEW THAT THE REVENUE HAS LEVIED THE PENALTY IN DISPUTE ONLY ON T HE BASIS OF ADDITIONS SUSTAINED BY THE LEARNED FIRST APPELLATE AUTHORITY. NO OTHER MATERIALS HAS BEEN BROUGHT ON RECORD BY THE REVENUE FOR LEVYING T HE PENALTY IN DISPUTE. THE REVENUE HAS ALSO NOT APPRECIATED THE FACTS THAT CASH CREDITS ARE APPEARING IN THE BALANCE-SHEET UNDER THE HEAD UNSE CURED LOANS IN THE NAME OF MR. RAJESH BHASIN AT RS. 75,000/-; SH. RAJU AT RS. 75,000/-; SH. SAJAN KUMAR AT RS. 70,000/-; AND SH. MUKESH KUMAR A T RS. 80,000/-. WE ARE OF THE VIEW THAT BOTH THE PENALTY PROCEEDINGS A ND ASSESSMENT 6 I.T.A. NO. 701(ASR)/2013 ASSESSMENT YEAR: 2007-08 PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDING S BUT HERE IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIALS TO ESTABLISH THAT THE ASSESSEE HAS CONCEA LED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. IN THE ABSENCE OF THE SAME, THE PENALTY IN DISPUTE IS NOT LEVIABLE. T HEREFORE, WE ARE OF THE VIEW THAT THE REVENUE HAS LEVIED THE PENALTY IN DIS PUTE MERELY ON THE BASIS OF ADDITION SUSTAINED BY THE LEARNED CIT(A) W HICH IS NOT PERMISSIBLE UNDER THE LAW. ACCORDINGLY, WE CANCEL T HE PENALTY ORDER DATED 05.03.2013 BY ACCEPTING THE APPEAL FILED BY T HE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH FEBRUARY , 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH FEBRUARY, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SHRI. SANDEEP MEHRA, 225, BASANT AVE NUE, AMRITSAR 2. ITO, WARD -2(2), AMRITSAR 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER 7 I.T.A. NO. 701(ASR)/2013 ASSESSMENT YEAR: 2007-08 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.