SMT,. GULAB DEVI MUTHA, Jaipur V. ITO, Jaipur

ITA 717/JPR/2012

• Counselvise Citation: 71723114 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 06-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 717/JP/2012 ASSESSMENT YEAR: 2006-07 PAN : ABWPN 9880 H SMT. GULAB DEVI MUTHA VS. THE ITO W/O SHRI MOHAN LAL MUTHA WARD- 6 (1) C-11,RAJA PARK, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SIDDHARTH RANKA, ADVOCATE DEPARTMENT BY: SHRI AJAY MALIK, ADDL. CIT DATE OF HEARING: 26-11-2014 DATE OF PRONOUNCEMENT: 09 -01-2015 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 2-05-2012 FOR THE ASSESSMEN T YEAR 2006-07 CHALLENGING THE IMPOSITION OF PENALTY OF RS. 2,58,9 70/- IMPOSED U/S 271(1)(C) OF THE ACT. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF COMMODITY TRADING OF GUWAR AND SARSON IN THE NAM E OF M/S. ACHAL FINANCE & INVESTMENTS. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE IN HER BALANCE SHEET HAS SHOWN UNSECURED LOANS ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 2 OF RS. 1,71,25,616/-, EXPLANATION FOR THE SAME WAS CALLED. THE ASSESSEE FILED ALL THE RELEVANT CONFIRMATIONS EXCEPT THE FOLLOWING TWO CONFIRMATIONS. 1. SHRI BHATTU SINGH RS. 3.50 LACS 2. SMT.RUPA DEVI RS. 3.50 LACS BESIDES QUA THE FOLLOWING UNSECURED LOANS, THERE W ERE DIFFERENCES IN THE CLOSING BALANCES FOR WHICH ALSO EXPLANATION WAS CAL LED: 1. SHRI HASTI MAL SAMAR RS. 2,70,308/- 2. SMT. MANJU SAMAR RS. 3,85,777/- 3. SMT. VIMLA DEVI JAIN RS. 1,90,205/- RS. 8,46,290/- VIDE REPLY FILED DATED 11-07-2008 THE ASSESSEE FUR NISHED COPIES OF CONFIRMATIONS OF THESE PERSONS, REFLECTING FOLLOWIN G CLOSING BALANCES: 1. SHRI HASTI MAL SAMAR RS. 2,25,000/- 2. SMT. MANJU SAMAR RS. 3,25,000/- 3. SMT. VIMLA DEVI JAIN RS. 1,50,000/- RS.7,00,000/- THUS THERE WAS A DIFFERENCE OF RS. 1,46,290/- IN RE SPECT OF CONFIRMATIONS OF THESE THREE CREDITORS. AS THE ASSESSEE COULD NOT FU RNISH THE CONFIRMATIONS IN RESPECT OF ABOVE THREE CREDITORS AND COULD NOT JUST IFY THE DIFFERENCE OF RS. 1,46,290/- IN RESPECT OF THREE CREDITORS. THE AO A SKED THE ASSESSEE TO ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 3 FURNISH THE EXPLANATION IN THIS BEHALF, SINCE THE A SSESSMENT WAS GETTING TIME BARRED AND THE ASSESSEE WAS NOT ABLE TO PROCURE FUR THER EVIDENCE AS WAS DIRECTED BY THE AO, THE ASSESSEE EXPRESSED HER INAB ILITY TO PRODUCE THEM AND OFFERED TO SURRENDER THESE AMOUNTS AS HER INCOME TO AVOID FURTHER PROCEEDINGS. 2.2 PENALTY PROCEEDINGS WERE INITIATED, ASSESSE FIL ED HER REPLY. THE SAME DID NOT FIND FAVOUR WITH THE AO IMPOSED PENALTY BY FOLLOWING OBSERVATIONS. AS STATED SUPRA THE ASSESSEE HAS FAILED TO FURNIS H CONFIRMATIONS IN CASES OF SHRI BHATTU SINGH AND SMT . RUPA DEVI AND FURTHER THE CONFIRMATIONS IN CASES OF SHRI HAST I MAL SAMAR, SMT. MANJU SAMAR AND SMT. VIMLA DEVI JAIN WERE NOT COMPLETE. THE ASSESSEE HAS SURRENDERED THE AMOUNT A T THE TIME OF ASSESSMENT PROCEEDINGS. NO CONFIRMATIONS IN THES E CASES ARE FURNISHED DURING PENALTY PROCEEDINGS ALSO. THUS IT IS PROVED THAT AFTER PROVIDING MANY OPPORTUNITIES AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDIN GS, THE ASSESSEE FAILED TO CONFIRM THE LOAN OF RS. 8,46,290 /-. THE ASSESSEE HAS NOT FILED APPEAL AGAINST ASSESSMENT OR DER. THIS CLARIFY THAT ASSESSEE HAS COMMITTED THE MISTAKE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C ). 2.3 AGGRIEVED, THE ASSESSEE APPEALED BEFORE LD. CIT (A) WHERE THE ACTION OF THE AO IMPOSING PENALTY U/S 271(1)(C ) OF THE A CT WAS ASSAILED ON THE BASIS OF VARIOUS PLEADINGS, EVIDENCE AND SUMMARY OF CASE LAWS WHEREOF IS AS UNDER:- ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 4 1. IN RESPECT OF BHATTU SINGH BANK CERTIFICATE FR OM VIJAYA BANK BEARING S.B. A/C NO.11524 CERTIFYING THAT CHEQ UE OF RS. 1.00 LAC WAS DEBITED TO HIS ACCOUNT AND CREDITED TO THE ACCOUNT OF ACHAL FINSAC & INVESTMENTS ON 4-07-2005. THE CO PY OF ACCOUNT FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE S HOWING CLOSING BALANCE OF RS. 3.50 LACS WITH PAN WAS CONFI RMED BY THE SAID BANK. 2. IN RESPECT OF SMT. RUPI DEVI BANK CERTIFICATE FROM CORPORATION BANK BEARING S.B. A/C NO.01001840 CERT IFYING THAT CHEQUE OF RS. 1.00 LAC WAS DEBITED TO HER ACCO UNT AND CREDITED TO THE ACCOUNT OF ACHAL FINSAC & INVESTME NTS ON 20- 06-2005, BANK CERTIFICATE FROM VIJAYA BANK, JAIPU R BEARING S.B. A/C NO. 700200300002192 CERTIFYING CHEQUE OF R S. 1.50 LACS WAS DEBITED TO HER ACCOUNT AND CREDITED TO THE ACCOUNT OF ACHAL FINSAC & INVESTMENTS ON 25-06-2005, BANK CERT IFICATE FROM STATE BANK OF INDIA, JAIPUR BEARING S.B. A/C NO.56229002695 CERTIFYING THAT THE CHEQUE OF RS. 1 .00 LAC WAS DEBITED TO HER ACCOUNT AND CREDITED TO THE ACCOUNT OF ACHAL FINSAC & INVESTMENTS ON 20-06-2005. SMT. RUPA DEVI GAVE AN DECLARATION THAT SHE HAD ADVANCED AN AMOUNT OF RS. 3.50 LACS ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 5 2.4 AS REGARDS THE OTHER 3 CREDITORS WHOSE A/CS COU LD NOT BE RECONCILED I.E. SHRI HASTI MAL SAMAR, SMT. MANJU DEVI SAMAR AND SM T. VIMLA DEVI JAIN, THE EXPENSES AND GENUINENESS OF THE CASH CREDITS WE RE NOT DOUBTED. ONLY THE DIFFERENCE WAS SURRENDERED BY THE ASSESSEE. THE SAM E MAINLY CONSISTED OF DIFFERENCE ON ACCOUNT OF INTEREST AS THE ASSESSEE H AS CREDITED INTEREST TO THEIR ACCOUNT AND THE PARTIES DID NOT CREDIT IT IN THEIR ACCOUNT. ALL THE THREE PERSONS ARE ASSESSED TO TAX. THE TDS WAS DEDUCTED FROM THE INTEREST PAID TO THEM. 2.5 IT WAS PLEADED THAT LEVY OF PENALTY IS NOT AUTO MATIC AND MERELY BECAUSE AN ADDITION HAS BEEN OFFERED FOR SURRENDER, IT DOES NOT LEAD TO AUTOMATIC PENALTY. THE PENALTY BEING DISTINCT AND S EPARATE, THE ASSESSEE CAN FILE FRESH EVIDENCE AND EXPLANATION TO DEFEND THE P ENALTY PROCEEDINGS. THE ASSESSEE HAS GIVEN VALID EXPLANATION. SHRI BHATTU S INGH AND SMT. RUPI DEVI WERE INCOME TAX ASSESSEE. THEIR PAN ACCOUNTS WERE SUPPLIED TO THE AO. IN THE PENALTY PROCEEDINGS, THE AO DID NOT GET CROSS V ERIFIED FROM THE DEPARTMENTAL RECORD WHETHER THESE PERSONS HAD ADVAN CED THESE AMOUNTS OR NOT. SINCE THE AO HAS FAILED TO CONTROVERT ASSESSEE 'S EXPLANATION IN THE PENALTY PROCEEDINGS BY CROSS-VERIFYING FROM THE DEP ARTMENTAL RECORDS, THE PENALTY IMPOSED IS ARBITRARY AND UNJUSTIFIED. 2.6 APROPOS THE ISSUE OF THREE CASH CREDITORS THERE WAS DIFFERENCE DUE TO THE ACCOUNTING OF INTEREST. THE AO OUGHT TO HAVE VE RIFIED WHETHER THOSE ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 6 ASSESSEES HAD OFFERED INTEREST INCOME AND CLAIMED T DS CREDIT OR NOT. THUS THE AO FAILED TO CARRY OUT EVEN MINIMUM OF THE CROS S-VERIFICATION IN ORDER TO BE FAIR IN INQUIRIES AND TO PROTECT THE INTEREST OF THE REVENUE. THUS IGNORING THE COPIOUS SUBMISSIONS AND EVIDENCES FURNISHED BY ASSESSE IN PENALTY PROCEEDINGS AND MERELY RELYING ON THE SURRENDER AO HAS HELD THE ASSESSEE LIABLE FOR PENALTY. THE LD. CIT(A) THOUGH REPRODUCE D THE EXPLANATION OF THE ASSESSE HOWEVER CONFIRMED THE ORDER OF THE AO. 2.7 AGGRIEVED, THE ASSESSEE IS BEFORE US. 2.8 THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE FACTS AND DREW OUR ATTENTION TO ARGUMENTS AS MADE BEFORE THE LD. CIT(A ) AND CONTENDS THAT LD. LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT PENAL TY PROCEEDINGS ARE DISTINCT THAN ASSESSMENT PROCEEDINGS. THE ASSESSE HAS RIGHT TO FURNISH EVIDENCE OLD AS WELL AS NEW AND RAISE PLEAS IN THE PENALTY PROCE EDINGS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ABOVE AMOUNT WAS SUR RENDERED AS IT WAS NOT POSSIBLE FOR ASSESSE TO FURNISH THE EVIDENCE AS REQ UIRED BY THE AO AND OFFERED THE AMOUNT FOR TAXATION, IT DOES NOT MEAN T HAT ASSESSE FILED INACCURATE PARTICULARS FOR PENALTY PROCEEDINGS. IT IS TRITE LAW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE AND THE ASSES SEE CAN RAISE FRESH EVIDENCE IN THE PENALTY PROCEEDINGS. ACCORDINGLY, T HE ASSESSEE FURNISHED DETAILED EXPLANATION AND EVIDENCE TO DEMONSTRATE TH AT THEY WERE GENUINE ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 7 CASH CREDITORS AND HER CASE WAS NOT LIABLE TO BE VI SITED WITH PENALTY. IT IS ALSO A TRITE LAW THAT MERELY BECAUSE SOME AMOUNT IS SURR ENDERED DURING ASSESSMENT THAT BY ITSELF DOES LEAD TO AUTOMATIC LE VY OF PENALTY AS LONG AS THE ASSESSEE IS ABLE TO GIVE PROPER EXPLANATION. TO THI S EFFECT ASSESSEE HAS FURNISHED PROPER EXPLANATION AND HAS BEEN MENTIONED IN DETAIL BY THE LD. CIT(A). THE PERTINENT EXPLANATION FURNISHED DURING THE PENALTY PROCEEDINGS HAS BEEN IGNORED AND PENALTY HAS BEEN IMPOSED MEREL Y RELYING ON SURRENDER. WHEN ALL THE CREDITORS ARE ASSESSED TO INCOME TAX, THEIR PAN, CONFIRMATIONS ARE FILED, IT WAS OBLIGATORY ON THE PART OF THE AO TO REBUT THE EXPLANATION FILED BY THE ASSESSEE BY CROSS-VERIFYING THE DEPART MENTAL RECORD AND TO GIVE A FINDING BASED ON THE EXPLANATION ITSELF. THUS AS TH E RECORD STANDS ASSESSES EXPLANATION REMAINS REBUTTED, IN THAT EVENTUALITY P ENALTY HAS NO JUSTIFICATION. 2.9 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES AND RELIED ON THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD. VS. CIT ,358 ITR 593 (SC). 2.10 THE LD. COUNSEL FOR THE ASSESSEE IN REPLY CONT ENDS THAT MAK DATA (P) LTD. VS. CIT (SUPRA) CASE IS NOT APPLICABLE IN ASSE SSEE'S CASE AS THE ASSESSEE DURING PENALTY PROCEEDINGS FILED ALL THE DETAILS DE SIRED BY THE AO ALONGWITH PROPER EXPLANATION. IN MAK DATA CASE ASSESSEES EXP LANATION WAS FOUND TO ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 8 BE TOTALLY UNSATISFACTORY WHEREAS IN THIS CASE PROP ER EVIDENCE AND EXPLANATION IS FILED. 2.11 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT THAN ASSESSMENT PROCEEDINGS. LOOKING FROM THIS ASPECT, I N PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED RELEVANT EVIDENCE WITH PROPE R EXPLANATION BEFORE THE LOWER AUTHORITIES. THE PLEADINGS DEMONSTRATE THAT A LL THE CASH CREDITORS WERE HAVING INCOME TAX NOS. AND IN CASES OF DIFFERENCE I N ACCOUNTS THE SAME WAS DUE TO ACCOUNTING OF INTEREST, THERE IS NO WORTHWHI LE REBUTTAL OF ASSESSEES EXPLANATION DURING THE PENALTY PROCEEDINGS. WE ARE INCLINED TO AGREE WITH THE SUBMISSIONS OF THE LD. AR THAT NONE REBUTTAL OF EXPLANATION OR CROSS VERIFICATION FROM THE DEPARTMENTAL RECORD CANNOT BE USED AS A TOOL TO PENALIZE THE ASSESSEE. THUS IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, WE FIND THAT THE ASSESSE FURNISHED A PROPER EXPLANATIO N SUPPORTED BY EVIDENCE IN PENALTY PROCEEDINGS. IN OUR CONSIDERED VIEW THE SAM E IS REASONABLE, THE CASE LAW AS CITED BY THE LD. DR DURING THE COURSE OF HEA RING I.E. MAK DATA (P) LTD. VS. CIT ,(SUPRA) IS NOT APPLICABLE TO THE FACT S OF THE ASSESSEE'S CASE MORE PARTICULARLY WHEN THE SAME REMAINS UNREBUTTED . THU S IN VIEW OF THE FACTS ITA NO. 717/JP/2012 SMT. GULAB DEVI MUTHA VS. ITO , WARD- 6 (1), JAIPUR 9 AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE VIEW THAT THE ASSESSEES CASE DOES NOT DESERVE TO BE PENALIZED U/S 271(1) (C) OF THE ACT WHICH IS DELETED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 9-01-2015 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 9 TH JAN 2015 *MISHRA COPY FORWARDED TO:- 1.SMT GULAB DEVI MUTHA, JAIPUR 2. THE ITO, WARD- 6 (1), JAIPUR 3. THE LD. CIT(A) 4. THE LD. CIT BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 717/JP/2012) AR ITAT, JAIPUR