SHIV SHANKAR PLYWOOD INIDA P. LTD, ULHASNAGAR V. DCIT RG 8(3), MUMBAI

ITA 7218/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101083 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 19-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 24-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Keywords: Unexplained cash credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER ITA NO S . 7217 & 7218 /MUM/2011 (ASSESSMENT YEAR S : 2003 - 04 & 2004 - 05 ) M/S.SHIVSHANKAR PLYWOOD INDUSTRIES P.LTD. C/O DWARKADAS WADHWA, 1103 FURNITURE BAZAR ULHASNAGAR - 421004. APPELLANT PAN: AAACS6821J VS. DEPUTY COMMISSIONER OF INCOME - TAX RANGE 8(3), MUMBAI. RESPONDENT APPELLANT BY : NONE. RESPONDENT BY: SHRI SUMIT KUMAR (DR). DATE OF HEARING: 19 /08/2015 . DATE OF PRONOUNCEMENT : : 16 / 0 9 /2015 O R D E R PER VIJAY PAL RAO, JM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 1/7/2011 OF THE CIT(A) - 18, MUMBAI, ARISING FROM THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE IT ACT FOR THE ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 RESPECTIVELY. 2. THE ASSESSEE HAS RAISED COMMON GROUNDS IN THESE APPEALS. THE GROUNDS RAI SED FOR THE ASSESSMENT YEAR 2003 - 04 ARE AS UNDER: ITA NO S.7217 & 7218/MUM/2011 M/S.SHIVSHANKAR PLYWOOD INDUSTRIES P.LTD. PAGE 2 OF 5 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) - 18, MUMBAI [ THE LD.CIT(A) ] ERRED IN CONFIRMING THE PENALTY OF RS.49,13,530/ - LEVIED BY THE ASSESSING OFFICER ( THE AO ) U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 [ THE ACT ON THE ALLEGATION OF FURNISHING INACCURATE PARTICULARS OF INCOME. 1.2 WHILE DOING SO, THE CIT(A) FAILED TO APPRECIATE THAT: (I) THE APPELLANT COULD NOT SAID TO HAVE CONCEALED INCOME OR FILED INACCURATE PARTICULARS OF INCOME WHEN ADDITION/DISALLOWANCES ARE MADE ON AD HOC BASIS. (II) THE APPELLANT HAD NEITHER CONCEALED NOR FILED AN INACCURATE PARTICULARS OF INCOME; AND 1.3 THE APPELLANT SUBMITS THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW NO SUCH PENALTY IS LEVIABLE. 1.4 THE APPELLANT PRAYS THAT PENALTY OF RS.49,13,530/ - BE CANCELLED. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUND AT THE TIME OF HEARING. 3. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE WHEN THESE APPEALS WERE CALLED FOR HEARING DESPITE THE NOTICE OF HEARING ISSUE THROUGH RPAD WAS DULY SERVED UPON THE ASSESSEE VIDE ACKNOWLEDGEMENT ON RECORD. WE FURTHER NOTE THAT AFTER FILING THESE APPEALS, THE ASSESSEE HAS NEVER APPEARED BEFORE THIS TRIBUNAL DESPITE REPEATED NOTICES ISSUED THROUGH RPAD. THEREFORE, WE PROPOSE TO HEAR AND DISPOSE OF THESE APPEALS OF THE ASSESSEE EX - PARTE. 4. WE HAVE HEARD THE LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR 200 3 - 04, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 6/3/2003 WHEREBY THE AO MADE THE FOLLOWING ADDITIONS: ITA NO S.7217 & 7218/MUM/2011 M/S.SHIVSHANKAR PLYWOOD INDUSTRIES P.LTD. PAGE 3 OF 5 1. INTEREST EXPENDITURE RS.78,90,851/ - 2. SHARE APPLICATION MONEY RS.50,00,000/ - 3. CASH DEPOSIT RS.60,000/ - 4. EXPENSES DEBITED IN P&L A/C RS.12,57,861/ - SUBSEQUENTLY, THE AO INITIATED PROCEEDINGS UNDER SECTION 271(1)(C) FOR LEVY OF PENALTY AGAINST THE ADDITION AND LEVIED PENALTY OF RS.49,13,350/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED VIDE ORDER DATED 30/1/2008. 5. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A). THE CIT(A) HAS CONFIRMED THE LEVY OF PENALTY BY TAKING NOTE OF THE FACT THAT THE ADDITIONS MADE BY THE AO HAVE BEEN CONFIRMED BY THE CIT(A) IN THE QUANTUM OF APPEAL AND THE ASSESSEE HAS ACCEP TED THE ORDER AND NOT FILED ANY FURTHER APPEAL. FROM THE PERUSAL OF THE RECORD, WE FIND THAT THE DISALLOWANCE OF RS.78,90,851/ - ON ACCOUNT OF INTEREST EXPENDITURE WAS MADE BY THE AO ON THE GROUND THAT THE ASSESSEE CLAIMED THIS EXPENDITURE OF INTEREST DUE TO THE BANK ON TERM LOAN BUT IT WAS NOT PAID BY THE ASSESSEE EVEN TILL THE AUDIT REPORT WAS SIGNED AND RETURN OF INCOME WAS FILED BY THE ASSESSEE. THUS, THE AO DISALLOWED THE SAID CLAIM OF EXPENDITURE BY INVOKING THE PROVISIONS OF SEC.43B. THE SECOND DISALLOWANCE WAS MADE BY THE AO ON ACCOUNT OF SHARE APPLICATION OF MONEY OF RS.50 LAKHS. THE ASSESSEE FAILED TO PRODUCE ANY DETAILS OR EVIDENCE INCLUDING CONFIRMATION/BANK STATEMENT, SOURCE OF MONEY IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION . T HE AS SESSEE CLAIMED THAT THE SHARE APPLICATION MONEY WAS RECEIVED FROM ONE OF THE DIRECTORS OF THE COMPANY BUT FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF THE SAID CLAIM. THE ITA NO S.7217 & 7218/MUM/2011 M/S.SHIVSHANKAR PLYWOOD INDUSTRIES P.LTD. PAGE 4 OF 5 THIRD ADDITION WAS MADE BY THE AO ON ACCOUNT OF CASH DEPOSIT OF RS.60,000/ - . THE A O RECORDED A FINDING THAT THE ASSESSEE FAILED TO EXPLAIN DEPOSIT DESPITE DUE OPPORTUNITY WAS GIVEN TO THE ASSESSEE THEREFORE, THE SAID AMOUNT OF RS.60,000/ - WAS TREATED AS UNEXPLAINED CASH CREDIT. THE LAST ADDITION WAS ON ACCOUNT OF EXPENSES DEBITED IN TH E PROFIT AND LOSS ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SEEN THAT THE ASSESSEE HAS DEBITED RS. 8 3,85,738/ - TO THE PROFIT AND LOSS ACCOUNT. THE AO ASKED THE ASSESSEE TO FURNISH REQUISITE DETAILS AS WELL AS ADDRESS OF THE PARTIES AND COP Y OF THE VOUCHERS. THE ASSESSEE DID NOT RESPOND TO THE QUERY OF THE AO AND THEREFORE IN ABSENCE OF DETAILS AND NON - RESPONSE TO THE QUERY , THE AO DISALLOWED 15% OF THE EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT OF RS.83,35,738/ - WHICH COMES TO RS.12,57,86 1/ - . 6. AS REGARDS THE DISALLOWANCE OF EXPENSES ON ADHOC BASIS AT 15%, WE ARE OF THE VIEW THAT IN ABSENCE OF ANY FINDING THAT THESE EXPENSES ARE BOGUS IN NATURE, MERELY BECAUSE THE AO HAS DISALLOWED ON ADHOC BASIS, PENALTY UNDER SECTION 271(1)(C) C ANNOT BE LEVIED ON SUCH DISALLOWANCE. ACCORDINGLY, WE DELETE THE PENALTY LEVIED BY THE AO AGAINST THE DISALLOWANCE MADE ON ACCOUNT OF ADHOC DISALLOWANCE OF EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT. ALL THE OTHER THREE ADDITIONS WERE DISALLOWED BY THE AO IN TOTO BECAUSE ASSESSEE FAILED TO PRODUCE ANY RECORD IN SUPPORT OF THE CLAIM THEREFORE IN THE ABSENCE OF ANY EXPLANATION OR EVIDENCE EVEN BEFORE US, WE DO NOT FIND ANY REASON TO INTERFERE ITA NO S.7217 & 7218/MUM/2011 M/S.SHIVSHANKAR PLYWOOD INDUSTRIES P.LTD. PAGE 5 OF 5 WITH THE ORDERS OF THE AUTHORITIES BELOW QUA LEVY OF PENALTY IN RESPECT OF THESE THREE ADDITIONS VIZ. INTEREST EXPENDITURE, SHARE APPLICATION MONEY AND CASH DEPOSIT. 7 . FOR THE ASSESSMENT YEAR 2004 - 05, PENALTY HAS BEEN LEVIED BY THE AO ONLY ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENDITURE BECAUSE THE ASSESSEE D ID NOT PAY THE ALLEGED INTEREST TO THE BANK. THIS ISSUE IS COMMON FOR THE ASSESSMENT YEAR 2003 - 04. ACCORDINGLY IN THE ABSENCE OF ANY EXPLANATION WHICH CAN BE TREATED AS A BONAFIDE EXPLANATION OF THE ASSESSEE, PENALTY LEVIED BY THE AO AND CONFIRMED BY THE CIT(A) IS UPHELD. 8 . IN THE RESULT, THE APPEAL FOR THE ASSESSMENT YEAR 2003 - 04 IS PARTLY ALLOWED AND THE APPEAL FOR ASSESSMENT YEAR 2004 - 05 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 1 6 TH SEPTEMBER , 2015. S D / - S D / - (N.K.BILLAIYA) (VIJAY PAL RAO) ACCOUNANT MEMBER JUDICIAL MEMBER EKSRINIVASULU, SR.PS COPY TO: 1. A PPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, MUMBAI. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL MUMBAI