Shri Hasmukh Keshavlal Kesaria-HUF, RAJKOT-GUJARAT V. The Income Tax Officer, Wd-2(1), RAJKOT-GUJARAT

ITA 752/RJT/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0432 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 1997-1998
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief
• Section: 271(1)(c); 68

Judgement Text

HASMUKH KESHAVLAL KESARIA/I.T.A.NO. 752/RJT/2014/A.Y. 97-98 PAGE 1 OF 6 INCOM TAX APPELLATE TRIBUNAL-RAJKOT-BENCH-RAJKOT BEFORE C .M. GARG, JUDICIAL MEMBER AND O. P. MEENA, ACCOUNTANT MEMBER I.T.A NO. 752/RJT/2014 ASSESSMENT YEAR: 1997-98 APPELLANT V. RESPONDENT HASMUKH KESHAV LAL KESARIA, HUF C/O D R ADHIA , OM SHRI PADMALAYA BESIDE TRIKAMJI 16, JAGNATH PLOT DR. YAGNIK ROAD RAJKOT PAN:AABHK6682H INCOME TAX OFFICER, WARD- 2(1) RAJKOT ASSESSEE BY WRITTEN SUBMISSIONS REVENUE BY SHRI PRAV EE N VERMA, SR. D.R. DATE OF HEARING 27 .11.2018 DATE OF PRONOUNCEMENT 2 8 .11.2018 ORDER PER O. P. MEENA, AM 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-III, RAJKOT DATED 10.11.2014 PERTAINING TO ASSESSMENT YEAR 1997-98 CONFIRMING THE PENALTY OF RS. 1,68,111 LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 2. THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE CASH CREDIT OF RS. 2,25,802 RECEIVED FROM SHRI VANSUR L DER AND NAZABHAI L DER, RS. 1,23,164 FROM JAYANTILAL M DHONIA AND RS. 91,121 FROM KISHAN J, CHAVDA AGGREGATING TO RS. 4,40,087 AS ALL THE INGREDIENTS OF SECTION 68 WERE NOT SATISFIED. THE AO STATED THAT THE ASSESSEE HAS FAILED TO PRODUCE SHRI VANSUR L DER AND NAZARBAHI L DER FOR EXAMINATION EVEN THOUGH CONFIRMATION, AFFIDAVIT, AND ABSTRACT OF 7/12 FROM THESE PERSONS WERE HASMUKH KESHAVLAL KESARIA/I.T.A.NO. 752/RJT/2014/A.Y. 97-98 PAGE 2 OF 6 FILED. SIMILARLY, JAYANTIBHAI M DHONIA IN HIS STATEMENT STATED THAT HE HAS NOT LENT ANY MONEY TO THE ASSESSEE. IN VIEW OF THESE FACTS, THE AO LEVIED A PENALTY OF RS. 1,68,111 BEING 100% OF TAX SOUGHT TO BE EVADED IN RESPECT OF ABOVE CASH CREDITORS. 3. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). WHEREIN THE PENALTY WAS CONFIRMED ON THE GROUND THAT ALL THE THREE INGREDIENTS OF SECTION 68 ARE SATISFIED HENCE, THE APPELLANT HAS CONCEALED THE INCOME BY FURNISHED INACCURATE PARTICULARS OF INCOME. 4. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE VIDE HIS WRITTEN SUBMISSIONS SUBMITTED THAT THE AO HAS INITIATED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS PER PARA 8 OF ASSESSMENT ORDER BUT THE CIT (A) HAS NOT CONFIRMED THE PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BUT CONFIRMED THE PENALTY FOR CONCEALMENT. HENCE, PENALTY NEEDS TO BE CANCELLED. FURTHER, PENALTY IS ALSO REQUIRED TO BE DELETED ON THE GROUND THAT OF NON MENTIONING SPECIFIC CHARGES IN THE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT. IN SUPPORT OF THIS CONTENTION, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE IN THE CASE OF CIT V. SSA`S EMERALD MEADOWS [2016] 73 TAXMANN.COM 248 (SC) [2016] 8 TMI 1145(SC). ON MERITS, THE LEARNED COUNSEL CONTENDED THAT THE AO IN PARA 7 AT PAGE NO. 7 OF ASSESSMENT ORDER STATED THAT I HOLD THAT THE ASSESSEE HASMUKH KESHAVLAL KESARIA/I.T.A.NO. 752/RJT/2014/A.Y. 97-98 PAGE 3 OF 6 HAS FULLY DISCHARGED HIS ONUS AND THERE IS NO CASE TO TREAT THE CREDITS AS UNEXPLAINED MONEY OF THE ASSESSEE INTRODUCED IN THE GUISE OF CASH CREDIT. HOWEVER, THEY HAVE NOT APPEARED BEFORE THE AO HENCE, ADDITION OF RS. 2,25,802 WAS MADE. SIMILARLY, CONFIRMATION OF SHRI KISHANBHAI JIVABHAI CHAVDA FOR RS. 91,121, WAS FILED BUT HE HAS NOT APPEARED BEFORE THE AO. ADDITION OF RS. 1,23,164 WAS MADE IN RESPECT OF SHRI JAYANTILAL MOHANLAL DHONIA AS HE DENIED ADVANCING MONEY BUT THERE WAS SOME DISPUTE IN RESPECT OF INTEREST PAID TO HIM THEREFORE, HE GAVE ADVERSE STATEMENT THOUGH PAYMENT TO HIM WAS MADE THROUGH ACCOUNT PAYEE CHEQUES. HENCE, NO PENALTY IS REQUIRED TO BE LEVIED IN THE LIGHT OF DECISION IN THE CASE OF CIT V. RAM SWAMI NAIDU 208 ITR 377 (MAD), CIT V. JALARAM OIL MILLS 253 ITR 192 (GUJARAT) AND CIT V. P ROES 260 CTR 397 (MAD). 5. PER CONTRA, THE LD. SR. D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PERUSAL OF ASSESSMENT ORDER AND PENALTY ORDER REVEALS THAT THE ASSESSEE HAS FURNISHED CONFIRMATION, AFFIDAVIT AND EXTRACT OF 7/12 IN RESPECT OF CASH CREDITORS OF SHRI VANSUR L DER AND NAZABHAI L DER FROM WHOM CASH CREDIT OF RS. 2,25,802 WAS RECEIVED BY ACCOUNT PAYEE CHEQUES. THUS, THE IDENTITY, GENUINENESS AND CREDITWORTHINESS HAS BEEN ESTABLISHED AS MENTIONED BY THE AO IN PARA 8 OF ORDER. HOWEVER, THE ADDITION WAS MADE AS THESE PERSONS FAILED TO APPEAR BEFORE THE AO. MERELY HASMUKH KESHAVLAL KESARIA/I.T.A.NO. 752/RJT/2014/A.Y. 97-98 PAGE 4 OF 6 BECAUSE PERSON CONCERNED HAVE NOT APPEARED BEFORE THE AO, THIS CANNOT BE A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME FROM LEVY OF PENALTY UNDER SECTION 271(1)(C). SIMILARLY, CONFIRMATION WAS FILED IN RESPECT OF CASH CREDITOR OF RS. 91,121, SHRI KISHORE J CHAVDA. HOWEVER, JAYANTILAL M DHONIA HAS GIVEN AN ADVERSE STATEMENT DUE TO DISPUTE WITH THE ASSESSEE, THOUGH PAYMENT WERE RECEIVED THROUGH CHEQUE AND MADE THROUGH CHEQUES, HENCE, IT CANNOT BE A CASE OF POSITIVE CONCEALMENT OF INCOME. THUS, THE AO HAS MADE ADDITION ON THE BASIS OF FACTS AS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE FIND THAT THE ASSESSEE HAS FURNISHED ALL RELEVANT FACTS; THEREFORE, THE PENALTY CANNOT BE LEVIED MERELY BECAUSE THAT IT WAS NOT ACCEPTABLE TO THE AO. WHERE THE EXPLANATION IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED, PENALTY IS NOT LEVIABLE. IT IS TRITE LAW THAT PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE PROCEEDINGS FROM ASSESSMENT PROCEEDINGS. THE FINDING RECORDED IN THE ASSESSMENT ORDER IS NOT CONCLUSIVE FOR DECIDING THE IMPOSITION OF PENALTY. IT ONLY HAS A PERSUASIVE VALUE. ANY FINDING RECORDED IN THE ASSESSMENT ORDER DOES NOT MEAN THAT THE PENALTY HAS TO BE IMPOSED AUTOMATICALLY. EXPLANATION 1 TO SECTION 271 (L) (C) PROVIDES THAT THE PENALTY WOULD BE DEEMED TO ATTRACT WHERE IN RESPECT OF A FACT MATERIAL TO THE COMPUTATION OF INCOME EITHER NO EXPLANATION IS OFFERED, OR EXPLANATION HASMUKH KESHAVLAL KESARIA/I.T.A.NO. 752/RJT/2014/A.Y. 97-98 PAGE 5 OF 6 OFFERED IS FOUND TO BE FALSE. IN THIS CASE, THE ASSESSEE HAS OFFERED EXPLANATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF AND ALL DETAILS OF CONFIRMATION, AFFIDAVIT AND EXTRACT OF 7/12 WERE SUBMITTED. THE ASSESSEE HAD OFFERED EXPLANATION AND THE SAID EXPLANATION OFFERED WAS NOT FOUND TO BE FALSE AND ACCORDINGLY ITS CASE IS NOT COVERED BY CLAUSE (A) OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. CLAUSE (B) OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT PROVIDES THAT WHERE THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE ITS EXPLANATION AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED, PENALTY IS LEVIABLE. THIS BEING THE FACTUAL POSITION, THEREFORE PENALTY UNDER SECTION 271(1) (C) IS NOT LEVIABLE. JUST BECAUSE APPELLANTS EXPLANATION WAS NOT FOUND ACCEPTABLE BY THE AO, IT DOES NOT FOLLOW THAT THAT THE ASSESSEE WAS UNABLE TO SUBSTANTIATE HIS EXPLANATION BY PROVIDING VARIOUS EVIDENCES AND JUDICIAL OPINIONS. EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT DOES NOT THEREFORE COVER THE CASE OF THE ASSESSEE. WE FURTHER, FOUND THAT NO SPECIFIC NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) WAS ISSUED AND PENALTY LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONFIRMED FOR CONCEALMENT OF INCOME HENCE, NO PENALTY IS LEVIABLE. THE CASE LAWS RELIED BY THE ASSESSEE IN THE CASE OF CIT RAM SWAMI (SUPRA) AND CIT JALARAM OIL MILLS (SUPRA) SUPPORTS HIS CASE. IN VIEW OF THE FOREGOING DISCUSSION, FACTS OF THE CASE AND CASE LAWS RELIED BY THE ASSESSEE HASMUKH KESHAVLAL KESARIA/I.T.A.NO. 752/RJT/2014/A.Y. 97-98 PAGE 6 OF 6 IT CAN BE HELD THAT THE ASSESSEE HAD MADE ALL THE NECESSARY DISCLOSURES ON A BONAFIDE BELIEF, WHICH IS NOT AGREEABLE TO THE AO, IT WILL NOT AUTOMATICALLY LEAD TO A CASE FOR PENALTY UNDER SECTION 271(1)(C) OF THE IT ACT, 1961. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THE PENALTY IS NOT SUSTAINABLE IN LAW. IN THE LIGHT OF ABOVE DISCUSSION, THE PENALTY LEVIED AT RS.1,68,111 IS DELETED. THEREFORE, SOLE GROUND OF APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 8. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018 . SD/- SD/- (C.M. GARG) (O. P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: DATED: 28.11.2018. COPY OF ORDER SENT TO - ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, RAJKOT