M/s. Hari Om Dia Jewel, Surat V. The ACIT., Cent.Circle-4, Surat

ITA 786/AHD/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50608 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 11-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S A BOHRA
• Assessee Lawyers: R N VEPARI
• Keywords: Principle of natural justice
• Section: 143(3); 68; 27

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'SMC' BEFORE SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER ITA NO.786/AHD/2011 (ASSESSMENT YEAR:-2002-03) M/S HARI OM DIA JEWEL, 207, MAVANI SHOPPING CENTRE, NEAR HIRA BAZAR, VARACHHA ROAD, SURAT V/S THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 4, SURAT PAN: AACFH 0806 M [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI R N VEPARI, AR RESPONDENT BY:- SHRI S A BOHRA, SR. DR DATE OF HEARING:- 19-09-2011 DATE OF PRONOUNCEMENT:- O R D E R THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER DATED 06-10-2010 OF THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, AHMEDABAD [THE CIT(A)] FOR ASSESSMENT YEAR (AY) 2002-03. THE ONLY ISSUE IS IN RESPECT OF LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT , 1961 [HEREINAFTER REFERRED TO AS THE ACT] OF RS.58,275/-. 2 THIS APPEAL WAS FILED BELATEDLY BY 83 DAYS. IT WA S EXPLAINED THAT THE PARTNERSHIP FIRM WAS DISSOLVED AND VACATED THE TENANTED PREMISES. THE ORDER OF THE CIT(A) WAS SERVED AT THE SAID OLD PREMISES WHICH WAS RECEIVED BY THE WATCHMAN. THE WA TCHMAN HAD KEPT THE DOCUMENT IN A POST-BOX WHICH WAS COLLECTED LATER ON BY THE ASSESSEE FROM THE WATCHMAN. THESE FACTS HAVE ALSO B EEN AFFIRMED THROUGH AN AFFIDAVIT OF ONE OF THE PARTNERS. AFTER HEARING BOTH THE SIDES, I AM OF THE VIEW THAT THE NATURAL JUSTICE DE MANDS TO CONDONE 2 ITA NO.786/AHD/2011 THE DELAY OF 83 DAYS AND HEREINBELOW PROCEED TO DEC IDE THE CASE ON MERIT. 3 THE FACTS IN BRIEF AS EMERGE FROM THE PENALTY ORD ER PASSED U/S 271(1)(C) DATED 31-03-2008 AND THE CORRESPONDING AS SESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147, DATED 31-0 3-2006 WERE THAT THE ASSESSEE FIRM HAS TAKEN CASH CREDITS FROM SIX PARTIES TOTALING RS.8,10,000/- OUT OF WHICH THE ASSESSING O FFICER [AO FOR SHORT] HAS ACCEPTED THE LOANS IN RESPECT OF THREE P ARTIES BUT MADE ADDITIONS IN RESPECT OF FOLLOWING THREE PARTIES:- (1) SMT. PRABHABEN M DOSHI RS.1,50,000/- (2) SMT. SHAKUNTALABEN M DOSHI RS.1,50,000/- (3) SMT. NITABEN M DOSHI RS. 60,000/- 4 THE MATTER HAD GONE UPTO THE ITAT AND ITAT AHMEDA BAD BENCH-B VIDE ITA NO.842/AHD/2007 FOR AY 2002-03, VI DE ORDER DATED 03-08-2007 HAS CONFIRMED THE ADDITION IN RESPECT OF SMT. PRABHABEN M DOSHI OF RS.1,50,000/-. IN RESPECT OF REST OF THE TWO PARTIES, IT WAS HELD THAT CONSIDERING THE MATERIAL ON RECORD, THE L OANS WERE EXPLAINED PROPERLY AND HENCE, DIRECTED TO DELETE TH E ADDITIONS. 5 CONSEQUENCE THEREUPON, PENALTY PROCEEDINGS U/S 27 1(1)(C) WERE STARTED ONLY IN RESPECT OF THE ADDITION PERTAI NING TO THE AMOUNT OF RS.1,50,000/- STATED TO BE ADVANCED BY SMT. PRAB HABEN M DOSHI. IT WAS EXPLAINED THAT THE AMOUNT WAS ADVANCED THROU GH A CROSSED CHEQUE. INTEREST WAS PAID BY THE ASSESSEE AND TDS W AS DEDUCTED. HOWEVER, THE AO AS WELL AS LEARNED CIT(A) WERE OF T HE VIEW THAT ONCE THE ADDITION WAS CONFIRMED BY THE TRIBUNAL AND THE ASSESSEE HAS NOT GIVEN ANY SATISFACTORY REPLY, THEREFORE, TH E PENALTY IS LEVIABLE ON THE ASSESSEE. 6 I HAVE HEARD BOTH THE SIDES. THE MAIN CONTENTION OF THE LEARNED AR IS THAT THE SAID DEPOSITOR WAS CROSSED E XAMINED BY THE 3 ITA NO.786/AHD/2011 AO. THE DEPOSITOR HAS CONFIRMED THE ADVANCE OF LOAN AND EVIDENCES HAVE ALSO BEEN VERY MUCH PLACED BEFORE THE AO. THE EVIDENCES WERE VIZ. PAN OF THE DEPOSITOR, AMOUNT OF TDS DEDUC TED, RELEVANT COPIES OF ACCOUNTS AND THE STATEMENT OF BANK ACCOUN T. MERELY BECAUSE SHE HAS STATED THAT THE LOAN WAS NOT GIVEN TO THE ASSESSEE, THE ENTIRE ADDITION WAS MADE. HOWEVER, THE LEARNED AR HAS SPECIFIED THAT THE RIGHT TO CROSS EXAMINE WAS NEVER GIVEN TO THE ASSESSEE. IN SUPPORT, A PRONOUNCED DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JALARAM OIL MILLS [2002] 253 ITR 192 (GUJ) IS CITED. 7 ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE, THE LEARNED DR MR. S A BOHRA APPEARED AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND CITED THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF CHUHARMAL VS. CIT [1988] 172 I TR 250 (SC). 8 IT IS AN ADMITTED FACT THAT THE SAID DEPOSITOR WA S PRESENT BEFORE THE AO. IT IS ALSO AN ADMITTED FACT THAT SHE IS SUBJECT TO TAX. HER PAN ACCOUNT WAS ON RECORD. THE ASSESSEE HAS PAI D INTEREST AND DEDUCTED TDS. THE LOAN TRANSACTION WAS ADMITTED LY THROUGH AN ACCOUNT PAYEE CHEQUE. CONTRA ACCOUNTS HAVE ALSO BEE N PLACED ON RECORD. IT IS VEHEMENTLY ARGUED BEFORE ME THAT WITH OUT GRANTING AN OPPORTUNITY TO CROSS EXAMINE THE LADY, A GENUINE LO AN TRANSACTION WAS DOUBTED. AS FAR AS QUANTUM ADDITION IS CONCERNE D, I AM OF THE VIEW THAT ONCE A DECISION HAS BEEN TAKEN BY A RESPE CTED COORDINATE BENCH, THEREFORE, AT THIS STAGE, NO ADJUDICATION OR ANY OPINION IS REQUIRED. IT IS ALSO AN ESTABLISHED POSITION OF LAW THAT THE QUANTUM PROCEEDINGS ARE DIFFERENT THAN THE PENALTY PROCEEDI NGS. IN THE PENALTY PROCEEDINGS, REQUIREMENT OF LAW IS TO SEE W HETHER THERE WAS CONCEALMENT OF FACT OR THERE WAS MISREPRESENTATION OF FACT WHICH HAS RESULTED INTO THE CONCEALMENT OF INCOME. AS FAR AS THE PRESENT CASE IS CONCERNED, THE FACTS RELATED TO THE LOAN ADVANCE D TO THE ASSESSEE WERE NOT IN DISPUTE. IT IS NOT A CASE OF THE REVENU E THAT THE LOAN 4 ITA NO.786/AHD/2011 TRANSACTION WAS NOT THROUGH ACCOUNT PAYEE CHEQUE OR TDS WAS WRONGLY OR FALSELY INFORMED. RATHER, NO FALSITY IN THOSE CONFIRMATIONS WAS DETECTED BY THE REVENUE AUTHORITIES. CONSIDERIN G THESE FACTS, I PLACE RELIANCE ON THE DECISION OF THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF JALARAM OIL MILLS (SUPRA), WHEREIN IT W AS STATED - IN THE PRESENT, CASE, ON THE BASIS OF THE ASSESSE E AGREEING TO HAVE CREDIT ENTRIES IN ITS BOOKS OF ACCOUNT TREATED AS ITS INCO ME BY VIRTUE OF THE PROVISIONS OF SECTION 68 OF THE ACT, THE SAID SUMS WOULD BE DEEMED TO BE INCOME OF THE YEAR UNDER CONSIDERATION. HOWEVER, DE HORS THE SAID PROVISION, IT WAS NOT POSSIBLE TO STATE WITH CERTAI NTY THAT THE SAID SUMS WOULD BE CONCEALED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE DECISION CITED BY THE LEARNED DR IS ON DIFFEREN T FACTS BECAUSE WRIST WATCHES WERE SEIZED AND NO EXPLANATION WAS GI VEN AT THE TIME OF SEIZURE. SINCE THERE WAS AN APPARENT CONCEALMENT OF ASSETS AND CONCEALMENT OF FACTS, THEREFORE, IT WAS HELD THAT P ENALTY COULD BE IMPOSED. UNDER THE TOTALITY OF THE FACTS AND CIRCUM STANCES OF THE CASE, ONCE THE DETAILS OF THE IMPUGNED TRANSACTIONS WERE MADE AVAILABLE TO THE AO AND THAT INFORMATION WAS NOT FO UND TO BE FALSE OR INCORRECT, THEREFORE, I HEREBY DIRECT TO DELETE THE PENALTY. 9. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 20-09-2011 SD/- (MUKUL KUMAR SHRAWAT) JUDICIAL MEMBER DATE : 20-09-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S HARI OM DIA JEWEL, 207, MAVANI SHOPPING CENT RE, NEAR HIRA BAZAR, VARACHHA ROAD, SURAT 2. THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CI RCLE-4, SURAT 5 ITA NO.786/AHD/2011 3. CIT CONCERNED 4. CIT(A)-II, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-SMC, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD