DR. SITA RAM SHARMA, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR

ITA 812/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0548 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH JCIT DHK
• Assessee Lawyers: TANUJ AGARWAL
• Keywords: Bogus purchase
• Section: 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 812/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 DR. SITA RAM SHARMA, PROP.- M/S SHARMA HOSPITAL, NEAR CHUNGI NAKA, CHOMU, JAIPUR. CUKE VS. D.C.I.T., CIRCLE-7, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AMVPS 4422 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI TANUJ AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10/09/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 13/09/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31/05/2018 OF LD. CIT(A)-3, JAIPUR ARISING FROM THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE A.Y. 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS O F APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD CIT(A) ERRED IN SUSTAINING THE LEVY OF PENAL TY AMOUNTING TO RS. 20,292/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, A LTER, MODIFY, SUBSTITUTE OR DELETE ANY GROUND OR GROUNDS OF APPEA L ON OR BEFORE THE HEARING OF THE APPEAL. ITA 812/JP/2018_ DR. SITA RAM SHARMA VS DCIT 2 2. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSM ENT, INTER ALIA, MADE ADDITION ON ACCOUNT OF CASH CREDIT U/S 68 OF T HE ACT OF RS. 3,38,655/- WHICH WAS RESTRICTED BY THE LD. CIT(A) TO R S. 59,700/-. THE SAID ADDITION WAS CONFIRMED BY THE TRIBUNAL IN THE QU ANTUM APPEAL. IN THE MEAN TIME, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED THE PENALTY AGAINST THE ADDITION U/S 68 OF THE ACT AND CONFIRMED TO THE EXTENT OF RS. 59,700/- . APART FROM THE PENALTY AGAINST THE ADDITION SUSTAINED BY THE TRIBUN AL ON ACCOUNT OF BOGUS PURCHASES TO THE EXTENT OF RS. 63,331/-. 3. THE ASSESSEE CHALLENGED THE SAID ACTION OF THE AS SESSING OFFICER BEFORE THE LD. CIT(A). THE LD. CIT(A) WHILE PASSING TH E IMPUGNED ORDER HAS DELETED THE PENALTY AGAINST THE ADDITION MADE O N ACCOUNT OF BOGUS PURCHASES AND SUSTAINED BY THE TRIBUNAL IN THE QUANT UM APPEAL TO THE EXTENT OF RS. 63,331/-. HOWEVER, THE PENALTY LEVIED AGAINST THE ADDITION MADE U/S 68 OF THE ACT WAS SUSTAINED BY THE LD. CIT(A ). 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THOUGH THE TRIBUNAL HAS CONFIRMED THE ADDITION OF RS. 59,700/- U/S 68 OF THE ACT, HOWEVER, THE SAID AMOUNT WAS SHOWN BY THE ASSESSEE AS TRADE CREDITORS ON ACCOUNT OF PURCHASES MADE ON CREDIT. THEREFORE, T HIS WAS NOT A PURE CASH CREDIT INTRODUCED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT BUT THE ITA 812/JP/2018_ DR. SITA RAM SHARMA VS DCIT 3 SAID AMOUNT WAS REPRESENTING THE CREDIT PURCHASE MAD E BY THE ASSESSEE FROM FIVE PARTIES AND HENCE IT CANNOT BE ADDED U/S 68 OF THE ACT. THUS, THE LD AR HAS SUBMITTED THAT EVEN THOUGH THE ADDITI ON WAS MADE AND SUSTAINED U/S 68 OF THE ACT. HOWEVER, THE PENALTY U/ S 271(1)(C) OF THE ACT IS NOT LEVIABLE ON SUCH ADDITION WHEN THIS FACT OF SUNDRY CREDITORS APPEARING IN THE BOOKS AGAINST THE PURCHASES IS NOT IN DISPUTE. HE HAS RELIED UPON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. PANCHAM DASS JAIN 205 CTR 444 (ALL) AND SUBMI TTED THAT THE HON'BLE HIGH COURT HAS CONFIRMED THE FINDING OF THE TRIBUNAL DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER U/S 68 OF T HE ACT ON ACCOUNT OF TRADE CREDITORS REPRESENTING PURCHASES. 5. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE TRIBUNAL HAS UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER BY RECORDING THE FIND ING THAT THE EXISTENCE OF THE PARTIES HAVE NOT BEEN PROVED BY THE ASSESSEE . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE PENALTY LEVIED BY THE ASSESS ING OFFICER AND SUSTAINED BY THE LD. CIT(A) IN THIS APPEAL IS ONLY AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH CR EDIT U/S 68 OF THE ACT, ITA 812/JP/2018_ DR. SITA RAM SHARMA VS DCIT 4 WHICH WAS SUSTAINED BY THE TRIBUNAL. THE DETAILS OF THE AMOUNT OUTSTANDING IN THE BALANCE SHEET AGAINST THESE PART IES ARE AS UNDER: S. NO. NAME OF THE TRADE CREDITOR OUTSTANDING BALANC E AT THE YEAREND ADDED BY A.O. & SUSTAINED BY CIT(A) 1. M.K. SURGICAL SUPPLIERS 22,768 2. RAJPUTANA BIOTECH PVT. LTD. 1,248 3. SANTOSH BATTERY SERVICE 6,200 4. SHREE LAXMI MEDICOSE 4,345 5. SURGIMED 25,139 TOTAL 59,700 WE NOTE THAT THIS FACT HAS NOT BEEN DISPUTED THAT T HE OUTSTANDING BALANCES WERE SHOWN BY THE ASSESSEE AGAINST THESE PA RTIES ON ACCOUNT OF PURCHASES. THUS, THESE ARE THE TRADE CREDITORS REPRE SENTING PURCHASES AS CLAIMED BY THE ASSESSEE, WHICH WAS NOT ACCEPTED BY T HE ASSESSING OFFICER. THE SAID FINDING OF THE ASSESSING OFFICER H AS BEEN CONFIRMED BY THIS TRIBUNAL. ONCE THE TRADE CREDITORS ARE REPRESEN TING THE PURCHASES THEN EVEN IF THE EXISTENCE OF THE PARTIES WERE IN DO UBT THEN THE CONSEQUENTIAL ADDITION WOULD BE ON ACCOUNT OF BOGUS PURCHASES INSTEAD OF CASH CREDIT. IT IS NOT THE CASE OF CASH INTRODUC ED BY THE ASSESSEE IN THE BOOKS BUT THE ASSESSEE HAS SHOWN THE OUTSTANDING PAY MENTS ON ACCOUNT OF PURCHASES. ACCORDINGLY, WE FIND THAT THOUGH THE E XPLANATION OF THE ASSESSEE WAS NOT FOUND AS SATISFACTORY IN THE QUANTU M PROCEEDINGS LEADING TO THE ADDITION IN QUESTION, HOWEVER, THE SA ME IS BONAFIDE IN VIEW OF THE FACTS AND CIRCUMSTANCES AS EXPLAINED BY THE ASSESSEE AND HENCE AS ITA 812/JP/2018_ DR. SITA RAM SHARMA VS DCIT 5 PER CLAUSE (B) OF EXPLANATION-1 TO SECTION 271(1)(C ) OF THE ACT, THE EXPLANATION OFFERED BY THE ASSESSEE WOULD BE CONSIDE RED AS BONAFIDE. ACCORDINGLY, WE DELETE THE PENALTY LEVIED BY THE ASS ESSING OFFICER U/S 271(1)(C) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/09/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13 TH SEPTEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- DR. SITA RAM SHARMA, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE D.C.I.T., CIRCLE-7, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 812/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR