Dynamic Engineers, Kota, Kota V. ITO Ward1(1) Kota, Ward-1(1) Kota

ITA 855/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7212 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 12-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH
• Assessee Lawyers: D KUMAR
• Section: 271(1)(c); 143(3); 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H A 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 VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 855/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2005-06 DYNAMIC ENGINEERS E-20, INDUSTRIAL AREA OPPOSITE TO MULTIMETLS , KOTA, RAJ. CUKE VS. INCOME TAX OFFICER WARD 1(1), KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAFD9332J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI D. KUMAR (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/10/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 22/10/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), KOTA DATED 15.03.2019 WHEREIN THE ASSESSEE HAS CHAL LENGED THE ACTION OF LD. CIT(A) IN CONFIRMING THE LEVY OF PENALTY U/S 271(1) (C) OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSMENT PROCEEDINGS WERE COMPLETED U/S 143(3) VIDE ORDER DATED 28.12.20 07 WHEREIN THE AO MADE ADDITION TOWARDS CASH CREDIT AMOUNTING TO RS. 1,26, 300/- AND THE RELEVANT FINDINGS OF THE AO READS AS UNDER:- 5. CASH CREDITORS: DURING THE PERIOD RELEVANT FOR THE AY 2005-06 UNDER CONSIDERATION THERE ARE NEW DEPOSITS IN FORM OF CAS H CREDITS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SURRE NDERED THE FOLLOWING AMOUNT OF CASH CREDITS FOR TAX CLAIMING THAT HE COU LD NOT PRODUCE THEM FOR ITA NO. 855/JP/2019 DYNAMIC ENGINEERS, K OTA VS. ITO, WARD 1(1), KOTA 2 EXAMINATION AND THEREFORE THE SAME IS BEING SURREND ERED SUBJECT TO CONDITION THAT IT SHOULD NOT BE TREATED AS CONCEALE D INCOME OF THE ASSESSEE. 1. SH. DHARAM RAJ R/O VILLAGE RAITHTAL DISTT. BARAN 1 8,000/- 2. SH. HANSRAJ R/O VILLAGE MUNDIL DISTT. BARAN 18,00 0/- 3. SH. HARI MOHAN KHENDELWAL R/O POST SHEOPUR 18,000/- 4. HEMRAJ SUMAN R/O BARAN 18,000/- 5. SMT. SITA DEVI GOYAL R/O MAHAVIR NAGAR III, KOTA 1 8,200/- 6. DHEERAJ SHUKLA 18,000/- 7. RAJENDRA PRASAD 18,100/- 1,26,300/- DURING THE COURSE OF HEARING THE ASSESSEE WAS REQUI RED TO PRODUCE THE ABOVE CASH CREDITORS. IN WRITTEN REPLY FILED BY SH. SHAILENDRA GUPTA PARTNER SURRENDERED THE FOLLOWING CASH CREDITS APPEARING IN THE ABOVE NAMES. THE ABOVE SURRENDERED CASH A CREDIT OF RS. 1,26,300/- I S HEREBY ADDED TO THE INCOME OF THE ASSESSEE TREATING IT AS UNEXPLAINED C ASH CREDITS. SINCE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE ABOVE CASH CREDITS, THE ASSESSEE HAS SURRENDERED THE ABOVE CAS H CREDITS DURING THE COURSE OF ASSESSMENT PROCEEDINGS THEREFORE PENALTY U/S 271(1)(C) IS BEING INITIATED SEPARATELY. 3. DURING THE PENALTY PROCEEDINGS, A FRESH SHOW CAU SE WAS ISSUED TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT SURRENDERED THE AMOUNT AS HE WAS HAVING PAUCITY OF TIME TO PRODUCE CASH CR EDITOR THOUGH COMPLETE DETAILS SUCH IDENTITY, CREDITWORTHINESS AND GENUINE NESS OF TRANSACTION WERE FILED BEFORE THE THEN AO DURING THE COURSE OF ASSES SMENT PROCEEDINGS. HOWEVER, THE AO DID NOT FIND THE SUBMISSIONS OF THE ASSESSEE ACCEPTABLE AND HELD THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME IN TERMS OF SECTION 271(1)(C) READ WITH EXPLANATION (1) AND LEV IED THE PENALTY. ITA NO. 855/JP/2019 DYNAMIC ENGINEERS, K OTA VS. ITO, WARD 1(1), KOTA 3 4. ON FURTHER APPEAL, THE LD. CIT(A) HAS CONFIRMED THE SAID LEVY OF PENALTY AND THE RELEVANT FINDINGS OF THE LD. CIT(A) AS UNDE R:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. SINCE IN HIS ORDER, THE CIT(A) HAD GIVEN THE RELIEF OF TELESCOPING TO THE EXTENT OF RS. 1,26,300/- ON SURRENDERED CASH CREDIT S DUE TO TRADING ADDITION ONLY EXCEEDING THE SAME AND THE ITAT HAS D ELETED THE TRADING ADDITION REMAINING SUBSEQUENTLY, THE PENALTY CALCUL ATION IS BEING RESTRICTED TO THE CASH CREDIT AMOUNT SURRENDERED BE ING RS. 1,26,300/- BASED ON THE FACTS INVOLVED THAT THE ENTRIES RELATE D TO THESE CREDITORS WERE NOT AT ALL PROVED LEAVE ALONE TO THE SATISFACT ION OF THE A.O. IN FACT THEN THE BONAFIDE OF THESE CREDITS BEING SUSPICIOUS AS DETECTED BY THE AO THEY WERE IN THE REALM OF BOGUS AND MALAFIDE CLA IMS. HENCE THE PENALTY ON THIS AMOUNT IS REQUIRED TO BE UPHELD. THIS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. 5. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT APPELLANT HAS NOT CONCEAL ED ANY PARTICULARS OF INCOME. APPELLANT DISCLOSED ALL THE CREDITORS AT TH E INITIAL STAGE WITH COMPLETE PARTICULARS OF CASH CREDITORS SUCH AS IDEN TITY, ADDRESS AND CREDITWORTHINESS ETC. THE ASSESSEE SURRENDERED CASH CREDITORS MAINLY TO AVOID LITIGATION AS THE CASH CREDITORS COULD NOT BE PRODUCED WITHIN SHORT TIME PERIOD ALLOWED BY THE A.O. IN THE PENALTY PROCEEDIN GS INITIATED BY AO, THE APPELLANT REQUESTED TO KINDLY PROVIDE AN OPPORTUNIT Y AND ALLOW US 15 DAYS TIME TO SUBMIT THESE DETAILS AND IF APPELLATE AUTHO RITY IS NOT SATISFIED, REQUESTED HIM TO KINDLY ISSUE SUMMONS U/S.131 OF TH E ACT TO THE CASH CREDITORS. THAT NEITHER AO NOR APPELLATE AUTHORITY EXERCISED POWERS U/S 131 OF IT ACT TO SUMMON CASH CREDITORS OR MADE ANY ENQU IRY TO VERIFY THE IDENTITY, CREDITWORTHINESS ETC. OF THE CREDITORS AN D COME TO CONCLUSION THAT APPELLANT HAS CONCEALED PARTICULARS OF INCOME. THE APPELLANT RESPECTFULLY ITA NO. 855/JP/2019 DYNAMIC ENGINEERS, K OTA VS. ITO, WARD 1(1), KOTA 4 SUBMITS THAT ONCE THE APPELLANT HAS FURNISHED NECES SARY PARTICULARS AS ABOVE PRIMARY BURDEN ON ASSESSEE IS DISCHARGED AND THE AS SESSING AUTHORITY IS REQUIRED TO BRING POSITIVE EVIDENCE TO DISPROVE THE SAME AND TO PROVE MENS REA. THE AO AND APPELLATE AUTHORITY CANNOT DRAW ANY ADVERSE CONCLUSION MERELY BECAUSE THE ASSESSEE SURRENDERED CREDITORS T O BUY PEACE. THE AUTHORITIES HAVE NOT APPRECIATED THAT AFTER LAPSE O F TIME, THE CREDITORS ARE NOT IN THE CONTROL OF ASSESSEE AND THEREFORE POWERS HAVE BEEN CONFERRED ON THE ASSESSING AUTHORITY AND APPELLATE AUTHORITY U/S 131 OF INCOME TAX ACT. IF THE AUTHORITIES DO NOT EXERCISE THE POWERS STATUTOR ILY CONFERRED ON THEM ANY INFERENCE AGAINST ASSESSEE CANNOT BE DRAWN. SINCE T HE EXPLANATION OF ASSESSEE REGARDING SURRENDER OF CASH CREDIT SUPPORT ED BY NECESSARY PARTICULARS HAVE NOT BE EXAMINED AND FOUND TO BE FA LSE BY BRINGING POSITIVE EVIDENCE ON RECORD AND NO MALAFIDE HAVE BEEN FOUND, PENALTY U/S 271(1)(C) IS NOT ATTRACTED. IT WAS FURTHER SUBMITTED THAT IT WAS A VOLUNTARY SURRENDER AND CANNOT BE SAID TO BE DETECTION OF ANY CONCEALME NT OR UNDISCLOSED INCOME BY THE DEPARTMENT. IN SUPPORT OF THE SAME, R ELIANCE WAS PLACED ON THE FOLLOWING CASES: ITO VS. DR. SAMEER KANT AGARWAL (2008) 113 TTJ 252 (ITAT LUCKNOW) SHREENATH SHARE CONSULTANCY VS. DCIT (2003) 22 CCH 320 (ITAT AHMEDABAD) ITO VS. SUNITA BANSAL (2008) 27 CCH 340 (ITAT AGRA) . 6. THE LD. DR IS HEARD WHO HAS RELIED ON THE FINDIN GS OF THE LOWER AUTHORITIES AND SUBMITTED THAT IT IS NOT A CASE OF MERE ADDITION U/S 68 OF THE ACT RATHER IT IS A CASE OF SURRENDER OF INCOME BY T HE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN THE ASSESSEE FAIL ED TO DISCHARGE THE INITIAL ONUS CAST ON HIM U/S 68 OF THE ACT. IT WAS ACCORDIN GLY SUBMITTED THAT THE DECISION RELIED UPON BY THE LD. AR ARE DISTINGUISHA BLE ON FACTS AND DOESNT SUPPORT THE CASE OF THE ASSESSEE. HE ACCORDINGLY SU BMITTED THAT THE ORDER OF THE LOWER AUTHORITIES SHOULD BE CONFIRMED. ITA NO. 855/JP/2019 DYNAMIC ENGINEERS, K OTA VS. ITO, WARD 1(1), KOTA 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISSUE UNDER CONSIDERATION RE LATES TO LEVY OF PENALTY IN RESPECT OF ADDITION CONFIRMED IN THE QUANTUM PROCEE DINGS U/S 68 OF THE ACT. IN SUPPORT OF ITS EXPLANATION AND BONAFIDE FOR NON- LE VY OF PENALTY, THE ASSESSEE HAS RELIED ON THE EVIDENCE FILED BEFORE THE LOWER A UTHORITIES IN TERMS OF SATISFYING THE INITIAL ONUS FACTS ON IT IN TERMS OF IDENTITY, ADDRESS AND CREDITWORTHINESS. WE FIND THAT THESE EVIDENCES AND THE BONAFIDE OF THE ASSESSEE HAVE NOT BEEN DISPUTED BY THE REVENUE. THE ONLY REASON THE ADDITION HAS BEEN CONFIRMED IN THE QUANTUM PROCEEDINGS IS IN ABILITY OF THE ASSESSEE IN PRODUCING THE CASH CREDITORS AND CONSEQUENT SURREND ER MADE TO AVOID LITIGATION AS THE CASH CREDITORS COULD NOT BE PRODU CED WITHIN SHORT TIME PERIOD ALLOWED BY THE A.O. IN OUR VIEW, THE INABILI TY OF THE ASSESSEE IN PRODUCING THE CASH CREDITORS MAY BE ONE OF THE FACT ORS TO HOLD THAT THE ASSESSEE HAS NOT DISCHARGED FULLY THE INITIAL ONUS CAST ON IT, HOWEVER THE SAME DOESNT NECESSARILY LEAD TO LEVY OF PENALTY IN ALL CASES. THE EXPLANATION AND THE EVIDENCE FILED IN SUPPORT OF THE EXPLANATION HAVE T O BE TESTED ON THE TOUCHSTONE OF BONAFIDE AND IN THE INSTANT CASE, THE RE IS NO FURTHER INVESTIGATION/EXAMINATION/SUMMONS ISSUED BY THE ASS ESSING OFFICER OR ANY POSITIVE EVIDENCE WHICH HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO HOLD THAT AMOUNT OF CASH CREDIT IS THE CONCEALED IN COME OF THE ASSESSEE. THE ASSESSING OFFICER HAS MERELY RELIED ON THE FINDINGS IN THE QUANTUM PROCEEDINGS AND HAS LEVIED THE PENALTY IN THE INSTANT CASE. IT IS SETTLED LEGAL PROPOSITION THAT THE ASSESSMENT AND PENALTY PROCEEDINGS ARE INDEPEND ENT PROCEEDINGS AND IF THE AO HAD ANY IOTA OF DOUBT REGARDING THE EVIDENCE SO FILED BY THE ASSESSEE IN SUPPORT OF THE TRANSACTIONS, IT WAS INCUMBENT ON HI M TO CARRY OUT INDEPENDENT INVESTIGATION DURING THE PENALTY PROCEEDINGS AND BR ING POSITIVE EVIDENCE REBUTTING THE EXPLANATION SO FURNISHED BY THE ASSES SEE. THEREFORE, IN ABSENCE OF THE SAME, EVEN THOUGH THE ADDITION HAVE BEEN MAD E IN THE QUANTUM PROCEEDINGS, THE BONA FIDE OF THE ASSESSEE IN SUPPO RT OF THE TRANSACTION CANNOT ITA NO. 855/JP/2019 DYNAMIC ENGINEERS, K OTA VS. ITO, WARD 1(1), KOTA 6 BE DISPUTED AND THEREFORE IT IS NOT A FIT CASE FOR LEVY OF PENALTY AND THE SAME IS DIRECTED TO BE DELETED. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/10/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/10/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DYNAMIC ENGINEERS, KOTA 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD 1(1), KOTA 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 855/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR