Shri Anirudhsingh P. Padhiyar, Anand V. The Income Tax Officer, Ward-1(3)(2), Petlad

ITA 907/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1781 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 13-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Set aside
• Section: 273B; 143(3); 271D; 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 907 & 908/AHD/2017 (ASSESSMENT YEAR: 2012-13) SHRI ANIRUDHSING P. PADHIYAR, DARBAR GARH, AT. UMETHA, TAL. ANKLAV, ANAND, GUJARAT V/S ITO, WARD-1(3)(2), PETLAD (APPELLANT) (RESPONDENT) PAN: ARCPP5362M APPELLANT BY : SHRI CHIRAG SHAH, AR RESPONDENT BY : SHRI L.P. JAIN, SR. D.R. ( )/ ORDER DATE OF HEARING : 04 -07-201 9 DATE OF PRONOUNCEMENT : 16 -07-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDER OF THE LD. CIT(A)-V, VADODARA DATED 23.01.2017 PERTAINING TO A.Y. 2012-13 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO . 907 & 908/AHD/2017 . A.Y. 2012-1 3 2 1. THE ASSESSMENT ORDER PASSED U/S. 143(3) OF IT. A CT BY THE ASSESSING OFFICER AND PARTLY CONFIRMED BY THE FIRST APPELLATE AUTHORITY I S BAD IN LAW AND DESERVES TO BE QUASHED. 2. THE ASSESSING OFFICER AS WELL AS FIRST APPELLATE AUTHORITY HAS ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF RS. 11,00,000/- U/S, 68 OF I.T. ACT. THE SAME DESERVES TO BE DELETED. 3. THE ASSESSING OFFICER AS WELL AS FIRST APPELLATE AUTHORITY HAS ERRED IN LAW AND ON FACTS IN MAKING DISALLOWANCE ON ACCOUNT OF BOGUS SA LARY EXPENSE OF RS. 6,38,000/-. THE SAME DESERVES TO BE DELETED. 4. THE ASSESSING OFFICER AS WELL AS FIRST APPELLATE AUTHORITY HAS ERRED IN LAW AND ON FACTS IN MAKING ADDITION ON ACCOUNT OF DISALLOWANCE OF A EXPENSES AT 15% AMOUNTING TO RS.10,19,590/-. THE SAME DESERVES TO B E DELETED. 2. FACTS OF THE CASE ARE THAT THE APPELLANT HAD FILLED HIS RETURN OF INCOME ON 26/09/2012DECLARING TOTAL INCOME OF RS. 13,44,9807- AS HIS INCOME. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND AGAINST WHICH THE REQUIRED DETAILS FROM TIME TO TIM E WERE SUBMITTED BEFORE THE ASSESSING OFFICER. ULTIMATELY ASSESSMENT ORDER WAS PASSED U/S 143(3) OF IT ACT ASSESSING THE TOTAL INCOME AT RS53,56,160/-BY MAKIN G THE FOLLOWING ADDITION. 1) UNEXPLAINED DEPOSIT U/S 68 OF RS.11,00,000/- 2) BOGUS SALARY EXPENSE OF RS.6,38,000/- 3) DISALLOWANCE OUT OF EXPENSES AMOUNTING TO RS. 20 ,39,180/- 4) DISALLOWANCE OF GENERATOR RENT EXPENSE U/S40( A)(IA) OF THE ACT AMOUNTING TO RS. 2,34,000/- 3. AGAINST THE ABOVE SAID ADDITION, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. 4. WE HAVE HEARD BOTH THE PARTIES AND SEEN THE MATERIA L AVAILABLE ON RECORD. OUT OF RS. 11,00,000/- RS. 9,00,000/- WAS GIVEN TO THE ASSESSEE ONE HER RELATIVE NAMELY KOLATKUVARBA PADHIYAR WHO EARNED THIS INCOM E FROM THE CUTTING OF THE ITA NO . 907 & 908/AHD/2017 . A.Y. 2012-1 3 3 TREE AT THE BED OF RIVER MAHI AND DURING AN ENQUIRY THIS FACT WAS CONFIRMED BY THE OFFICER OF THE REVENUE DEPARTMENT WHO PHYSICALL Y VERIFIED CLAIM OF THE ASSESSEE. AND SO FAR REMAINING 2,00,000/- LOAN IS C ONCERNED, ASSESSEE RECEIVED THE SAME FROM ONE SHRI VIRENDRASINGH MANASAHEB PARM AR AND STATED THAT HE IS AN AGRICULTURIST AND IN SUPPORT OF ITS CONTENTION, ASSESSEE SUBMITTED EXTRACT OF 7/12 OF SHRI PARMAR FATHERS AGRICULTURAL LAND. THU S, IN OUR CONSIDERED OPINION, ASSESSEE HAS SUBMITTED ALL RELEVANT DOCUMENTS BEFOR E THE LOWER AUTHORITIES. THEREFORE, GROUND NO. 1 WITH REGARD TO ADDITION OF RS. 11,00,000/- U/S. 68 ALLOWED AND WE DIRECT ASSESSING OFFICER TO DELETE T HE ADDITION OF RS. 11,00,000/- . 5. NEXT GROUND RELATING TO MAKING DISALLOWANCE ON ACCO UNT OF BOGUS SALARY EXPENSE OF RS. 6,38,000/- . 6. THIS SALARY WAS PAID BY THE ASSESSEE IN CASH AND IN ASSESSMENT ORDER, ASSESSING OFFICER ADMITTED THAT ASSESSEE IS ENGAGED IN THE BU SINESS OF TRADING IN SAND, TRUCK TRANSPORTATION AND MANUFACTURING AND TRADING OF CEMENT PAVER BLOCKS. AND IN THE ASSESSMENT YEAR UNDER CONSIDERATION, ASS ESSEE HAS DECLARED INCOME AT RS. 13,44,980/-. FROM THE ABOVE, IT IS CLEAR THA T ASSESSEE IS IN THE BUSINESS AND HAS EARNED RS. 13,44,980/- . THEREFORE, HE MUST HAVE PAID SALARY TO THE EMPLOYEES IN ORDER TO EARN THE INCOME OF RS. 13,44, 980/-. THEREFORE, IN THE INTEREST OF THE JUSTICE, WE ALLOW 50% OF THE SALARY EXPENSES OF RS. 6,38,000/-. A.O. IS DIRECTED TO GIVE EFFECT OF RS. 3,19,000/- T O THE APPELLANT/ASSESSEE. 7. NOW WE COME TO NEXT GROUND RELATING TO MAKING ADDIT ION ON ACCOUNT OF DISALLOWANCE OF EXPENSES AT 15% AMOUNTING TO RS. 10 ,19,590/-. ITA NO . 907 & 908/AHD/2017 . A.Y. 2012-1 3 4 8. LD. A.R. MADE DISALLOWANCE OF RS. 20,39,180/-. AND IN APPEAL, LD. CIT(A) GRANTED RELIEF TO THE APPELLANT/ASSESSEE AND MADE A DDITION OF RS. 10,19,590/-. IN ORDER TO MEET THE ENDS OF JUSTICE AND APPELLANT/ ASSESSEE HAS FURNISHED DETAILS WITH REGARD TO EXPENSES INCURRED BY HIM FOR HIS BUSINESS ACTIVITIES. WE GIVE RELIEF OF RS. 4,00,000/- AND REMAINING AMOUNT 6,19,590/- IS TO BE CONFIRMED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. 10. NOW WE COME TO ITA NO. 908/AHD/2017. THE ASSESSEE H AS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THE PENALTY ORDER PASSED U/S. 271D OF IT. ACT BY TH E ASSESSING OFFICER AND CONFIRMED BY THE FIRST APPELLATE AUTHORITY IS BAD I N LAW AND DESERVES TO BE QUASHED. 2. THE ASSESSING OFFICER AS WELL AS FIRST APPELLATE AUTHORITY HAS ERRED IN LAW AND ON FACTS LEVYING PENALTY AND CONFIRMING THE SAME U/S. 271D AMOUNTING TO RS. 63,00,000/-THE SAME DESERVES TO BE DELETED. 11. FACTS OF THE CASE ARE THAT THE THE APPELLANT HAD F ILED HIS RETURN OF INCOME ON 26/09/2012 DECLARING THE TOTAL INCOME AT RS. 13,44, 980/-. THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S 143(3) ON 25/03/20 15 ASSESSING THE TOTAL INCOME AT RS.53,56,160/-.THE ASSESSING OFFICER FOUN D FOLLOWING ACCEPTANCE OF LOAN FROM FOLLOWING PERSONS IN CASH: SR. NO. NAME TOTAL AMOUNT (IN RS.) 1 PRADHUMANSING J PADHIYAR HUF 24,00,000/ - 2 DEVENDRASINGH PARMAR 10,00,000/ - 3 HASMUKH BHAI BRAHMBHAT 6,00,000/ - 4 MANASAHEB PADHIYAR 6,00,000/ - ITA NO . 907 & 908/AHD/2017 . A.Y. 2012-1 3 5 5 PARVINSINGH ALLAS PARKASHSINGH DHIRSINGH PARMAR 10,00,000/ - 6 SURENDRASINGH B. PADHIYAR 7,00,000/ - TOTAL 63,00,000/ - 12. BUT LOWER AUTHORITIES WERE NOT AGREE WITH THE CONTE NTION OF THE APPELLANT AND IMPOSED AND CONFIRMED THE PENALTY OF RS. 63,00,000/ - U/S. 271D. 13. NOW APPELLANT/ASSESSEE HAS COME BEFORE US. ASSESSEE CONTENTION IS THAT ALL LENDERS WERE AGRICULTURIST THEIR IDENTITY AND CREDI TWORTHINESS WAS PROVED AND WHERE ASSESSEE AND CREDITORS ARE RESIDING THERE IS NO BANKING FACILITIES AVAILABLE IN CONNECTED ITA NO. 907/AHD/2017. WE HAVE ALSO GAV E SUBSTANTIAL RELIEF TO THE APPELLANT. 14. IN SUPPORT OF ITS CONTENTION, ASSESSEE CITED A JUD GMENT OF HONBLE HIGH COURT IN THE MATTER OF CIT VS. MAA KHODIYAR CONSTRUCTION [2014] 45 TAXMANN.COM 566 (GUJARAT) WHERE IT HAS BEEN HELD AS UNDER: 'SECTION 269SS, READ WITH SECTIONS 273B AND 271D, OF THE INCOME-TAX ACT, 1961 - DEPOSITS - MODE OF ACCEPTING/TAKING (REASONABLE CAU SE) -ASSESSMENT YEAR 2006- 07 - INSTEAD OF TAKING LOAN IN ACCOUNT PAYEE CHEQUE OR BANK DRAFT, ASSESSEE TOOK LOANS IN CASH EXCEEDING RS. 20,000 FROM AGRICULTURI STS LIVING IN REMOTE VILLAGE - NOT ONLY SUBSTANTIATING EVIDENCE LIKE 7/12 EXTRACTS FROM LAND RECORDS WERE PRODUCED, BUT, ALSO ADDITIONALLY, TRANSACTIONS WERE REFLECTED IN ACCOUNTS OF ASSESSES AND ADVANCEMENT OF LOAN TO ASSESSEE HAD BE EN REFLECTED IN BOOKS OF ACCOUNT OF THOSE PERSONS FROM WHOM LOAN HAD BEEN RE CEIVED - IDENTITY OF THOSE PERSONS HAD ALSO BEEN WELL ESTABLISHED - ASSESSEE A LSO HAD GIVEN SATISFACTORY REASONS FOR TAKING SUCH LOAN - WHETHER SINCE GENUIN ENESS OF VERY TRANSACTIONS WERE NEVER DOUBTED BY REVENUE AUTHORITIES, AND BREA CH WAS DUE TO REASON THAT AGRICULTURISTS WERE LIVING IN REMOTE AREAS, DEFAULT WAS TO BE TREATED AS A MERE TECHNICAL OR VENIAL BREACH AND PENALTY WAS NOT TO B E LEVIED ON ASSESSEE - HELD, YES [PARAS 12 & 13] [IN FAVOUR OF ASSESSEE].' ITA NO . 907 & 908/AHD/2017 . A.Y. 2012-1 3 6 15. AND ALSO CITED A JUDGMENT OF MADRAS HIGH COURT IN CASE OF DIRECTOR OF INCOME TAX (EXEMPTIONS) V. YOUNG MEN CHRISTIAN AS SOCIATION [2014] 49 TAXMANN.COM 72 WHEREIN IT WAS HELD AS UNDER: ' I. SECTION 68, READ WITH SECTIONS 269SS, 2697 AND 271D, OF THE INCOME-TAX ACT, 1961 - CASH CREDITS (LOAN) - ASSESSMENT YEARS 2008- 09 AND 2009-10 - DURING RELEVANT YEAR, ASSESSING OFFICER NOTED THAT ASSESSE E, TO GET OVER CERTAIN FINANCIAL DIFFICULTIES, BORROWED A SUM OF RS. ONE CRORE IN CA SH - ASSESSEE REPAID RS. 50 LAKHS DURING RELEVANT YEARS - ASSESSING OFFICER TAKING A VIEW THAT IT WAS A CASE OF UNEXPLAINED CASH RECEIPT, TREATED AMOUNT IN QUESTIO N AS ASSESSEE'S OWN INCOME - HE THUS ADDED SAID AMOUNT TO ASSESSEE'S INCOME UNDE R SECTION 68 - ASSESSING OFFICER ALSO PASSED A PENALTY ORDER UNDER SECTION 2 7ID FOR VIOLATING PROVISIONS OF SECTION 269SS - WHETHER ONCE AMOUNT WAS SUBJECTED T O TAX UNDER SECTION 68, QUESTION OF TREATING IT AS TRANSACTION IN VIOLATION OF SECTION 269SS OR SECTION 2697 DID NOT ARISE AS IT STOOD MUTUALLY EXCLUDED - HELD, YES - WHETHER, THEREFORE, IMPUGNED PENALTY ORDER WAS TO BE SET ASIDE - HELD, YES [PARA 7] [IN FAVOUR OF ASSESSEE] II. SECTION 269SS, READ WITH SECTIONS 271D AND 273B , OF THE INCOME-TAX ACT, 1961 - LOANS OR DEPOSITS - MODE OF ACCEPTING (PENALTY) - ASSESSMENT YEARS 2008-09 AND 2009-10 - ASSESSEE TOOK LOAN OF RS. 25 LAKHS IN CAS H FROM 'M' - ASSESSING OFFICER TAKING A VIEW THAT THERE WAS VIOLATION OF SECTION 2 69SS, PASSED A PENALTY ORDER UNDER SECTION 27ID - COMMISSIONER (APPEALS) AND TRI BUNAL HAVING GONE INTO GENUINENESS OF TRANSACTION AND REASONS ATTRIBUTED B Y ASSESSEE FOR OBTAINING SAID LOAN IN VIEW OF COMPELLING CIRCUMSTANCES, INVOKED P ROVISIONS OF SECTION 2736 AND SET ASIDE PENALTY ORDER - WHETHER ON FACTS, IMPUGNE D ORDER PASSED BY TRIBUNAL DID NOT WARRANT ANY INTERFERENCE - HELD, YES [PARAS 13 & 14] [IN FAVOUR OF ASSESSEE]' ITA NO . 907 & 908/AHD/2017 . A.Y. 2012-1 3 7 16. SINCE WE HAVE SUBSTANTIALLY GRANTED RELIEF TO THE A SSESSEE IN CONNECTED ITA NO. 907/AHD/2017 IN QUANTUM PROCEEDINGS AND IN SIMILAR CIRCUMSTANCES, IN ABOVE SAID CASE, RELIEF WAS GRANTED BY THE HIGHER FORUM. THUS, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ABOVE SAID JUDGMENT, WE DELETE THE PENALTY OF RS. 63,00,000/-. 17. IN THE RESULT, APPEAL FILED BY THE ASSESSEE/ APPELL ANT IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16- 07- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 16/07/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD