The ACIT,(OSD)Circle-8, Ahmedabad V. Shri Milan S.Patel, Ahmedabad

ITSSA 38/AHD/2008

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8452 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-04-2011
• Assessment Year: misc
• Appeal Filed On: 29-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Unexplained expenditure
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND T.K. SHARMA, JUDICIAL MEMBER) IT(SS)A NO.38/AHD/2008 WITH CO NO.85/AHD/2008 [ASSTT. YEAR : BLOCK PERIOD] ACIT (OSD), CIR.8 AHMEDABAD. VS. SHRI MILAN S. PATEL 1, RAJKAMAL SOCIETY ST. XAVIERS SCHOOL NARANPURA, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI MADHUSUDAN ASSESSEE BY : SHRI VIJAY RANJAN O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THIS IS REVENUES APPEAL AND ASSESSEES CROSS-OBJECTION AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-III, AHMEDABAD ARISING OUT OF T HE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 271D THE INC OME TAX ACT, 1961. 2. THE ONLY GROUND RAISED IN THIS APPEAL READS AS U NDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S.271D OF THE IT ACT AMOUNTING TO RS.12,00,000/- OUT OF RS.13,00,000/- BEING IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE A ND ALSO AT THE GROUP CONCERNS, CERTAIN DOCUMENTS WERE FOUND AND SEIZED. ON THE BASIS OF A DOCUMENT MARKED AS ANNEXURE-A/14, IT WAS STATED BY THE AO THAT THE ASSESSEE BORROWED A SUM OF RS.13,00,000/- FROM THE FOLLOWING PARTIES: I) SHRI ASHISHBHAI RS. 1 LAKH IT(SS)A NO.38/AHD/2008 WITH CO NO.85/AHD/2008 -2- II) SHRI DIPAK PATEL RS. 5 LAKHS III) SHRI AMRITBHAI PATEL RS. 2 LAKHS IV) SHRI BHARAT J. MEHTA RS. 5 LAKHS. THE AO LEVIED PENALTY OF RS.13.00 LAKHS UNDER SECTI ON 271D OF THE IT ACT FOR VIOLATION OF PROVISIONS OF SECTION 269SS. ON APPEAL, THE CIT(A) RECORDED FINDING THAT BORROWING OF RS.12 LAKHS I.E. FROM DIPAKBHAI, AMRITBHAI AND BHARAT MEHTA WAS NOT BY THE ASSESSEE BUT TO M/S. SHIV GANGA BUILDERS. HE THEREFORE DELETED THE PENALTY O F RS.12 LAKHS. THE BORROWING OF RS.1 LAKH FROM SHRI ASHISHBHAI WAS BY THE ASSESSEE AND THE ASSESSEES EXPLANATION FOR EXCEPTIONAL CIRCUMSTANCE S IN WHICH THE BORROWING WAS MADE WAS NOT ACCEPTED BY THE CIT(A), THEREFORE, HE SUSTAINED THE PENALTY OF RS.1 LAKH UNDER SECTION 27 1D OF THE ACT. THE REVENUE IS IN APPEAL AGAINST THE RELIEF OF RS.12 LA KHS ALLOWED BY THE CIT(A), WHILE THE ASSESSEE IS IN CROSS-OBJECTION AG AINST THE PENALTY OF RS.1 LAKH SUSTAINED BY THE CIT(A). 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT IN THE ASS ESSMENT PROCEEDINGS, THE AO MADE CERTAIN ADDITIONS IN RESPECT OF PAYMENT OF INT EREST TO S/SHRI AMRITBHIA, DIPAKBHAI PATEL AND BHARAT MEHTA TREATING THE SAME AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C. THE RELEVANT FINDIN GS IN THIS REGARD READ AS UNDER: 3. IN THE CASE OF TRANSACTIONS WITH SHRI AMRUTBHAI PATEL, THE PAYMENT OF RS.2 LACS IS COVERED BY THE PROVISIONS O F SECTION 269SS AND THE PAYMENT OF INTEREST OF RS.12,000/- IN CASH BY T HE ASSESSEE IS TREATED AS UNDISCLOSED EXPENDITURE U/S.69C. 4. IN THE CASE OF TRANSACTIONS WITH SHRI DEEPAK PAT EL, THE PAYMENT T OF RS.5 LACS IS COVERED BY THE PROVISION OF SECTION 269SS AND THE PAYMENT OF RS.12,500 IN CASH IS TREATED AS UNEXPLAI NED EXPENDITURE U/S.69C. IT(SS)A NO.38/AHD/2008 WITH CO NO.85/AHD/2008 -3- 5. THE LOAN FROM DR. BHARAT J. MEHTA IS COVERED BY THE PROVISION OF SECTION 269SS AND THE PAYMENT OF INTEREST AT RS.20, 000/- IN CASH TO SHRI MEHTA BY THE ASSESSEE IS TREATED AS UNEXPLAINED EXP ENDITURE U/S.69C. THE AO HAD ALSO MADE CERTAIN OTHER ADDITIONS FOR UN EXPLAINED INTEREST AND THE TOTAL ADDITION FOR UNEXPLAINED INTEREST WAS RS.89,5 00/-. IN THE QUANTUM APPEAL, THE CIT(A) DELETED THE ADDITION VIDE ORDER DATED 20 -10-2003. THE REVENUE HAD FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A ) WHICH WAS DISMISSED BY THE ITAT IN IT(SS)A NO.432/AHD/2003 DATED 27-7-2007 . BY THESE FACTS, IN THE QUANTUM APPEAL, THE CIT(A) DELETED THE PENALTY WITH THE FINDING THAT IN THE QUANTUM APPEAL, THE CIT(A) AS WELL AS THE TRIBUNAL HAS DELETED THE ADDITION MADE UNDER SECTION 69C. THE FINDING BY THE CIT(A) IN THE PENALTY ORDER IS BASED UPON THE FINDING OF THE ITAT IN THE QUANTUM A PPEAL. ON THE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHEREB Y HE DELETED THE PENALTY LEVIED UNDER SECTION 271D IN RESPECT OF BORROWING F ROM S/SHRI DIPAKBHAI, AMRUTIBHAI AND BHARAT MEHTA. THE SAME IS SUSTAINED AND THE REVENUES APPEAL IS DISMISSED. 5. IN THE CO, THE ASSESSEE HAS CHALLENGED PENALTY O F RS.1 LAKH SUSTAINED BY THE CIT(A). AT THE TIME OF HEARING BEFORE US, THE ASSESSEES COUNSEL FAIRLY ADMITTED THAT THIS MONEY WAS BORROWED BY THE ASSESS EE IN CASH. HOWEVER, IT WAS EXPLAINED BY HIM THAT BORROWING WAS FROM ASHISH PATEL WHO IS A RELATIVE OF THE ASSESSEE. HE ALSO STATED THAT THE MONEY WAS BORROWED BY THE ASSESSEE FOR REPAIRING OF ANCESTRAL HOUSE WHICH WAS DAMAGED IN GUJARAT EARTHQUAKE. HE FURTHER STATED THAT THE MONEY WAS RETURNED WITHIN A SHORT SPAN. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUT HORITY BELOW. 6. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS A ND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ALMOST S IMILAR EXPLANATIONS WERE GIVEN BEFORE THE CIT(A), HOWEVER HE DID NOT AC CEPT THE SAME ON THE GROUND THAT THE EXPLANATION OF THE ASSESSEE IS NOT SUPPORTED BY ANY IT(SS)A NO.38/AHD/2008 WITH CO NO.85/AHD/2008 -4- EVIDENCE. WE FIND THAT NOT ONLY THE EXPLANATION OF THE ASSESSEE IS NOT SUPPORTED BY ANY EVIDENCE, BUT THE SAME IS SELF-CON TRADICTORY. IF THE MONEY WAS BORROWED FOR THE REPAIRING OF ANCESTRAL H OUSE, HOW THE MONEY COULD BE RETURNED WITHIN A VERY SHORT SPAN OF TIME ? THEREFORE, THE EXPLANATION OF THE ASSESSEE THAT THERE WERE EXCEPTI ONAL CIRCUMSTANCES FOR BORROWING THE MONEY IN CASH CANNOT BE ACCEPTED. TH E ONLY EXPLANATION NOW REMAIN IS THAT SHRI ASHISH PATEL IS RELATIVE OF THE ASSESSEE. WE FIND THE SECTION 269SS DOES NOT HAVE ANY EXCEPTION FOR B ORROWING FROM A RELATIVE. MOREOVER, WHAT IS THE RELATIONSHIP BETWE EN THE ASSESSEE AND THE ASHISH PATEL HAS ALSO NOT BEEN SPECIFIED. CONSIDER ING THE FACTUAL AS WELL AS LEGAL POSITION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHEREIN HE SUSTAINED THE PENALTY OF RS.1 LAKHS. WE UPHOLD THE SAME AND REJECT ASSESSEES CO. 7. IN RESULT, REVENUES APPEAL AS WELL AS ASSESSEE S CO ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 TH APRIL, 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 29-04-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD