S.Ponnambalam, Pattukkottai v. ITO, Thanjavur

ITA 1013/CHNY/2013 | 2007-2008
Pronouncement Date: 06-10-2016 | Result: Allowed

Appeal Details

RSA Number 101321714 RSA 2013
Assessee PAN AEAPP5045A
Bench Chennai
Appeal Number ITA 1013/CHNY/2013
Duration Of Justice 3 year(s) 4 month(s) 21 day(s)
Appellant S.Ponnambalam, Pattukkottai
Respondent ITO, Thanjavur
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Assessment Year 2007-2008
Appeal Filed On 16-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C B ENCH CHENNAI . . . . % BEFORE SHRI N.R.S.GANESAN JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER ./ I.T.A.NO.1013/MDS/2013 ( / ASSESSMENT YEAR: 2007-08) MR. S.PONNAMBALAM 3 SUNNAMBUKKARA STREET PATTUKOTTAI VS THE INCOME TAX OFFICER WARD-I(1) THANJAVUR. PAN: AEAPP5045A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K.RAVI ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH JCIT /DATE OF HEARING : 31 ST AUGUST 2016 /DATE OF PRONOUNCEMENT : 6 TH OCTOBER 2016 / O R D E R PER A. MOHAN ALANKAMONY AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) TIRUCHIRAPALLI DATED 21.01.2013 IN ITA NO.138/2010- 11 PASSED UNDER SECTION 271(1)(C) R.W.S. 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOW S:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUSTAINING THE MINIMUM PENALTY OF 2 ITA NO.1013 /MDS/2013 RS.16 52 002/- LEVIED BY THE LEARNED ASSESSING OFF ICER UNDER SECTION 271(1)(C) OF THE ACT. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDIVIDU AL ENGAGED IN THE BUSINESS OF TRADING IN COFFEE POWDER AND EARNING COMMISSION INCOME FILED HIS RETURN OF INCO ME FOR THE ASSESSMENT YEAR 2007-08 ADMITTING INCOME OF RS.1 87 000/- AND AGRICULTURAL INCOME OF RS.6.00 LAKHS ON 14.9.20 07. SUBSEQUENTLY THE CASE WAS TAKEN UP FOR SCRUTINY AN D ASSESSMENT WAS COMPLETED ON 24.12.2009 WHEREIN THE LEARNED ASSESSING OFFICER MADE ADDITION OF RS.49.00 LAKHS UNDER THE HEAD UNEXPLAINED CASH CREDITS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE LE ARNED ASSESSING OFFICER THAT THE ASSESSEE HAD DISCLOSED A N AMOUNT OF RS.49.00 LAKHS AS SUNDRY CREDITORS IN THE NAME O F SHRI N.K.R SHANMUGHAM. ON VERIFYING THE BALANCE SHEET OF MR. NKR SHANMUGHAM IT WAS FOUND THAT NO SUCH CORRESPOND ING AMOUNT WAS REFLECTED IN HIS BOOKS OF ACCOUNT. SUBSE QUENTLY IT WAS EXPLAINED BY THE ASSESSEE THAT HE HAD RECEIV ED THE AMOUNT FROM MR. NKR SHANMUGHAM WHO WAS ASSESSEES UNCLE WHO IN TURN HAD RECEIVED THE AMOUNT FROM MR. 3 ITA NO.1013 /MDS/2013 A.NAMASIVAYAM HUF. HOWEVER THE ASSESSEE COULD NEI THER PRODUCE MR. A.NAMASIVAYAM BEFORE THE LEARNED ASSESS ING OFFICER NOR FURNISHED ANY FURTHER EVIDENCE. THEREAF TER THE ASSESSEE AGREED TO OFFER THE AMOUNT OF RS.49.00 LAK HS AS HIS INCOME. THE ASSESSEE FURTHER CLARIFIED THAT HE HAD FILED THE RETURN OF INCOME BASED ON THE ASSURANCE THAT HE WIL L GET THE CONFIRMATION FROM THE CREDITORS WHICH AT THIS POIN T OF TIME THE CREDITORS FAILED TO DO SO. REJECTING THE SUBMISSIO NS OF THE ASSESSEE THE LEARNED ASSESSING OFFICER NOT ONLY MA DE ADDITION OF RS.49.00 LAKHS IN THE HANDS OF THE ASSE SSEE BUT ALSO INVOKED THE PENAL PROVISIONS OF SECTION 271(1) (C) OF THE ACT FOR LEVYING PENALTY AND ACCORDINGLY LEVIED MIN IMUM PENALTY OF RS.16 52 002/-. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESSING OFFICER BY OBSERVING AS UN DER:- 6. AFTER HAVING GONE THROUGH THE WRITTEN SUBMISSIO NS STATEMENTS OF FACTS AS WELL AS PENALTY ORDER THE ASSESSING OFFICER HAS ELABORATELY DEALT THE LOAN CR EDITS OF RS.49 LAKHS AS UNEXPLAINED CASH CREDITS AND DISCUSSED IN HER ORDER FOR LEVYING PENALTY. SINCE T HE APPELLANT COULD NOT FURNISH ANY DETAILS REGARDING T HE SOURCE OF CASH CREDITS/LOAN CREDITORS IN THE FORM O F CONFIRMATION LETTERS THE APPELLANT FAILED TO PROVE THE IDENTITY CREDIT WORTHINESS AND CAPACITY TO LEVEL T O LEND RS.49 LAKHS FROM THE SO CALLED LOAN CREDITORS THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS AND AS WELL MISREPRESENTED THE FACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HENCE THERE IS NO IOTA O F 4 ITA NO.1013 /MDS/2013 DOUBT IN MY MIND IN CONFIRMING THE PENALTY LEVIED B Y THE ASSESSING OFFICER. I ALSO RELY ON THE RATIOS HELD I N SEVERAL CASE LAWS IN FAVOUR OF THE REVENUE FOR LEVYING PENA LTY UNDER SECTION 271(1)(C). 4. THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED BEF ORE US RELYING IN THE DECISION OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. J.V.APPADURAI CHETTIAR REPORTED IN 221 ITR 849 WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE FILE D REVISED RETURN SURRENDERING AN AMOUNT WHICH WAS CLAIMED AS CREDIT BALANCE IN THE NAME OF ONE MR. GOPAL MUDALIAR BECAU SE MR.GOPAL MUDALIAR DENIED THE TRANSACTION THEN IN S UCH CASE PENALTY CANNOT BE LEVIED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND ARGUED IN SUPPORT OF THE DECISION OF TH E REVENUE RELYING IN THE DECISION OF THE HONBLE APEX COURT I N THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS & ORS REPORTED IN 306 ITR 277. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM TH E FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE HAD DISC LOSED THE DETAILS OF THE SUNDRY CREDITORS BEFORE THE REVENUE. THE 5 ITA NO.1013 /MDS/2013 ASSESSEE ALSO DISCLOSED THE PARTICULARS OF MR. A.NAMASIVAYAM AND SMT. P.KAMACHI TO EXPLAIN THE BON AFIDE OF THE SUNDRY CREDITORS. IT APPEARS THAT THE REVENU E HAS NOT EXERCISED ITS VAST POWERS TO EXAMINE THESE INDIVIDU ALS TO DISPROVE THE EXPLANATION TENDERED BY THE ASSESSEE. IN THESE CIRCUMSTANCES THE DECISION OF THE HONBLE JURISDIC TIONAL MADRAS HIGH COURT CITED BY THE ASSESSEE IN THE CASE OF CIT VS. J.V.APPADURAI CHETTIAR CO. WILL BE APPLICABLE TO THE CASE OF THE ASSESSEE. MOREOVER IN THE CASE OF NATIONAL TEXTILES VS. CIT REPORTED IN 249 ITR 125 THE HONBLE GUJARAT HIGH COURT HAD HELD THAT T HE PROVISIONS OF S. 68 PERMITTING THE AO TO TREAT UNEXPLAINED CASH CREDIT AS INCOME ARE ENAB LING PROVISIONS FOR MAKING CERTAIN ADDITIONS WHERE THER E IS FAILURE BY THE ASSESSEE TO GIVE AN EXPLANATION OR WHERE THE EXPLANATION IS NOT TO THE SATISFACTION OF THE AO. H OWEVER THE ADDITION MADE ON THIS COUNT WOULD NOT AUTOMATICALLY JUSTIFY IMPOSITION OF PENALTY UNDER S. 271(1)(C) BY RECOURS E ONLY TO EXPLN. 1 BELOW S. 271(1)(C).NO PENALTY CAN BE IMPOS ED IF THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCE ALED INCOME AS WITH THE HYPOTHESIS THAT IT DOES. IF THE ASSESSEE 6 ITA NO.1013 /MDS/2013 GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISP ROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE S CASE IS FALSE THE EXPLANATION CANNOT HELP THE DEPARTMENT B ECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT I N QUESTION WAS THE INCOME OF THE ASSESSEE. FURTHER WE FIND THAT THE DECISION OF THE HONBLE APEX COURT RELIED BY THE RE VENUE IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS CITED SUPRA IS NOT APPLICABLE IN THE CA SE OF THE ASSESSEE BECAUSE THE FACTS AND CIRCUMSTANCES OF BOT H THE CASES ARE NOT IDENTICAL. THEREFORE RELYING IN THE DECISIONS OF THE HONBLE JURISDICTIONAL AND GUJARAT HIGH COURT S UPRA WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO DELE TE THE MINIMUM PENALTY OF RS.16 52 002/- LEVIED UNDER SEC TION 271(1)(C) OF THE ACT IN THE CASE OF THE CASE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 6 TH OCTOBER 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI ( /DATED 6 TH OCTOBER 2016 SOMU 7 ITA NO.1013 /MDS/2013 *+ + /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF