M/s Nauharia Rice & General Mills,, Rudrapur v. ITO, Rudrapur

ITA 2299/DEL/2009 | 2005-2006
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 229920114 RSA 2009
Assessee PAN AAEFS7127C
Bench Delhi
Appeal Number ITA 2299/DEL/2009
Duration Of Justice 7 month(s) 25 day(s)
Appellant M/s Nauharia Rice & General Mills,, Rudrapur
Respondent ITO, Rudrapur
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 22-01-2010
Date Of Final Hearing 07-01-2010
Next Hearing Date 07-01-2010
Assessment Year 2005-2006
Appeal Filed On 28-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F BENCH NEW DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.D. RANJAN ITA NO. 2299(DEL)09 ASSESSMENT YEAR: 2005-06 M/S. NAUHARIA RICE & GENERAL MILLS INCOM E TAX OFFICER AGM-54 GALLA MANDI RUDRAPUR V. RUDRAP UR. UTTARAKHAND. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI CHITRA GUPTA RESPONDENT BY: SHRI RAJ EEV RANKA SR. DR ORDER PER A.D. JAIN J.M. THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 005-06 CHALLENGING THE ACTION OF THE LEARNED CIT(A) IN CONFIRMING THE LEVY OF PENALTY OF RS. 1 46 310/- ON THE ASSESSEE U/S 271(1)(C) OF THE IN COME TAX ACT. 2. DURING THE YEAR UNDER CONSIDERATION AS OBSERVED BY THE AO THE ASSESSEE HAD SHOWN TO HAVE BEEN TAKEN UNSECURED LOA N OF RS. 4 LAKHS FROM M/S. SINGHAL ENTERPRISES RUDRAPUR. THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE LOAN BY FURNISHING REQUISITE EVI DENCE. EVEN THOUGH THE ASSESSEE SUBMITTED THE LOAN TO BE GENUINE IT FAILE D TO FURNISH THE CONFIRMATION THEREOF FROM M/S. SINGHAL ENTERPRISES RUDRAPUR. AS PER THE ITA 2299(DEL)09 2 AOS ORDER SHEET ENTRY DATED 17.12.2007 THE ASSESS EE GAVE ITS CONSENT FOR ADDITION OF RS. 4 LAKHS ON ACCOUNT OF THE SAID LOAN TAKEN. AS SUCH THE ENTIRE SUM OF RS. 4 LAKHS WAS ADDED TO THE TOTAL IN COME OF THE ASSESSEE ON AGREED BASIS BY TREATING THE SAME AS UNEXPLAINED C ASH CREDIT. 3. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WER E INITIATED AGAINST THE ASSESSEE CHALLENGING THE ASSESSEE AS TO WHY THE PE NALTY BE NOT LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY SHOW ING A BOGUS LOAN OF RS. 4 LAKHS. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ADDITION OF RS. 4 LAKHS HAD BEEN MADE BECAUSE OF NON-ACCEPTANCE OF TH E GENUINENESS OF THE SAID LOAN; THAT THE CONFIRMATION COULD NOT BE FURNI SHED BECAUSE OF NON- COOPERATION OF THE LOAN CREDITOR IN FURNISHING THE CONFIRMATION; THAT THE ASSESSEE HAD SURRENDERED THE LOAN AMOUNT FOR TAXATI ON TO BUY PEACE OF MIND ON THE AGREEMENT THAT THIS SUM WOULD NOT FORM ANY B ASIS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT; AND THAT SINCE THE ASSESS EE HAD NOT FURNISHED INACCURATE PARTICULARS OF INCOME NOR HAD ANY INCOM E HAD BEEN CONCEALED THE PENALTY PROCEEDINGS BE DROPPED. 4. BEING NOT CONVINCED WITH THE ASSESSEES AFORESA ID EXPLANATION SINCE THE ASSESSEE HAD NOT ONLY FAILED TO PROVE THE GENUI NENESS OF THE LOAN BUT IT ALSO COULD NOT PRODUCE ANY EVIDENCE BY FURNISHING C ONFIRMATION OF THE LOAN THE AO HELD THE LOAN TRANSACTION TO BE NOT GENUINE. IT WAS OBSERVED THAT ITA 2299(DEL)09 3 SINCE THE ASSESSEE HAD SURRENDERED THE INCOME THER E WAS NOTHING LEFT WITH THE DEPARTMENT TO ESTABLISH THE FACTUM OF CONCEALME NT OF INCOME BY WAY OF CLAIM OF BOGUS LOAN BY THE ASSESSEE. REFERENCE WA S MADE TO DURGA TIMBER WORKS V. CIT 79 ITR 63(DEL) TO HOLD THAT CONFESSION BY THE ASSESSEE BY WAY OF SURRENDER OF INCOME ATTRIBUTABLE TO THE LOAN OF RS. 4 LAKHS MADE OFFERED A SOUND FOUNDATION FOR IMPOSITIO N OF PENALTY. HOLDING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICUL ARS OF INCOME THE AO LEVIED BY VIRTUE OF THE PENALTY ORDER A PENALTY O F RS.1 46 310/- ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. 5. BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED INTER ALIA THAT THE ADDITION OF RS. 4 LAKHS HAD BEEN MADE BY NOT ACCEPT ING THE GENUINENESS OF THE LOAN; THAT THE LOAN CREDITOR WAS AN ASSESSEE OF THE INCOME TAX OFFICE RUDRAPUR UNDER PAN AAEFS 7127 C; THAT THE LOAN CRE DITOR HAD NOT CO- OPERATED WITH THE ASSESSEE DUE TO SOME DIFFERENCES BETWEEN THEM; THAT IT WAS JUST TO BUY PEACE AND TO FINISH THE MATTER THAT THE ASSESSEE OPTED TO GIVE TAX ON THAT AMOUNT ALSO; THAT HOWEVER THIS DID NOT MAKE THE LOAN OR THE LOAN CREDITOR TO BE NOT GENUINE AND THIS COULD ALSO NOT FORM THE BASIS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT; THAT THE ASSESSEE NEITHER FURNISHED INACCURATE PARTICULARS OF INCOME NOR WAS ANY INCO ME CONCEALED; THAT THE COPIES OF BANK ACCOUNT IN WHICH BOTH THE ENTRIES OF DEPOSIT AND PAYMENT ITA 2299(DEL)09 4 WERE REFLECTED WERE BEING FILED BEFORE HIM [THE LD . CIT(A) ]; THAT THESE COPIES CONFIRMED THE GENUINENESS OF THE LOAN TRANSA CTION; THAT NON- ACCEPTANCE OF ANY EXPLANATION GIVEN BY THE ASSESSEE DOES NOT IPSO FACTO BECOME THE BASIS FOR LEVY OF CONCEALMENT PENALTY. THE ASSESSEE PLACED RELIANCE ON CIT V. CAFCO SYNDICATE SHIPPING CO. 294 ITR 134 (MAD) WHEREIN IT HAS BEEN HELD INTER ALIA THAT THE MER E ADDITION OF INCOME BY CONCEALING EXPENSES IS NOT CONCEALMENT OF INCOME AN D AS SUCH IN SUCH A CASE CONCEALMENT PENALTY CANNOT BE IMPOSED. 6. BY VIRTUE OF THE IMPUGNED ORDER THE LEARNED CIT (A) OBSERVED INTER ALIA THAT THOUGH DUE OPPORTUNITY HAD BEEN PROVIDED TO THE ASSESSEE TO EXPLAIN THE GENUINENESS OF THE ALLEGED LOAN OF RS. 4 LAKHS BY PRODUCING NECESSARY EVIDENCE EVEN DURING THE PENALTY PROCEED INGS THE ASSESSEE WAS NOT IN A POSITION TO DO SO AND NO EVIDENCE AT ALL HAD BEEN FURNISHED TO JUSTIFY SUCH LOAN; THAT THEREFORE THE CLAIM OF SUC H LOAN HAD CORRECTLY BEEN TREATED AS FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE RESULTING IN CONCEALMENT OF INCOME. AGGRIEVED THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 7. CHALLENGING THE IMPUGNED ORDER THE LEARNED COUN SEL FOR THE ASSESSEE BROADLY REITERATED THE STAND TAKEN BEFORE THE AUTHO RITIES BELOW. OUR ATTENTION WAS SPECIFICALLY DRAWN TO PAGES 6 9 & 11 OF THE ASSESSEES PAPER ITA 2299(DEL)09 5 BOOK. (APB FOR SHORT) . THESE DOCUMENTS HAVE BE EN CERTIFIED TO HAVE BEEN FILED BEFORE BOTH THE TAXING AUTHORITIES. AP B 6 IS A COPY OF ACCOUNT OF THE LOAN CREDITOR IN THE ASSESSEES BOOKS OF ACCOUN T. APB 7 TO 13 IS A COPY OF THE BANK STATEMENT OF THE ASSESSEE. THE LEARNE D COUNSEL HAS CONTENDED THAT THE AMOUNT OF LOAN AS IS EVIDENT FROM THESE D OCUMENTS WHICH WERE DULY PRODUCED BEFORE THE AUTHORITIES BELOW WAS DULY REP AID BY THE ASSESSEE DURING THE SAME YEAR THROUGH AN ACCOUNT PAYEE CHEQU E. 8. SUPPORTING THE ORDER UNDER CHALLENGE ON THE OTH ER HAND THE LEARNED DR HAS REITERATED THE OBSERVATIONS MADE BY THE AUTH ORITIES BELOW. IT HAS BEEN CONTENDED THAT DESPITE AMPLE OPPORTUNITY PROVI DED TO THE ASSESSEE DURING THE ASSESSMENT AS WELL AS THE PENALTY PROCEE DINGS NO CONFIRMATION WAS FILED BY THE ASSESSEE NOR WAS THE LOAN CREDITO R PRODUCED; THAT THE ASSESSEES ONUS U/S 68 OF THE ACT WAS THUS NOT DISC HARGED; THAT SINCE THE ASSESSEE HAD SURRENDERED THE AMOUNT THERE WAS NO O CCASION FOR THE DEPARTMENT TO CONSIDER ANYTHING ELSE BEFORE THE LEV Y OF PENALTY; THAT THE AO CORRECTLY PLACED RELIANCE ON DURGA TIMBER WORKS (SUPRA); AND THAT THEREFORE THERE BEING NO FORCE IN THE APPEAL FILED BY THE ASSESSEE THE SAME BE ORDERED TO BE DISMISSED. 9. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. THE ISSUE IS AS TO WHETHER SINCE THE ASSESSEE WAS N OT ABLE TO PROVE THE CLAIM ITA 2299(DEL)09 6 OF LOAN OF RS. 4 LAKHS THE PENALTY IN QUESTION WAS RIGHTLY IMPOSED AND CONFIRMED BY THE LEARNED CIT(A). 10. A PERUSAL OF APB 6 WHICH IS A COPY OF THE ACC OUNT OF LOAN CREDITOR M/S. SINGHAL ENTERPRISES RUDRAPUR IN THE BOOKS OF THE ASSESSEE SHOWS THAT THE AMOUNT OF RS. 4 LAKHS WAS CREDITED AS ON 19.7.2 004 VIDE CHEQUE NO. 021202 REFERENCE CB FOLIO NO. C-31. AN AMOUNT OF RS. 4 LAKHS HAS BEEN SHOWN TO HAVE BEEN DEBITED THROUGH CHEQUE NO. 01065 41 REFERENCE CB FOLIO NO. C-54 ON 15.10.2004. IN THE COPY OF THE ASSESSEES BANK STATEMENT APB 7 TO 13 (AT PAGE 9) AN AMOUNT OF R S. 4 LAKHS HAS BEEN SHOWN TO HAVE BEEN CREDITED AS ON 19.7.2004 BY CLE ARING I.E. THROUGH CHEQUE. AT APB-11 AN AMOUNT OF RS. 4 LAKHS IS SH OWN TO HAVE BEEN DEBITED ON 15.10.2004 IN THE NAME OF SINGHAL ENTER PRISES VIDE CHEQUE NO. 16541. 11. IN DURGA TIMBER WORKS(SUPRA) RELIED ON THE A UTHORITIES BELOW AS WELL AS THE LEARNED DR BEFORE US IT HAS BEEN HELD INTER ALIA THAT WHERE A DEVICE OR DELIBERATE DISGUISE WAS CREATED BY THE AS SESSEE FOR THE PURPOSE OF CONCEALING ITS INCOME AND WHERE THE ASSESSEE HAD AD MITTED THAT THE AMOUNT IN QUESTION COULD BE TREATED AS ITS CONCEALED INCOM E AND INCLUDED IN ITS TOTAL INCOME FOR THE YEAR IT WOULD AMOUNT TO LAYING AN I MPOSSIBLE BURDEN OF PROOF ON THE DEPARTMENT AND MAKING THE PROVISIONS O F IMPOSITION OF PENALTY ITA 2299(DEL)09 7 WHOLLY UNWORKABLE IF ONE WERE TO INSIST THAT THE D EPARTMENT SHOULD STILL BE CALLED UPON TO PROVE BY INDEPENDENT EVIDENCE THAT T HE ASSESSEE HAS CONCEALED ITS INCOME OR THAT THE AMOUNT WAS NOT REV ENUE RECEIPT; THAT IT WAS NOT FOR THE FUN OF IT THAT THE ASSESSEE SURRENDERED THE AMOUNT AND AGREED THAT IT BE TREATED AS THE ASSESSEES INCOME FROM UNDISC LOSED SOURCES; THAT WHEN THE ASSESSEE WAS GIVEN A SECOND OPPORTUNITY TO ADDU CE EVIDENCE OR TO EXPLAIN AWAY ITS EARLIER ADMISSION IT STILL STUCK TO THE SAME POSITION; THAT IT ALSO DID NOT GIVE ANY EXPLANATION THAT THE MISTAKE WAS BONA FIDE ; AND THAT IN SUCH CIRCUMSTANCES THE LEVY OF PENALTY FOR CONC EALMENT OF INCOME APPEARED TO BE FULLY JUSTIFIED. 12. IN THE PRESENT CASE HOWEVER AS DISCUSSED HERE INABOVE THE FACTS AND CIRCUMSTANCES ARE ENTIRELY DIFFERENT. HEREIN THE ASSESSEE WAS NOT ABLE TO PRODUCE THE CONFIRMATION FROM THE LOAN CREDITOR SI NCE BECAUSE OF CERTAIN DIFFERENCE WITH THE SAID PARTY IT WAS NOT WILLING TO COOPERATE WITH THE ASSESSEE. BEFORE THE LEARNED CIT(A) IN THE PENAL TY PROCEEDINGS HOWEVER THE ASSESSEE FURNISHED THE ABOVE BANK STATEMENT OF THE ASSESSEE AND A COPY OF THE ACCOUNT OF THE LOAN CREDITOR IN THE ASSESSEE S BOOKS. A PERUSAL OF THESE DOCUMENTS AS DISCUSSED HEREINABOVE SHOWS TH AT THE LOAN WAS IN FACT TAKEN BY THE ASSESSEE FROM M/S. SINGHAL ENTERPRISES RUDRAPUR ON 19.7.1994 THROUGH CHEQUE. THE SAME WAS REPAID VI DE CHEQUE ON 15.10.04. ITA 2299(DEL)09 8 THEREFORE IT CANNOT AT ALL BE SAID THAT THE LOAN W AS NOT GENUINE. MERELY BECAUSE THE ASSESSEE WAS UNABLE TO FILE FOR THE AFO RESAID REASON OF NON- COOPERATION OF THE LOAN CREDITOR DUE TO DIFFERENCES BETWEEN THEM CONFIRMATION FOR THE LOAN MUCH LESS PRODUCE THE LO AN CREDITOR ITSELF BEFORE THE AUTHORITIES BELOW IT COULD BE AND WAS REASON G OOD ENOUGH FOR MAKING ADDITION. HOWEVER THE SAME COULD NOT FORM THE BA SIS FOR LEVY OF THE PENALTY IN QUESTION. SO FAR AS REGARDS THE SURREN DER TRUE AS HELD IN DURGA TIMBER WORKS (SUPRA) THE ONUS OF PROOF WAS NOT ON THE DEPARTMENT TO PROVE BY INDEPENDENT EVIDENCE THAT THE ASSESSEE HAD CONCEALED ITS INCOME BY FURNISHING INACCURATE PARTICULARS THEREFROM. BUT IN VIEW OF THE BANK STATEMENT OF THE ASSESSEE AND THE COPY OF ACCOUNT O F THE LOAN CREDITOR IN THE ASSESSEES BOOKS (SUPRA) IT STOOD ESTABLISHED THA T THERE WAS INDEED A LOAN WHICH WAS TAKEN BY THE ASSESSEE FROM M/S. SINGHAL E NTERPRISES RUDRAPUR AND THAT THE SAME WAS REPAID DURING THE YEAR. IN CIT V. CAFCO SYNDICATE SHIPPING CO.(SUPRA) IT HAS BEEN HELD INTER ALIA THAT WHERE THE BOOKS OF ACCOUNT REVEALED THAT THE EXPENSES WERE INCURRED BY THE ASSESSEE BUT THE ONLY INCAPACITY ON THE PART OF THE ASSESSEE WAS TH AT IT WAS NOT ABLE TO PRODUCE PROPER VOUCHERS FOR THE EXPENSES INCURRED IT WOULD NOT AMOUNT TO CONCEALMENT OF INCOME. LIKEWISE IN THE PRESENT C ASE THOUGH THE ASSESSEE WAS NOT ABLE TO AND FOR GOOD REASON AS DISCUSSED ABOVE TO EITHER FILE ITA 2299(DEL)09 9 CONFIRMATION OF THE LOAN FROM THE LOAN CREDITOR OR TO PRODUCE THE LOAN CREDITOR ITSELF THE DOCUMENTS IN THE SHAPE OF THE BANK STATEMENT OF THE ASSESSEE AND THE ACCOUNT OF THE LOAN CREDITOR IN TH E BOOKS OF THE ASSESSEE (SUPRA) CLEARLY ESTABLISH THE GENUINENESS OF THE LO AN AND THE PAYMENT THEREOF DURING THE YEAR. 13. IN VIEW OF THE ABOVE WE FIND FORCE IN THE GRIE VANCE RAISED BY THE ASSESSEE. THIS GRIEVANCE AS SUCH IS HEREBY ACCE PTED. THE ORDER OF THE LD. CIT(A) CONFIRMING THE LEVY OF PENALTY IS THUS QUASH ED. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.01.2010. SD/- SD/- (K.D. RANJAN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22.01.2010 *RM COPY FORWARDED TO: 1. M/S. NAUHARIA RICE & GENERAL MILLS AGM-54 GALLA MANDI RUDRAPUR UTTARAKHAND. 2. ITO RUDRAPUR. 3. CIT 4. CIT(A) 5. DR TRUE COPY ITA 2299(DEL)09 10 BY ORDER DEPUTY REGISTRAR