The ITO, Ward-5(2),, Ahmedabad v. Parna Industries Ltd.,, Ahmedabad

ITA 2456/AHD/2006 | 1997-1998
Pronouncement Date: 22-01-2010 | Result: Dismissed

Appeal Details

RSA Number 245620514 RSA 2006
Bench Ahmedabad
Appeal Number ITA 2456/AHD/2006
Duration Of Justice 3 year(s) 2 month(s) 6 day(s)
Appellant The ITO, Ward-5(2),, Ahmedabad
Respondent Parna Industries Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 22-01-2010
Date Of Final Hearing 21-01-2010
Next Hearing Date 21-01-2010
Assessment Year 1997-1998
Appeal Filed On 16-11-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD - AHMEDABAD B BENCH (BEFORE DR.O.K. NARAYANAN VICE-PRESIDENT AND SHRI MAHAVIR SINGH JUDICIAL MEMBER) ITA NO.2456/AHD/2006 [ASSTT.YEAR : 1997-1998] ITO WARD-5(2) AHMEDABAD. VS. PARNA INDUSTRIES LTD. ANAND 503 MANGAL COMPLEX C.G.ROAD AHMEDABAD. REVENUE BY : SMT. NEETA SHAH ASSESSEE BY : NONE DATE OF ORDER RESERVED : 21-01-2010 O R D E R PER DR. O.K. NARAYANAN VICE-PRESIDENT : THIS APPEAL IS FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 1997-1998. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- XI AT AHMEDABAD DATED 13-9-2006 AND ARISES OUT OF THE PENALTY ORDER PASSE D UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961. 2. IN THIS CASE THE ASSESSEE HAD RETURNED A TOTAL I NCOME OF RS.2 47 040/-. ADDITIONS WERE MADE BY THE ASSESSIN G AUTHORITY TO THE TUNE OF RS.32 51 755/-. THUS THE TOTAL INCOME WAS ASSESSED AT RS.34 98 795/-. 3. THE ADDITION OF RS.34 51 755/- CONSISTED THE FOL LOWING: I) CLAIM OF DEDUCTION UNDER SECTION 80IA : RS.1 1 9 619/- II) UNVERIFIABLE EXPENSES : RS.5 52 876/- III) UNEXPLAINED CASH CREDITS : RS.25 79 258/- PAGE - 2 ITA NO.2456/AHD/2006 -2- 4. THE AO TREATED THE ABOVE ADDITIONS IN THE NATURE OF CONCEALMENT OF INCOME COUPLED WITH FURNISHING OF INACCURATE PARTIC ULARS AND LEVIED A PENALTY OF RS.13 32 101/- BEING THE AMOUNT EQUAL TO THE AMOUNT OF TAX SOUGHT TO BE EVADED BY THE ASSESSEE. 4. IN THE FIRST APPEAL THE CIT(A) ANALYZED THE FAC TS OF THE CASE IN A CRITICAL MANNER AND HELD THAT THE LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE ACT IS JUSTIFIED. BUT THE CIT(A) FOUND THAT THE QUANTUM WAS NOT JUSTIFIED. HE FOUND THAT ONE OF THE ADDITIONS OF R S.5 52 876/- IN THE NATURE OF UNVERIFIABLE EXPENSES COULD NOT BE TREATE D AS A CASE OF CONCEALMENT OF INCOME AS THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE TO SHOW THAT THE CLAIM MADE BY THE ASSESSE E WAS BOGUS. IN RESPECT OF THE ADDITION RELATING TO THE UNEXPLAINED CASH CREDITS ALSO THE CIT(A) HAS HELD THAT THE AO HAS NOT CONCLUSIVELY PR OVED THAT THOSE CASH CREDITS WERE BOGUS CREDITS. THEREFORE HE HELD THA T NO PENALTY WOULD BE JUSTIFIED IN RESPECT OF THE TWO ADDITIONS OF RS.5 5 2 876/- AND RS.25 79 258/-. 5. BUT HE FOUND THAT THE CLAIM OF THE ASSESSEE MADE UNDER SECTION 80IA FOR RS.1 19 619/- WAS BOGUS AND THEREFORE THAT ADDITION CALLED FOR A CORRESPONDING PENALTY. ACCORDINGLY HE MODIFIED TH E PENALTY CONFINING TO DISALLOWANCE OF RS.1 19 619/-. THE REVENUE IS A GGRIEVED BY THIS QUANTUM RELIEF TO THE ASSESSEE AND THEREFORE THE S ECOND APPEAL BEFORE THE TRIBUNAL. 6. THE GROUND RAISED BY THE REVENUE IS THAT THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE PENALTY LEVIED UND ER SECTION 271(1)(C) OF RS.13 32 101/- TO RS.51 436/-. PAGE - 3 ITA NO.2456/AHD/2006 -3- 7. WHEN THE MATTER WAS CALLED ON FOR HEARING NOBOD Y WAS PRESENT FOR THE RESPONDENT-ASSESSEE. THIS APPEAL WAS POSTED FO R HEARING A NUMBER OF TIMES IN THE PAST. BUT NOTICE COULD NOT BE SERVED ON THE ASSESSEE AND THERE WAS NO APPEARANCE. LATER ON INSTRUCTIONS WER E GIVEN TO SERVE THE NOTICE THROUGH THE INCOME TAX DEPARTMENT. EVEN THE N NO APPEARANCE WAS PUT IN BY THE ASSESSEE. AGAIN NOTICE WAS SENT THROUGH THE INCOME TAX DEPARTMENT AND IT WAS SERVED BY AFFIXTURE AT TH E MAIN DOOR OF THE ASSESSEES PREMISES ON 30-12-2009 IN THE PRESENCE O F TWO WITNESSES AS THERE WAS NOBODY IN THE ADDRESS OF THE ASSESSEE AVA ILABLE IN THE RECORDS OF THE TRIBUNAL/DEPARTMENT. IN THESE CIRCUMSTANCES T HE SERVICE OF NOTICE IS STATUTORILY DEEMED AND WE PROCEED TO DISPOSE OF THE APPEAL EX - PARTE QUA THE ASSESSEE. 8. SMT.NEETA SHAH THE LEARNED ADDL. COMMISSIONER O F INCOME-TAX APPEARED FOR THE REVENUE AND ARGUED THE CASE AT LEN GTH. SHE CONTENDED THAT THE CIT(A) WHILE JUSTIFYING THE LEVY OF PENALT Y UNDER SECTION 271(1)(C) HAS GONE WRONG IN DILUTING THE QUANTUM OF PENALTY WITHOUT APPRECIATING THE FACT THAT THE ONUS OF PROVING EXP ENSES AND CASH CREDITS ARE CAST ON THE ASSESSEE AND NOT ON THE REVENUE. S HE INVITED OUR ATTENTION TO THE RELEVANT PORTIONS OF THE ORDER OF THE CIT(A) . HE HAS EXCLUDED AN ADDITION OF RS.5 52 876/- FROM THE AMBIT OF THE PEN ALTY ON THE GROUND THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDE NCE TO SHOW THAT THE EXPENDITURE CLAIMED WAS BOGUS. THE LEARNED ADDL. C OMMISSIONER CONTENDED THAT THE ONUS IS NOT ON THE REVENUE TO PR OVE WHETHER THE CLAIM OF THE ASSESSEE WAS TRUE OR FALSE AND IT WAS THE ON US OF THE ASSESSEE TO PROVE THAT THE CLAIM WAS TRUE. SHE EXPLAINED THAT THE DISALLOWANCE WAS NOT MADE ON ANY CASUAL REASONING OF NON-AVAILABILIT Y OF CERTAIN DETAILS OR PAGE - 4 ITA NO.2456/AHD/2006 -4- PARTICULARS. THE DISALLOWANCE WAS MADE AS ABSOLUTE LY THERE WAS NO MATERIAL TO SUPPORT THE CLAIM OF EXPENSES MADE BY T HE ASSESSEE. SHE CONTENDED THAT THIS IS A CLEAR CASE OF FURNISHING I NACCURATE PARTICULARS THEREBY APPARENTLY CONCEALING INCOME LIABLE FOR TAX ATION. SHE RELIED ON SIMILAR GROUNDS IN RESPECT OF UNEXPLAINED CASH CRED ITS AS WELL. SHE STATED THAT IF THE ASSESSEE DOES NOT PROVE THE GENUINENESS OF THE CASH CREDITS THE STATUTORY PRESUMPTION IS THAT THE CREDITS ARE BOGUS . ENTERING BOGUS EXPENSES IN THE BOOKS OF ACCOUNTS IS FALSIFICATION OF ACCOUNTS AND AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS. I N THESE CIRCUMSTANCES THE LEARNED ADDL. COMMISSIONER CONTENDED THAT THE C IT(A) SHOULD HAVE UPHELD THE ENTIRE QUANTUM DETERMINED BY THE ASSESSI NG AUTHORITY FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 9. WE CONSIDERED THE MATTER IN DETAIL. THERE IS NO DISPUTE REGARDING THE JUSTIFICATION OF IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. DISPUTE IS ONLY IN RESPECT OF QUANTUM. THE ADDITIO N OF RS.5 52 876/- WAS MADE BY THE ASSESSING AUTHORITY ON THE GROUNDS THAT THE EXPENSES CLAIMED BY THE ASSESSEE WERE NOT VERIFIABLE. THE CIT(A) HA S EXCLUDED THE SAID AMOUNT FROM THE AMBIT OF PENALTY ON THE GROUND THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE TO SHOW THA T THE EXPENDITURE CLAIMED WAS OF BOGUS NATURE. WE HAVE TO STATE IN T HIS CONTEXT THAT THE ONUS OF PROVING A POSITIVE STATEMENT OF FACT IS THA T OF THE ASSESSEE AND THE AO CANNOT BE CALLED UPON TO PROVE THE NEGATIVE. TH AT IS THE AO CANNOT BE CALLED UPON TO PROVIDE THAT THE CLAIMS OF EXPENS ES MADE BY THE ASSESSEE WERE NOT GENUINE. IT IS THE DUTY OF THE A SSESSEE TO PROVE NECESSARY DETAILS BEFORE THE AO. SUCH DETAILS MAY NOT BE COMPREHENSIVE. SUCH EVIDENCES MAY NOT BE FOOL-PROOF. IN SUCH CASE S IT IS POSSIBLE TO SHOW THAT EVEN IF THE DISALLOWANCE IS MADE SUCH DI SALLOWANCES DO NOT PAGE - 5 ITA NO.2456/AHD/2006 -5- AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OR C ONCEALING TAXABLE INCOME. BUT WHERE THE ASSESSEE WAS NOT FURNISHING ANY PARTICULARS IT IS TO BE HELD THAT THE CLAIM OF THE EXPENSES AS SUCH W AS NOT SUBSTANTIATED AND THEREFORE COULD NOT BE HELD AS GENUINE. THE AS SESSING AUTHORITY IS JUSTIFIED IN MAKING SUCH INFERENCE. BEYOND THAT HE CANNOT BE CALLED UPON TO PROVE THE NEGATIVE. THIS IS EQUALLY APPLICABLE TO UNEXPLAINED CASH CREDITS AS WELL. WHEN THE ASSESSEE IS ENTERING CAS H CREDITS IN THE BOOKS OF ACCOUNTS IT IS FOR THE ASSESSEE TO PROVE SOURCES O F SUCH CREDITS TO THE SATISFACTION OF THE ASSESSING AUTHORITY. DEFICIENC Y IN THE EXPLANATION OR EVIDENCE NEED NOT INVITE PENALTY AGAINST THE ASSESS EE. BUT TOTAL ABSENCE OF EVIDENCE/EXPLANATION GIVES A REASONABLE PRESUMPT ION THAT THE ENTRIES IN THE ACCOUNTS ARE BOGUS. IN THESE CIRCUMSTANCES TH E DISPUTED ITEMS ARE CLASSICAL EXAMPLES OF FURNISHING INACCURATE PARTICU LARS WHICH ULTIMATELY RESULTED IN CONCEALMENT OF TAXABLE INCOME. THEREFO RE IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE CIT(A) IS NOT JUSTIFIED IN INTERFERING IN THE QUANTUM OF THE PENALTY AMOUNT. SETTING ASIDE THE ORDER OF THE CIT(A) TO THE ABOVE EXTENT WE HOLD THAT THE ASSESSING AUTHORITY IS JUSTIFIED IN LEVYING OF PENALTY WITH REFERENCE TO U NVERIFIABLE EXPENSES AS WELL AS UNEXPLAINED CASH CREDITS. ACCORDINGLY WE RESTORE THE PENALTY OF RS.13 32 101/- LEVIED BY THE ASSESSING AUTHORITY AN D WITHDRAW THE MODIFICATION GRANTED BY THE CIT(A). 10. IN RESULT THIS APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY THIS 22 ND DAY OF JANUARY 2010. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (DR.O.K. NARAYANAN) VICE-PRESIDENT PAGE - 6 ITA NO.2456/AHD/2006 -6- PLACE : AHMEDABAD DATE : 22-01-2010 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR ITAT AHMEDABAD