J.J.Button Centre, Trichur v. ITO, Thrissur

ITA 247/COCH/2010 | 2001-2002
Pronouncement Date: 29-02-2012

Appeal Details

RSA Number 24721914 RSA 2010
Assessee PAN AABFJ7534R
Bench Cochin
Appeal Number ITA 247/COCH/2010
Duration Of Justice 1 year(s) 10 month(s) 23 day(s)
Appellant J.J.Button Centre, Trichur
Respondent ITO, Thrissur
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 29-02-2012
Date Of Final Hearing 14-02-2012
Next Hearing Date 14-02-2012
Assessment Year 2001-2002
Appeal Filed On 06-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE: SHRI N.R.S.GANESAN JUDICIAL MEMBER AND SHRI B.R. BASKARAN ACCOUNTANT MEMBER ITA NO. 247/COCH/2010 ASSESSMENT YEAR : 2001-02 J.J. BUTTON CENTRE KUTTENCHERRY COMPLEX HIGH ROAD THRISSUR-1. [PAN:AABFJ 7534R] THE INCOME TAX OFFICER WARD- 2(2) THRISSUR. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI T.M. SREEDHARAN SR. ADV. RESPONDENT BY: SMT. VIJAYAPRABHA JR. DR DATE OF HEARING: 14/02/2012 DATE OF PRONOUNCEMENT: 29/02/2012 ORDER PER SHRI B.R.BASKARAN ACCOUNTANT MEMBER:- THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01-01-2010 PASSED BY LD CIT(A)-V KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 2001-02. THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE I.T. ACT 1961 HAVING BEEN CONFIRMED BY LD CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 2. THE FACTS BORNE OUT OF RECORD RELATING TO TH E ISSUE UNDER CONSIDERATION ARE THAT THE ASSESSING OFFICER ADDED A SUM OF RS.10 59 185/- REL ATING TO THE UNPAID SUNDRY CREDITORS BALANCES TREATING THE SAME AS NO LONGER PAYABLE. H OWEVER THE LD CIT(A) RESTRICTED THE ADDITION TO RS.4 49 467/- IN THE QUANTUM APPEAL PROCEEDINGS AND THE ORDER OF LD CIT(A) WAS ALSO CONFIRMED BY THE ITAT. THERE AFTER THE AO LEVIED A PENALTY OF RS.2 00 000/- U/S 271(1)(C) OF THE ACT. THE LD CIT (A) UPHELD THE LEVY OF PENALTY BUT GRANTED PARTIAL RELIEF AS THERE WAS MISTAKE IN COM PUTATION OF QUANTUM OF PENALTY. I.T.A. NO.247 /COCH/2010 2 THUS THE ACTUAL PENALTY AMOUNT OF RS.1 33 451/- WA S CONFIRMED BY LD CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD A.R SUBMITTED THAT THE IMPUGNED ADDIT ION HAS BEEN MADE ON ESTIMATED BASIS AND HENCE THERE IS NO CASE FOR LEVYING PENALT Y U/S 271(1)(C) OF THE ACT. HE FURTHER SUBMITTED THAT THE AO ADDED THE ENTIRE BALA NCES OUTSTANDING IN THE NAME OF VARIOUS SUNDRY CREDITORS BUT THE LD CIT(A) RESTRIC TED THE SAME TO THE POSITIVE BALANCES ACCORDINGLY HE SUBMITTED THAT THE IMPUGNED ADDITION HAS BEEN MADE ON ESTIMATED BASIS AS THE ASSESSEE WAS NOT ABLE TO PROVE THE OU TSTANDING BALANCES. 4. ON THE CONTRARY THE LD D.R SUBMITTED THAT T HE DEPARTMENT HAS CONCLUSIVELY PROVED THAT THE ASSESSEE HAS BEEN SHOWING BOGUS CRE DIT BALANCES IN THE NAME OF THESE SUNDRY CREDITORS WHERE AS IT HAD ONLY BEEN EFFECTI NG CASH PURCHASES FROM THEM. THE TRIBUNAL ON APPRECIATING THE ABOVE SAID FACTS HAS C ONFIRMED THE ADDITION AND HENCE THE PENALTY U/S 271(1)(C) HAS BEEN RIGHTLY LEVIED AND C ONFIRMED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. AS SUBMITTED BY LD D.R WE NOTICE THAT THE LD CIT(A) H AS CALLED FOR A REMAND REPORT FROM THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS A ND FOUND OUT THAT THE ASSESSEE HAS BEEN SHOWING BOGUS CREDITS. ACCORDINGLY HE CONFIRM ED THE ADDITION TO THE TUNE OF RS.4 49 467/-. THE SAID ORDER OF THE LD CIT(A) WAS UPHELD BY THE ITAT. 6. THERE CANNOT BE ANY DISPUTE THAT THE EXPLANA TION 1 TO SECTION 271 PLACES REBUTTABLE PRESUMPTION UPON THE ASSESSEE. IT IS ALS O A FACT THAT IN THE PENALTY PROCEEDINGS THE ENTIRE MATTER HAS TO BE CONSIDERED AFRESH. HOWEVER FROM THE RECORD WE NOTICE THAT THE ASSESSEE HAS NOT REBUTTED THE PR ESUMPTION PLACED UPON HIM UNDER EXPLANATION 1 TO SECTION 271 OF THE ACT. IN PARTICU LAR THE ASSESSEE HAS FAILED TO SHOW HOW THE FINDING OF THE TRIBUNAL THAT THE IMPUGNED C REDITS ARE BOGUS CREDITS CANNOT LEAD TO LEVY OF PENALTY. IT IS APT HERE TO EXTRACT THE OBSERVATIONS MADE BY LD CIT(A) IN THIS REGARD. I.T.A. NO.247 /COCH/2010 3 6. THE ARGUMENT THAT THE DEPARTMENT HAS NOT DISPRO VED ANYTHING TO ESTABLISH CONCEALMENT AND THERE IS NO F INDING OF THE CIT(AS) IS NOT TENABLE IN VIEW OF THE FOLLOWING:- (I) ON VERIFICATION IT WAS FOUND BY THE AO THAT SUN DRY CREDITS AMOUNTING TO RS.10 59 185/- WERE NOT GENUINE AND THE AO ADDED BACK THE SAME TO THE INCOME RETURNED. THE AS SESSEE FILED APPEAL BEFORE THE CIT(AS) AND PLEADED THAT PROPER O PPORTUNITY WAS NOT GIVEN TO PROVE THE CLAIM. FROM THE RECORDS IT IS SEEN THAT PROPER OPPORTUNITY WAS GIVEN BY THE AO TO THE ASSESSEE BY SENDING LETTERS TO THE CREDITORS VIZ. MARUDHAR AGENCIES MARUDHAR ENT ERPRISES AND MAHALAKSHMI BUTTON CENTRE. IN REPLY MARUDHAR AGENC IES STATED THAT ALL THE TRANSACTIONS WITH THE ASSESSEE WERE IN CASH AND THEY DO NOT HAVE ANY LEDGER ACCOUNTS OF THE ASSESSEE IN THEIR B OOKS OF ACCOUNTS. MARUDHAR ENTERPRISES ALSO REPLIED THE SAME EXCEPT FOR ONE PENDING BILL FOR RS.10 900/- AS ON 14-11-2000. MAHALAKSHMI BUTTON CENTRE ALSO REPLIED THE SAME THAT TRANSACTIONS WITH THE A SSESSEE WERE IN CASH AND THEY DO NOT HAVE ANY LEDGER ACCOUNTS OF TH E ASSESSEE IN THEIR BOOKS OF ACCOUNTS. (II) IT IS FURTHER NOTICED THAT THE AO HAD SENT THE COPIES OF REPLIES FURNISHED BY THE ABOVE PARTIES AND REQUESTE D TO ADDUCE CORROBORATIVE EVIDENCE TO PROVE THE GENUINENESS OF THE CREDITS BUT THE ASSESSEE FAILED TO PROVE THE SUNDRY CREDITS BY COGENT AND CONVINCING MATERIAL EVIDENCE. THE AO SUBMITTED A D ETAILED REMAND REPORT ON 14-10-2005 AND CONCLUDED THAT THE ASSESSE E HAS NOT PRODUCED ANY EVIDENCE TO ESTABLISH THE GENUINENESS AND AUTHENTICITY OF THE SUNDRY CREDITS AS ON 31-3-2001. (III) IT IS SEEN FROM THE RECORDS THAT THE CIT(AS) AFTER CAREFUL ANALYSIS OF THE REMAND REPORT HELD AS UNDER:- IF WE LOOK AT ALL THE FACTS IN TANDEM AND PROPER P ERSPECTIVE OF INTER RELATIONSHIP OF BUSINESS BETWEEN TWO PARTIES IT IS NOT DIFFICULT TO INFER THAT WHAT THE APPELLANT IS SAYING IS BLAT ANT INCORRECT FACTS. THEREFORE I AM UNABLE TO ATTACH ANY SIGNIF ICANCE OF THE ARGUMENTS TAKEN BY THE APPELLANT IN DECIDING THE IS SUE. HERE IT MAY BE MENTIONED THAT THERE IS A LOGICAL COROLLARY OF T HE CREDIT BALANCES APPEARING IN THE NAME OF THE AFORESAID PARTIES IN THE BOOKS OF THE APPELLANT. THERE APPEARS TO BE TRUTH IN THE STATEM ENT OF FACTS GIVEN BY THE OTHER PARTIES THAT THEY ARE MOSTLY DEALING I N THE CASH SALES AND RARELY IN CREDIT SALE. WHILE THE APPELLANT IS PAYI NG CASH ON THE CASH PURCHASES MADE BY THE ALLEGED PARTIES IT IS NOT SH OWING THE CASH PURCHASES ENTIRELY IN THEIR BOOKS OF ACCOUNT. PART OF THE CASH PURCHASES ARE SHOWN AS CREDIT PURCHASES BY THE APPE LLANT IN THE I.T.A. NO.247 /COCH/2010 4 NAME OF THE ALLEGED PARTIES WHICH PROVIDES ROOM TO HIM TO INTRODUCE ITS UNACCOUNTED INCOME IN THE FORM OF CASH IN HIS B USINESS. THIS APPEARS TO BE NOVEL WAY OF INTRODUCING THE UNACCOUN TED INCOME IN ITS BUSINESS IN THE FORM OF SHOWING CREDIT BALANCE IN T HE NAME OF THE OTHER PARTIES WHICH IS NOT A REALITY. WHENEVER IT SUITS TO THE APPELLANT HE SQUARES UP THE CREDIT BALANCE BY MAKING THE CASH PAYMENT ROUGH BOOKS TAKING OUT THE UNACCOUNTED CASH OUT OF THE BU SINESS. THAT IS THE REASON THAT SUCH BOGUS CREDIT BALANCES ARE APP EARING IN THE NAME OF SUCH PARTIES. THIS IS THE ONLY INFERENCE W HICH CAN BE REASONABLY DRAWN WITHOUT ANY DOUBT. THEREFORE AFT ER CIRCUMSPECTING ALL THE FACTS INTRINSIC AS WELL AS E XTRINSIC SURROUNDING THE DISPUTED POINTS I HAVE NO HESITATION TO HOLD T HAT THE INFORMATION PROVIDED BY THE OTHER PARTIES CANNOT BE HELD UNRELI ABLE AND AT THE SAME TIME THE BOOKS ENTRIES OF THE APPELLANT WITH REFERENCE TO SUNDRY CREDITORS ARE NOT SACROSANCT. FURTHER I A LSO GIVE A FACTUAL FINDING THAT THE APPELLANT HAS NOT SATISFACTORILY E STABLISHED THE GENUINENESS OF ALLEGED SUNDRY CREDITORS AND THEREF ORE THE ONUS RESTED ON HIM CANNOT BE SAID TO HAVE DISCHARGED FUL LY. THEREFORE I UPHOLD THE FINDING OF THE ASSESSING OFFICER IN PRIN CIPLE IN THIS RESPECT. (IV) THE CIT(AS) FURTHER HELD THAT AS REGARDS TO T HE OTHER SUNDRY CREDITORS DESPITE THE AMPLE OPPORTUNITY GIVE N BY THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS THE APPELLANT COULD NOT PROVE THE GENUINENESS OF SUCH CREDITORS AND THE CREDIT BALANC ES IN THEIR NAME. EVEN THE ADDRESS GIVEN BY THE APPELLANT IN THE CASE OF SOME CREDITORS WAS FOUND INCORRECT AND THE LETTER SENT AT THE ADDR ESS RETURNED UN- SERVED. ONCE AGAIN THE APPELLANT GOT ANOTHER OPPOR TUNITY TO EXPLAIN THE GENUINENESS OF SUCH OTHER SUNDRY CREDITORS BUT NO FURTHER EVIDENCE WAS ADDUCED BY THE APPELLANT EVEN DURING THE REMAND PROCEEDINGS. THE APPELLANT HAS TAKEN ARGUMENT THAT NO ADDITION CAN BE MADE IN THIS CASE WITHOUT MAKING ANY VERIFICATIO N AND INQUIRY FROM SUCH PARTIES. HERE IT IS IMPORTANT TO NOTE THAT TH E APPELLANT HIMSELF IS TO BE BLAMED FOR NOT PRODUCING ANY EVIDENCE TO PROV E THE CREDIT BALANCES. MORE SO THE APPELLANT HAS NOT EVEN PRO VIDED THE CORRECT ADDRESS OF SUCH CREDITORS SO THAT IN ORDER TO ENAB LE THE AO TO MAKE FURTHER ENQUIRIES. UNDER THE CIRCUMSTANCES THERE IS NO OTHER OPTION LEFT THAN TO HOLD THAT THE CREDIT BALANCES ARE NOT CORRECT. HENCE I CONFIRM THE FINDINGS OF THE AO ON THIS POINT ALSO. THEREFORE THE CONTENTION THAT THERE IS NO FINDING OF THE CONCEALM ENT BY CIT(AS) IS NOT CORRECT. 7. THE HBLE ITAT VIDE THEIR ORDER IN I.T.A. NO. 289/COCH/06 DATED 29-8-2008 HAS CONFIRMED THE FINDING OF THE CI T(AS). THEREFORE THE APPELLANT FAILS TO PROVE THE CORRECTNESS AND GE NUINENESS OF THE I.T.A. NO.247 /COCH/2010 5 CREDITS. IT IS THEREFORE VERY CLEAR THAT THE APPEL LANT HAS FURNISHED INACCURATE PARTICULARS. SO IN VIEW OF THE DECIS ION OF THE HBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHA RMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC) AND IN THE CASE OF CIT VS. ATUL MOHAN BINDAL (2009) 317 ITR 1 (SC) AND ALSO IN VIEW OF THE DECISION OF THE HBLE ITAT IN THE CASE OF SHRI C.K. SUDHAKA RAN PROP. M/S. CHERAKULAM VESSELS IN I.T.A. NO. 510/COCH/2007 DA TED 21-12-2009 I HOLD THAT THE PENALTY U/S. 271(1)(C) IS LEVIABLE IN THIS CASE AND THE ACTION OF THE AO IN LEVYING THE PENALTY IS CONFIRME D. 7. ON A CAREFUL CONSIDERATION OF THE ORDER OF L D CIT(A) WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS TAKEN A CONSCIOUS DECISION AFTER FULLY ANALYZING THE FACTS SURROUNDING THE CASE. HENCE WE DO NOT FIND ANY INF IRMITY IN HIS DECISION AND ACCORDINGLY UPHOLD HIS ORDER IN CONFIRMING THE PENA LTY U/S 271(1)(C) OF THE ACT. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED ON 29-02-2012 (N.R.S.GANESAN) (BR BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER ERNAKULAM DATED: 29TH FEBRUARY 2012 GJ COPY TO 1 J.J. BUTTON CENTRE KUTTENCHERRY COMPLEX HIGH RO AD THRISSUR-1. 2 THE INCOME TAX OFFICER WARD-2(2) THRISSUR. 3 THE COMMISSIONER OF INCOME-TAX(APPEALS)-V KOCHI. 4 THE COMMISSIONER OF INCOME-TAX THRISSUR. 5. THE DR ITAT COCHIN BENCH. 6 GUARD FILE. BY ORDER A SSISTANT REGISTRAR I.T.A. NO.247 /COCH/2010 6 INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH