Shri Tulsibhai Manjibhai Viradia, v. The Income tax Officer,Ward-6(4),, Surat

ITA 2536/AHD/2007 | 2001-2002
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 253620514 RSA 2007
Assessee PAN AANPV6271H
Bench Ahmedabad
Appeal Number ITA 2536/AHD/2007
Duration Of Justice 2 year(s) 11 month(s) 22 day(s)
Appellant Shri Tulsibhai Manjibhai Viradia,
Respondent The Income tax Officer,Ward-6(4),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 31-05-2010
Date Of Final Hearing 12-05-2010
Next Hearing Date 12-05-2010
Assessment Year 2001-2002
Appeal Filed On 08-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING :12/05/2010 DRAFTED O N: 14/05/2010 ITA NO.2536/AHD/2007 ASSESSMENT YEAR : 2001-02 SHRI TULSIBHAI MANJIBHAI VIRADIA 45 LAXMI PARK SOCIETY AT & POST : VYARA DIST. SURAT VS. THE INCOME TAX OFFICER WARD-6(4) SURAT PAN/GIR NO. : AANPV 6271 H (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI R.N. VEPARI RESPONDENT BY: SHRI M.C. PANDIT SR. D.R. O R D E R PER SHRI MUKUL SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -IV SURAT DATED 30/03/2007 AND THE ONLY ISSUE IS IN RESPECT OF CONF IRMATION OF LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT 1961 OF RS.5 16 208/-. 2. FACTS IN BRIEF; AS EMERGED FROM THE CORRESPONDI NG PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT 1961 DATED 13 /03/2006 WERE THAT THE ASSESSEE HAPPENED TO BE A CIVIL CONTRACTOR. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS VIDE ASSESSMENT ORDER PASSE D U/S.143(3) OF THE I.T. ACT 1961 DATED 27/02/2004 TWO IMPUGNED ADDITI ONS WERE MADE; ONE WAS IN RESPECT OF UNSECURED LOAN AMOUNTING TO RS.61 000/- AND THE OTHER ITA NO.2536/AHD/2007 SHRI TULSIBHAI MANJIBHAI VIRADIA VS. ITO ASST.YEAR 2001-02 - 2 - ONE WAS IN RESPECT OF ALLEGED CERTAIN LIABILITIES O F RS.14 21 551/-. WHILE IMPOSING THE PENALTY THE ASSESSING OFFICER HAS COM MENTED THAT SINCE THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE SAID DEPOSITS AND ALSO FAILED TO PROVE THE IDENTITY OF THE CREDITORS THER EFORE THE SAID ADDITION WAS MADE. IN RESPECT OF THE OTHER ADDITION THE C OMMENTS OF THE ASSESSING OFFICER WHILE IMPOSING THE PENALTY WERE T HAT ON VERIFICATION OF THE DETAILS OF THE CREDITORS IT WAS FOUND THAT THO SE LIABILITIES WERE PERTAINED TO THE OPENING BALANCES ONLY. IN ORDER T O VERIFY THE CORRECTNESS OF THE LIABILITY A SHOW-CAUSE NOTICE WAS ISSUED TO PROVE THE IDENTITY OF THOSE CREDITORS. SINCE THE ASSESSEE WAS UNABLE TO FURNISH THE COMPLETE ADDRESSES ETC. OF THOSE CREDITORS THEREFORE THE ASSESSING OFFICER HAS TREATED THAT THOSE LIABILITIES WERE NOT IN EXISTENC E. IT WAS ALSO NOTICED THAT THE SUBSEQUENT CASH PAYMENTS TO THOSE CREDITORS WAS NOT SUPPORTED BY VOUCHERS OR RECEIPTS. AFTER NARRATING THE FACTS IN RESPECT OF BOTH THESE ADDITIONS THE ASSESSING OFFICER HAS CONCLUDED THAT SINCE THE ASSESSEE HAS FAILED TO PROVE EITHER THE GENUINENESS OF THE CASH CREDITORS OR THE GENUINENESS OF THE OUTSTANDING LIABILITIES THEREFO RE CONCEALED THE PARTICULARS OF INCOME AND FINALLY LEVIED A PENALTY U/S.271(1)(C) OF THE I.T. ACT 1961 OF RS.5 16 208/- WHICH WAS CHALLEN GED BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LEARNED CIT(APPEALS) WHILE DECIDING THE ISS UE OF LEVY OF CONCEALMENT PENALTY HAS RELIED UPON THE DECISION OF THE LEARNED CIT(APPEALS) PASSED IN RESPECT OF THE QUANTUM ADDIT IONS WHICH WERE CONFIRMED IN THAT ORDER. HE HAS CONCLUDED THAT SI NCE THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPECT OF BOTH THE ADDI TIONS WAS FOUND TO BE ITA NO.2536/AHD/2007 SHRI TULSIBHAI MANJIBHAI VIRADIA VS. ITO ASST.YEAR 2001-02 - 3 - FALSE THEREFORE EXPLANATION-1 TO SECTION 271(1)(C ) OF THE I.T.ACT 1961 WAS ATTRACTED HENCE THE PENALTY WAS RIGHTLY IMPOSE D. NOW AGAINST THE SAID CONFIRMATION OF THE PENALTY THE ASSESSEE IS I N FURTHER APPEAL. 4. WE HAVE HEARD BOTH THE PARTIES AND ALSO CAREFUL LY PERUSED THE MATERIAL PLACED BEFORE US IN THE LIGHT OF THE ORDER S OF THE AUTHORITIES BELOW AND ALSO THE CASE LAWS CITED. THE LEARNED AU THORISED REPRESENTATIVE OF THE ASSESSEE HAS STATED THAT A Q UANTUM APPEAL WAS FILED BEFORE THE RESPECTED TRIBUNAL WHICH HAS NOW BEEN DE CIDED VIDE ITA NO.726/AHD/2006 (ASSESSMENT YEAR 2001-02) AS PER OR DER DATED 18 TH DAY OF SEPTEMBER-2009 BUT DISMISSED FOR TECHNICAL R EASON. THE SAID APPEAL WAS DISMISSED WITHOUT CONSIDERING THE MERITS OF THE CASE ON THE GROUND THAT THE DELAY WAS ABOUT ONE YEAR THREE MONT HS WHICH WAS HELD AS NOT CONDONABLE. HENCE THE LEARNED AUTHORISED REP RESENTATIVE OF THE ASSESSEE HAS PLEADED THAT IN THE ABSENCE OF ANY DIS CUSSION ON MERITS THE ISSUE ABOUT THE CORRECTNESS OF THE LEVY OF PENALTY IS STILL ALIVE AND NOW CAN BE DECIDED INDEPENDENTLY BECAUSE THE SAID DISMI SSAL WAS IN LIMINE BY THE RESPECTED TRIBUNAL AND THAT JUDGEMENT HAS NO BEARING ON THE PRESENT APPEAL. 4.1. WITH THIS BACKGROUND WE HAVE PROCEEDED TO DEC IDE THE MERITS OF THE ISSUE IN RESPECT OF LEVY OF PENALTY. AS FAR A S QUESTION OF INVOCATION OF PROVISIONS OF SECTION 41(1) OF THE I.T. ACT 196 1 IS CONCERNED THE APPELLANT HAS FURNISHED THE DETAILS OF THE LIABILIT Y AS ON 31/03/2001. ON THE BASIS OF THOSE DETAILS AN ENQUIRY WAS CONDUCT ED AND IT WAS FOUND THAT THE IMPUGNED LIABILITY WAS LATER ON SQUARED UP IN THE SUBSEQUENT ITA NO.2536/AHD/2007 SHRI TULSIBHAI MANJIBHAI VIRADIA VS. ITO ASST.YEAR 2001-02 - 4 - YEAR. OUR ATTENTION HAS ALSO BEEN DRAWN ON A WRI TTEN SUBMISSION FURNISHED BEFORE THE LEARNED CIT(APPEALS) DATED 29/ 03/2007 WHEREIN BY PARAGRAPH NO.5 IT WAS INFORMED THAT THE SAID ADD ITION U/S.41(1) OF THE I.T. ACT 1961 WAS INCORRECT BECAUSE THE OUTSTANDI NG LIABILITY WAS SUBSEQUENTLY PAID EVEN BEFORE THE INITIATION OF ASS ESSMENT PROCEEDINGS. IN SUPPORT OF THE SAID CONTENTION COPIES OF ACCOU NTS OF THOSE CREDITORS WERE ALSO PLACED ON RECORD. THE LEARNED AUTHORISE D REPRESENTATIVE OF THE ASSESSEE HAS EXPLAINED BEFORE US THAT FEW OF TH E CREDITORS WHO HAVE RESPONDED THE SHOW-CAUSE NOTICE HAVE STATED THAT AS ON THAT DATE WHEN THE STATEMENT WAS RECORDED THERE WAS NO LIABILITY HOWEVER THAT REPLY WAS WRONGLY CONSTRUED BY THE ASSESSING OFFICER. TH E LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS ALSO ARGUED THAT IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F CIT VS. SUGAULI SUGAR WORKING PVT.LTD. REPORTED AS 236 ITR 518 (SC) THE INVOCATION OF THE PROVISIONS OF SECTION 41(1) OF THE I.T. ACT 19 61 WAS A SUBJECT OF CONTROVERSY SPECIALLY WHEN THE REVENUE DEPARTMENT HAS UNILATERALLY TREATED THOSE LIABILITY AS CEASED TO EXIST. 4.2. IN RESPECT OF ADDITION MADE U/S.68 OF THE I.T. ACT 1961 ABOUT THE CASH CREDITORS THE LEARNED AUTHORISED REPRESENTATI VE OF THE ASSESSEE HAS PLEADED THAT THOUGH THE CONFIRMATIONS WERE VERY MUC H BEFORE THE ASSESSING OFFICER HOWEVER MERELY ON THE GROUND TH AT NONE OF THEM WERE ASSESSED TO TAX THE IMPUGNED ADDITION WAS MADE . THOUGH THE ASSESSING OFFICER HAS ACCEPTED THAT THE CONFIRMATIO NS IN RESPECT OF ALL THE DISCLOSURES WERE AVAILABLE BUT SINCE THEY WERE THE PERSONS OF SMALL MEANS HENCE NOT IN A CAPACITY TO ADVANCE THE MO NEY THE ADDITION WAS ITA NO.2536/AHD/2007 SHRI TULSIBHAI MANJIBHAI VIRADIA VS. ITO ASST.YEAR 2001-02 - 5 - MADE BY INVOKING THE PROVISIONS OF SECTION 68 OF TH E I.T. ACT 1961. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE H AS PLEADED THAT IN NUMBER OF CASES OF IDENTICAL SITUATION WHEN THE ADD ITION WAS MADE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE I.T. A CT 1961 THE QUESTION OF LEVY OF PENALTY US/.271(1)(C) OF THE I.T. ACT 1 961 WAS DECIDED IN FAVOUR OF THE ASSESSEE AND FOLLOWING THE ORDERS WER E CITED IN SUPPORT OF THIS CONTENTION:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. VINAYCHAND HARILAL 120 ITR 752 2. NATIONAL TEXTILES 249 ITR 125 3. JALARAM OIL MILLS 253 ITR 192 4. BARODA TIN WORKS 221 ITR 661 5. M.M. GUJAMGADI 290 ITR 168(KAR.) 6. RAKESH GUPTA 107 TTJ 109 (AMRITSAR) 4.3. IN SUPPORT OF THE ADDITION MADE U/S.41(1) OF T HE I.T. ACT 1961 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE H AS CITED FOLLOWING DECISIONS TO DEMONSTRATE THAT THE QUANTUM ADDITION HAS ALWAYS BEEN A SUBJECT OF CONTROVERSY AS IS EVIDENT FORM THE FOLLO WING DECISIONS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. TAMILNADU WAREHOUSING CORPORATION 292 ITR 310 (MAD.) 2. UTTAM AIR PRODUCTS (P) LTD. 99 TTJ 718 (DELHI) 3. THAKKAR DEVELOPERS 6 DTR 238 (PUNE) 4. WILSON & CO.LTD. 16 DTR 428 (CHENNAI) 5. SOUTHERN ROADWAYS LTD. 282 ITR 379 (MAD.) ITA NO.2536/AHD/2007 SHRI TULSIBHAI MANJIBHAI VIRADIA VS. ITO ASST.YEAR 2001-02 - 6 - 6. DSA ENGINEERS 30-SOT-31 (MUM.) 7. AMEYA ENG.LTD. ITA NO.2158/A/07(AHD.) 5. UNDER THE TOTALITY OF THE CIRCUMSTANCES OF THE C ASE AS ALSO CONSIDERING THE AFOREMENTIONED PROVISIONS OF THE I .T. ACT 1961 WE ARE OF THE VIEW THAT IT WAS NOT POSSIBLE WITH CERTAINTY TO INFLICT THE ALLEGATION ON THIS APPELLANT THAT HE HAS DELIBERATELY CONCEALE D THE PARTICULARS OF INCOME. ON HIS PART HE HAS OFFERED AN EXPLANATIO N AND THAT EXPLANATION WAS NOT FOUND SATISFACTORY. NEVERTHELESS IT IS DIF FICULT TO HOLD THAT THE EXPLANATION WAS ALTOGETHER FALSE OR UNTRUE. IN THE ABOVE REFERRED CITATIONS THE HON'BLE COURTS WERE OF THE VIEW TH AT THE PROVISIONS OF SECTION 68 OF THE I.T. ACT 1961 ARE THE DEEMING P ROVISION AND UNIVERSALLY COULD NOT BE HELD A DELIBERATE CONCEALM ENT IF NOT UNEARTHED BY THE REVENUE DEPARTMENT OR UNLESS AND UNTIL WHIC H WAS CONCLUSIVELY DETECTED AS A CONCEALMENT ON THE PAT OF THE ASSESSE E. IN SUCH A SITUATION THE ALLEGATION OF CONCEALMENT OF INCOME CAN BE HELD HAS ILL-FOUNDED. THE HON'BLE JURISDICTIONAL HIGH COURT IN ONE OF THE CAS E HAS ALSO OBSERVED IN A SITUATION WHEN THAT THE ASSESSEE GIVES AN EXPLANA TION WHICH IS UNPROVED BUT NOT DISPROVED AND THE CIRCUMSTANCES DO NOT LE AD TO A POSITIVE INFERENCE ABOUT THE DELIBERATE DEFAULT OF THE ASSES SEE THEN AN ALLEGATION COULD NOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE IMPUGNED AMOUNT IN QUESTION WAS THE CONCEA LED INCOME OF THE ASSESSEE. FURTHER IN ONE OF THE CASE THE COURT H AS OBSERVED THAT WHEN THE DEPARTMENT IS NOT MAKING ANY EFFORT TO COME TO THE CONCLUSION THAT THE CASH CREDITS COULD IN NO CIRCUMSTANCES HAVE BEE N THE AMOUNTS RECEIVED AS LOAN FORM THE VARIOUS PARTIES THE PENA LTY MUST NOT BE ITA NO.2536/AHD/2007 SHRI TULSIBHAI MANJIBHAI VIRADIA VS. ITO ASST.YEAR 2001-02 - 7 - IMPOSED. LIKEWISE IN RESPECT OF THE REASON FOR THE IMPOSITION OF PENALTY WAS THE ADDITION BY INVOKING THE PROVISIONS OF SECT ION 41(1) BUT THE HON'BLE COURTS HAVE HELD AS CITED SUPRA THAT MERE LY FOR THE REASONS THAT THE AMOUNTS BEING CARRIED FORWARD FOR YEARS DO NOT IPSO FACTO CEASED TO EXIST AS A LIABILITY. NEVERTHELESS THIS ISSUE HAD ALWAYS BEEN A SUBJECT OF CONTROVERSY. FOLLOWING THE RATIO DECIDENDI OF THE SE DECISIONS WE ARE OF THE CONSCIENTIOUS VIEW THAT THE APPELLANTS DEFAULT IS NOT A FIT CASE OF IMPOSING THE CONCEALMENT PENALTY HENCE WE HEREBY REVERSE THE VIEW TAKEN BY THE REVENUE AUTHORITIES AND DIRECT TO DELE TE THE PENALTY OF CONCEALMENT. 6. IN THE RESULT APPEAL IS ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 31 ST MAY 2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31 / 05 /2010 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-IV SURAT 5. THE DR AHMEDABAD BENCH. 6. THE GUARD FILE . BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD