M/s. Kachins, Anand v. The Income tax Officer, Ward-1,, Anand

ITA 300/AHD/2007 | 2002-2003
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 30020514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 300/AHD/2007
Duration Of Justice 3 year(s) 5 day(s)
Appellant M/s. Kachins, Anand
Respondent The Income tax Officer, Ward-1,, Anand
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 22-01-2010
Date Of Final Hearing 12-01-2010
Next Hearing Date 12-01-2010
Assessment Year 2002-2003
Appeal Filed On 17-01-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' (BEFORE SHRI T K SHARMA AND N S SAINI) ITA NO.300/AHD/2007 (ASSESSMENT YEAR: 2002-03) M/S KACHINS OPP. BANK OF BARODA STATION ROAD ANAND V/S THE INCOME-TAX OFFICER WARD-1 ANAND (APPELLANT) (RESPONDENT) APPELLANT BY :- SHRI M G PATEL CA RESPONDENT BY:- SHRI GOVIND SINGHAL SR. DR O R D E R PER N S SAINI (ACCOUNTANT MEMBER) : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A ) DATED 20-11-2006 WHEREBY THE LD. CIT(A) HAS CONFIRMED PENALTY OF RS. 2 36 739/- IMPOSED BY THE LEARNED ASSESSING OFFICER UNDER SECT ION 271(1)(C) OF THE INCOME-TAX ACT 1961 [THE ACT]. 2 THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/ S 133A OF THE ACT WAS CONDUCTED ON 17-10-2001. DEFICIT IN STOCK A MOUNTING TO RS.2 86 486/- WAS FOUND. THE ASSESSMENT WAS COMPLET ED ON 30-12- 2004 WHEREIN THE FOLLOWING ADDITIONS WERE MADE: (1) LUMP SUM ADDITION TO BOOK RESULTS RS.1 50 000/- (2) UNEXPLAINED INVESTMENT U/S 69 RS.6 72 697/- (3) UNEXPLAINED CASH CREDIT U/S 68 RS. 75 000/- IN APPEAL THE CIT(A)-IV BARODA VIDE ORDER DATED 2 9-08-2005 GAVE FOLLOWING RELIEF: (1) RS.1 00 000/- FROM LUMP SUM ADDITION (2) 20% I.E. RS.1 34 340/- FROM UNEXPLAINED INVESTM ENT IN STOCK U/S 69. 2 2 (3) UNEXPLAINED CASH CREDITS U/S 68 WAS WHOLLY CONF IRMED. 3 ON FURTHER APPEAL THE ITAT AHMEDABAD BENCH-B VI DE ORDER DATED 25-05-2006 IN ITA NO.220/AHD/2005 CONFI RMED THE LUMP SUM ADDITION OF RS.50 000/-. THEY HOWEVER GAVE 50% RELIEF ON ACCOUNT OF INVESTMENT U/S 69 OF THE ACT. ADDITION ON ACCOUN T OF UNEXPLAINED CASH CREDIT OF RS.75 000/- WAS REDUCED TO RS.25 000 /- BY GIVING TELESCOPIC RELIEF ON ACCOUNT OF LUMP SUM ADDITION. 4 ON THE BASIS OF THE ABOVE FACTS THE LEARNED ASS ESSING OFFICER LEVIED PENALTY BASED ON THE CIT(A)S ORDER OF RS.2 36 739/- BEING 100% OF THE INCOME SOUGHT TO BE EVADED / OR F OR WHICH INACCURATE PARTICULARS HAVE BEEN FILED. 5 ON APPEAL THE LEARNED CIT(A) HELD AS UNDER: 4.1 THE FACTS OF THE CASE ARE THAT DURING PHYSIC AL VERIFICATION DEFICIT IN STOCK OF RS.2 86 486/- WAS FOUND. NO REASON FOR THIS DEFICIT WAS SUBMITTED BY THE APPELL ANT. HE SIMPLY DECLARED A GP AT THE RATE OF 15% AND DECLARED THE I NCOME OF RS.20 000/-. EVEN BEFORE THE ITAT THE APPELLANT CO ULD NOT GIVE ANY REASON OR SUFFICIENT CAUSE OR EVIDENCE FOR SUCH DEFICIT IN STOCK. 4.2 THE ASSESSEE HAD TAKEN LOAN FACILITY OF RS.3 7 7 588/- FROM ANAND MERCANTILE CO-OP. BANK LTD. AGAINST HYP OTHETICAL STOCK. THE ASSESSING OFFICER CALLED FOR INFORMATION FROM THE BANK REGARDING THE MONTHLY STOCK POSITION AND TALLIED TH E SAME AGAINST THE BOOKS OF ACCOUNTS. SINCE THE DIFFERENCE BETWEEN THE POSITION PROVIDED TO THE BANK IN TERMS OF QUANTITY RATE AND VALUE IN COMPARISON TO THE BOOKS OF ACCOUNTS WAS LARGE THE ASSESSING OFFICER WORKED OUT THE PEAK DIFFERENCE AND MADE AN ADDITION OF RS.6 72 697/-. THE CIT(A) IN HIS ORDER STATED THAT THIS IS THE GENERAL PRACTICE TO SHOW HIGHER VALUE OF STOCK AND GRANTED 20% RELIEF TO COVER INFLATED MARGIN. THE LEARNED TRIBUN AL STATED THAT THE INFLATED MARGIN OF 20% IS HIGHER AND IN THE INT EREST OF JUSTICE AND REASONABLENESS GRANTED RELIEF OF 50% AND ACCOR DINGLY CONFIRMED A SUM OF RS.3 36 249/-. 5 THE LAST GROUND RELATES TO ADDITION OF RS.75 000 /- MADE U/S 68 OF THE INCOME-TAX ACT. THE LD. TRIBUNAL WAS OF THE 3 3 VIEW THAT SINCE THE ASSESSING OFFICER HAS MADE ADDI TION ON ACCOUNT OF DEFICIT IN STOCK OF RS.50 000/- IN THE INTEREST OF JUSTICE AND WITHOUT GOING INTO THE MERITS OF THE DE POSITS TELESCOPIC BENEFIT WAS GIVEN TO THE APPELLANT AND A DDITION OF RS.25 000/- WAS ONLY CONFIRMED. 6 BEFORE ME THE AUTHORIZED REPRESENTATIVE SHRI N M SHAH CITED JUDGMENTS OF (I) CIT V/S S P BHATT 97 IT R 440 (GUJ) (II) CIT V/S KADRI MILLS COIMBATORE LTD. 96 ITR 378 (MAD) AND (III) NATIONAL TEXTILE V/S CIT 249 ITR 125 (GUJ) AN D STATED THAT PENALTY SHOULD NOT BE LEVIED. I DO NOT AGREE WITH T HE PLEA OF THE APPELLANT. THE HIGHEST FACT FINDING AUTHORITY I.E. HON. ITAT HAS AFTER GOING INTO THE DETAILS AND FACTS OF THE CASE CONFIRMED PART OF THE DISALLOWANCES MADE BY THE ASSESSING OFFICER. IT THEREFORE STANDS ESTABLISHED THAT THE APPELLANT HAS FILED INA CCURATE PARTICULARS OF INCOME. ON GOING THROUGH THE DETAILS FILED AT EVERY STAGE BE IT ASSESSMENT OR APPEAL THE APPELLANT HAS FAILED TO SUBSTANTIATE THE CLAIMS MADE IT. ITS BOOK RESULT HA VE BEEN FOUND WANTING IT HAS MADE INVESTMENTS OUTSIDE THE BOOKS OF ACCOUNTS AND HAS UNEXPLAINED CASH CREDITS. SINCE THE APPELLA NT HAS FAILED TO ADEQUATELY DISCHARGE THE ONUS PLACED UPON IT TO SUBSTANTIATE THE CLAIMS MADE BY IT WHICH HAVE BEEN CONFIRMED BY THE ITAT PENALTY U/S 271(1)(C) IS LEVIABLE. ACCORDINGLY PEN ALTY U/S 271(1)(C) LEVIED BY THE AO IS CONFIRMED TO THE EXTE NT OF INCOME SOUGHT TO BE EVADED AFTER GIVING THE EFFECT TO THE HON. ITATS ORDER. 6. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE SUBMITTED THAT IN THE QUANTUM APPEAL THE TRIBUNAL HAS CONFIRMED ADDITION OF RS. 50 000/- ON ACCOUNT OF DEFICIT IN S TOCK FOUND DURING THE COURSE OF SURVEY ON AN ESTIMATE BASIS AND THEREFORE THE ASSESSEE IS NOT EXIGIBLE TO PENALTY ON THIS ADDITION. HE FURTHER S UBMITTED THAT THE ADDITION OF RS.25 000/- SUSTAINED ON ACCOUNT OF CAS H CREDIT BY THE TRIBUNAL IN QUANTUM APPEAL NO PENALTY CAN BE LEVIE D BECAUSE THE CASH CREDIT WAS RECEIVED BY THE ASSESSEE BY ACCOUNT PAY CHEQUE AND THE CREDITOR IN THE STATEMENT RECORDED UNDER SECTION 13 1 OF THE ACT HAS CONFIRMED THE FACT OF ADVANCING OF MONEY TO THE ASS ESSEE. AS REGARDS THE ADDITION OF RS.3 36 249/- SUSTAINED BY THE TRIB UNAL IN QUANTUM APPEAL ON ACCOUNT OF DIFFERENCE IN STOCK AS PER THE STOCK STATEMENT SUBMITTED TO THE BANK AND THE STOCK AS PER THE BOOK S OF ACCOUNTS OF THE ASSESSEE IT WAS SUBMITTED THAT NO PENALTY CAN BE L EVIED ON THIS ADDITION 4 4 ALSO BECAUSE IT WAS A COMMON PRACTICE TO SUBMIT STO CK STATEMENT TO THE BANK SHOWING HIGHER STOCK TO AVAIL HIGHER CREDIT FA CILITY AGAINST THE HYPOTHECATION OF STOCK. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE PENALTY OF RS.2 36 739/- WAS LEVIED U NDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF ADDITION OF THRE E ITEMS WHICH WERE SUSTAINED BY THE TRIBUNAL IN QUANTUM APPEAL. THE T HREE ITEMS WERE FIRSTLY RS.50 000/- ON ACCOUNT OF DEFICIT OF STOCK FOUND DURING THE COURSE OF SURVEY SECONDLY RS.3 36 249/- ON ACCOUNT OF DIFFERENCE IN STOCK STATEMENT SUBMITTED TO BANK AND LASTLY RS.25 000/- ON ACCOUNT OF CASH CREDIT. WE FIND THAT THE ASSESSEE DISCLOSED I N HIS RETURN OF INCOME RS.20 000/- AS INCOME DERIVED ON SHORTAGE OF STOCK FOUND DURING THE COURSE OF THE SURVEY. HOWEVER THE INCOME WAS ESTI MATED BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AT RS.50 000/- WHICH WAS CONFIRMED BY THE TRIBUNAL. THUS IT IS OBSERVED TH AT THIS ADDITION WAS MADE MERELY ON THE BASIS OF AN ESTIMATE AND NO MATE RIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ASSESSEE ACT UALLY EARNED MORE THEN RS.20 000/- ON SALE OF STOCK OF RS.2 86 486/-. IN RESPECT OF ADDITION OF RS.3 36 249/- SUSTAINED WITH REGARD TO STOCK STATEMENT SUBMITTED TO THE BANK WE FIND THAT THIS IS NOT A C ASE WHERE THE STOCK WAS KEPT UNDER THE LOCK AND KEY BY THE BANK OR BANK OFFICIAL OR ANY OTHER INDEPENDENT THIRD PERSON FOUND THAT THE STOCK STATEMENT SUBMITTED TO THE BANK WAS SACROSANCT. ON THE OTHER HAND WE FIND THAT THE REVENUE AUTHORITIES THEMSELVES AS WELL AS THE TRIBU NAL ALSO OBSERVED THAT IT WAS A COMMON PRACTICE TO SUBMIT MOTIVATED D OCUMENTS TO THE BANK WITH A DESIRE TO AVAIL LARGER CREDIT FACILITIE S AND ON THIS COUNT ONLY AN ESTIMATED ADDITION WAS SUSTAINED TO THE EXTENT O F 50% OF THE PEAK DIFFERENCE OF STOCK. IN VIEW OF THE DECISION OF HO N'BLE MADRAS HIGH 5 5 COURT REPORTED IN THE CASE OF COMMISSIONER OF INCO ME TAX VS. N.SWAMI 241 ITR 363 (MAD) THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELAXO FOOTWARE REPORTED IN 259 ITR 744 (RAJ) AND THE DECISION OF H ON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TA X VS. ACROW INDIA LTD. REPORTED IN 298 ITR 447 (BOM) IN OUR CO NSIDERED VIEW PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED IN RESPECT OF SUCH ADDITION. 9. FURTHER IN RESPECT OF CASH CREDIT OF RS.75 000 /- WE FIND THAT THE LOAN WAS TAKEN BY ACCOUNT PAY CHEQUE AND T HE CREDITOR ALSO CONFIRMED THE ADVANCING OF THE LOAN TO THE ASSESSEE . THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE BY DISBELIEVING THE SOURCE OF THE CREDITOR. NO MATERIAL WAS BROUGHT ON RECORD TO SHO W THAT THE CASH DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR CAME FROM THE ASSESSEE. IN THE ABOVE CIRCUMSTANCES IN OUR CONSIDERED VIEW PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT LEVIABLE WITH R EFERENCE TO THE ABOVE ADDITIONS. CONSIDERING THE ABOVE FACTS AND CIRCUM STANCES OF THE CASE IN OUR CONSIDERED VIEW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE LE VY OF PENALTY OF RS.2 36 739/- UNDER SECTION 271(1)(C) OF THE ACT. WE THEREFORE DELETE THE LEVY OF PENALTY OF RS.2 36 739/- AND ALLOW THE APPEAL OF THE ASSESSEE. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 22-01-2010 SD/- SD/- (T K SHARMA) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 22-01-2010 COPY OF THE ORDER FORWARDED TO : 1. M/S KACHINS OPP. BANK OF BARODA STATION ROAD ANAND 6 6 2. THE ITO WARD-1 ANAND 3. THE CIT CONCERNED 4. THE CIT(A)-IV BARODA 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR ITAT AHMEDABAD