Shah Traders, v. ACIT, Dhule,

ITA 365/PUN/2009 | 2005-2006
Pronouncement Date: 09-09-2010 | Result: Allowed

Appeal Details

RSA Number 36524514 RSA 2009
Assessee PAN AAFFN6098N
Bench Pune
Appeal Number ITA 365/PUN/2009
Duration Of Justice 1 year(s) 5 month(s) 15 day(s)
Appellant Shah Traders,
Respondent ACIT, Dhule,
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 09-09-2010
Assessment Year 2005-2006
Appeal Filed On 24-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 364/PN/2009 (ASSTT. YEAR : 2005-06) M/S.DIPTI TRADERS NANDURBAR (1) C/O. D.P. LUNAWAT ADVOCATE NAHAR SHOPPING COMPLEX SANTOSHI MATA CHOWK SAKRI ROAD DHULE 424001 PAN: AAFFN 6098N . APPELLANT V. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 3(1) AAYKAR BHAWAN SAKRI ROAD DHULE - 424001 . RESPONDENT ITA NO. 365/PN/2009 (ASSTT. YEAR : 2005-06) M/S. SHAH TRADERS C/O. D.P. LUNAWAT ADVOCATE NAHAR SHOPPING COMPLEX SANTOSHI MATA CHOWK SAKRI ROAD DHULE 424001 PAN: AANFS 5885N . APPELLANT V. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 3(1) AAYKAR BHAWAN SAKRI ROAD DHULE - 424001 . RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY :SHRI ABHAY DAMLE ORDER PER D. KARUNAKARA RAO AM THESE APPEALS BY DIFFERENT ASSESSEES ARE FILED AGAINS T THE SEPARATE ORDER OF THE CIT(A)- I NASHIK DATED 30.9.2009 & 30/01/2009 BOTH FOR THE A.Y. 2005-06. SINCE IDENTICAL GROUNDS ARE INVOLVED BOTH THESE APPE ALS ARE CONSOLIDATED HEARD ITA NO 364 & 365/PN/2009 DIPTI TRADERS & SHAH TRADERS A.Y.2005-06 PAGE OF 5 2 TOGETHER AND DECIDED BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE GROUNDS RAISED BY BOTH THE ASSESSES ARE COMMON AND THEY READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A)-I NASHIK IS NOT JUSTIFIED IN RETAINING THE PENALTY IN RESPECT OF RS.80000/-. THE SAME MAY BE CANCELLED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A)-I NASHIK IS NOT JUSTIFIED IN RETAINING THE PENALTY IN RESPECT OF THE AMOUNT OF RS.80000/- WHEN THE AMOUNT WAS OFFERED FOR TAXATION TO BUY PEACE. THE PENALTY MAY BE CANCELLED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A)-I NASHIK IS NOT JUSTIFIED IN RELYING ON THE DECISION IN THE CASE OF UOI VS. DHARMENDRA TEXTILES PROCESSORS (2008) 306 ITR 277 (SC ) WHEN THE DECISION IN THE CASES OF HINDUSTAN STEEL LIMITED VS. STATE OF ORISSA (19 72) 83 ITR 27(SC) D.M. MANASWI VS. CIT(1972) 86 ITR 557 (SC) AND ANANTHARAM VEERSINGHAIAH & OTHERS VS. CIT (1980) 123 457 (SC) STILL HOLDS GOOD ON THE POINT. T HE PENALTY MAY BE CANCELLED. 2. WE FIRST TAKE UP THE APPEAL ITA NO. 364/PN/2009 A.Y . 2005-06 (M/S DIPTI TRADERS). BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF WHOLESALE TRADING IN SOYA BEEN REFINED OIL AND COMMISSION AGENT. ASSESSEE FILED THE RETURN OF INCOM E DECLARING TOTAL LOSS OF RS.7 50 942/-ON 21/09/2005 WHICH WAS PROCESSED U/S. 143(1) OF THE I.T. ACT. SUBSEQUENTLY THE CASE WAS PICKED UP FOR SCRUTINY AND NOTICE WAS ISSUED U/S. 143(2) OF THE I.T. ACT 1961. DURING THE COURSE OF S CRUTINY PROCEEDINGS VARIOUS BOOKS OF ACCOUNTS SUCH AS CASH BOOK LEDGER BANK BO OK SALES REGISTER BILL BOOKS ETC WERE PRODUCED FOR VERIFICATION BEFORE THE A.O WHICH WERE VERIFIED ON TEST CHECK BASIS. A.O. ON VERIFICATION OF THE BALAN CE-SHEET WITH CASH BOOK NOTICED THAT ASSESSEE HAS RECEIVED FOLLOWING UNSECU RED LOANS/DEPOSITS OF RS. 20 000/- EACH IN CASH FROM THE FOLLOWING DEPOSITORS : SR.NO. NAME OF DEPOSITOR AMOUNT RS. MODE OF RECEIPT 1 RAJENDRA GANPATI PATIL 20000 CASH 2 SURESH BHUTA KOLDA 20000 CASH 3 KAILASH SHARAD PATEL KOLDA 20000 CASH 4 MANOJ HARISCHANDRA PATEL 20000 CASH TOTAL 80000 3. THE A.O. THEREFORE ASKED THE ASSESSEE TO PROVE THE SAID CASH CREDITS. THE ASSESSEE COULD NOT OBTAIN CONFIRMATIONS FROM THE SAID CREDITORS AND FINALLY OFFERED THE AMOUNT OF RS. 80 000/- TO TAX IN ORDER TO PURCHAS E PEACE OF MIND AND SUBJECT TO CONDITION THAT NO PENALTY U/S. 271(1)(C ) WOULD BE INITIATED. A.O HOWEVER DID NOT ACCEPT THE SAID CONDITION. AO NOT ONLY MADE THE ADD ITION U/S. 68 OF THE ACT OF RS.80 000/- BUT ALSO INITIATED AND LEVIED PENALT Y U/S. 271(1)(C ) AT 100% OF THE TAX SOUGHT TO BE EVADED IE RS.41 347/- FOR FURNISHI NG OF INACCURATE PARTICULARS OF ITA NO 364 & 365/PN/2009 DIPTI TRADERS & SHAH TRADERS A.Y.2005-06 PAGE OF 5 3 INCOME AND CONCEALMENT THEREOF. AGGRIEVED ASSESSEE P REFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A) IT WAS CONTENDED BY THE ASSE SSEE THAT PENALTY U/S. 271(1)(C) IS NOT LEVIABLE ON THE SAID ADDITION OF RS.80 000/- ON THE FACTS OF THE CASE. IN SUPPORT ASSESSEE SUBMITTED VARIOUS DECISIONS INCLUDI NG THE DECISIONS CONTENDING THAT MENS REA IS REQUIRED TO BE PROVED FOR LEVYING PENALTY U/S.271(1 )(C ). CIT(A) HOWEVER UPHELD THE ADDITION BY OBSERVING IN PARA 3.1 OF HIS ORDER AS UNDER : 3.1. I HAVE CAREFULLY CONSIDERED THE PENALTY ORDE R OF THE A.O AND THE SUBMISSIONS OF THE APPELLANT IN THIS REGARD. THE C ONTENTION OF THE APPELLANT IS NOT ACCEPTABLE AS THE A.O HAS NOT ACCEPTED THE COND ITIONAL OFFER OF THE APPELLANT. THE APPELLANT IS DUTY-BOUND TO PROVE TH E CREDIT ENTRIES APPEARING IN ITS BOOKS OF ACCOUNTS. THE APPELLANT HAS FAILED TO PROVE THE SAID CREDITS AMOUNTING TO RS.80 000/- AND COULD NOT EVEN FILE CONFIRMATION LETTERS FROM THE SAID FOUR CREDITORS. THE CASE LAWS RELIED ON BY THE APPELLANT ARE ON DISTINGUISHABLE FACTS. THE CONTENTION OF THE APPEL LANT THAT MENS REA HAS TO BE PROVED BEFORE LEVYING PENALTY U/S.271(1)(C ) AN D CASE LAWS RELIED ON BY THE APPELLANT ON THIS ISSUE ALSO CANNOT BE ACCEPTED AS THE ISSUE IS RECENTLY DECIDED BY THE HONBLE SUPREME COURT IN FAVOUR OF T HE REVENUE IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS ( 2008) 306 ITR 277. IN VIEW OF THE ABOVE DISCUSSION THE A.O IS JUSTIFIED IN LEVYING PENALTY U/S.271(1)(C ) ON THE ADDITION OF RS.80 000/- 4. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL DEMONS TRATED THAT THE ADDITION WAS RESULTED FOR NON FURNISHING OF CONFIRMATION LETTERS AND THE NON-AVAILABILITY OF THE RELEVANT UPDATED ADDRESS OF THE LOAN CREDITORS. IN THE GIVEN CONSTRAINS OF THE TIME IT IS NOT THE CASE OF THE REVENUE THAT THEY HAVE SUCCE SSFULLY CONCLUSIVELY DEMONSTRATED THE NON-EXISTENCE OF THE CREDITORS AND TH E BOGUS NATURE OF THE CASH CREDITORS. ON THE OTHER HAND LD DR RELIED ON THE ORDERS O F THE A.O AND CIT(A). 5. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF T HE REVENUE. FROM THE FACTUAL MATRIX DESCRIBED ABOVE THE ASSESSEE DECLARED THE RELEVANT ENTRIES IN THE BOOKS OF ACCOUNTS ABOUT THE IMPUGNED CREDITS AND THE ASSESSEE FAIL TO PLACE THE CONFIRMATION LETTERS. CONSIDERING THE LIMITATION OF TI ME SET BY THE ASSESSING AUTHORITY AND THE HASSLES ASSOCIATED WITH THE PROCESS OF OBTAI NING THE CONFIRMATION LETTERS FROM THE SAID CREDITORS AND OTHER REASONS SPECIFIC TO TH IS CASE THE ASSESSEE OFFERED THE SAID UNDISCLOSED INCOME CONDITIONALLY. THIS MAY BE A GOOD CASE FOR MAKING ADDITION IN QUANTUM PROCEEDINGS. SO FAR AS THE CONCEA LMENT PROCEEDINGS ARE CONCERNED THE AO HAS TO PROCURE AND ESTABLISH THAT TH E SAID PERSONS ARE NON EXISTENT AND AMOUNTS IN QUESTION BELONGS TO THE ASS ESSEE AND IT WAS ROUTED THROUGH THOSE BENAMI OR BOGUS OR NON EXISTENT NAMES. FAILURE T O FILE CONFIRMATION IS NOT A ITA NO 364 & 365/PN/2009 DIPTI TRADERS & SHAH TRADERS A.Y.2005-06 PAGE OF 5 4 CONCLUSIVE EVIDENCE FOR ARRIVING AT THE INFERENCE THAT THE CREDITORS OR CREDIT TRANSACTIONS ARE BOGUS ON ONE SIDE AND THE ASSESSEES OWN MONEY IS ROUTED THROUGH AN ARTIFICIAL MECHANISM IE UNEXPLAINED CASH CREDIT ROU TE. CONSIDERING THE SAME WE ARE OF THE OPINION THAT IT IS NOT FIT CASE FOR LEVY O F PENALTY. ACCORDINGLY RELEVANT GROUNDS ARE ALLOWED . 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO. 365/PN/2009 A.Y. 2005-06 (M/S.SHAH TRADERS ) 7. FACTS OF THE CASE IN THIS APPEAL ARE SIMILAR TO TH E FACTS OF THE CASE IN ITA NO. 364/PN/2009 (DIPTI TRADERS) ABOVE. ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL LOSS OF RS.19 50 151/- ON 21/09/2005 WHICH WA S PROCESSED US. 143(1). SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE WAS ISSUED U/S.143(2) AS IN THIS CASE ALSO THE A.O. HAS NOTICED THAT AS SESSEE HAS RECEIVED UNSECURED LOANS/DEPOSITS IN CASH FROM THE FOLLOWING DEPOSITORS : SR.NO. NAME OF DEPOSITOR AMOUNT RS MODE 1 SHRI SHARAD SHANKAR PATEL 20000 CASH 2 SHRI INDAS BABHUTA PATEL 20000 CASH 3 SHRI VILAS VITTHAL PATEL 20000 CASH 4 SHRI MAGAN ZAGDU PATEL 20000 CASH TOTAL 80000 A.O THEREFORE ASKED THE ASSESSEE TO PROVE THE SAID C ASH CREDITS. ASSESSEE COULD NOT OBTAIN CONFIRMATIONS FROM THE SAID CREDITORS AND OF FERED THE AMOUNT OF RS.80 000/- TO TAX IN ORDER TO PURCHASE PEACE OF MIND AND SUBJECT TO CONDITION THAT NO PENALTY U/S. 271(1)(C ) WILL BE INITIATED. A.O HOWEVER DID NOT ACCEPT THE CONDITIONAL OFFER AND HAS MADE THE ADDITION U/S. 68 OF THE ACT OF RS.80 000/- AND INITIATED AND LEVIED PENALTY AT 100% OF TAX SOUGH T TO BE EVADED AT RS. 36 400/- U/S. 271(1)(C ) FOR FURNISHING OF INACCURATE PARTICULA RS OF INCOME AND CONCEALMENT THEREOF. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT( A). BEFORE CIT(A) IT WAS CONTENDED BY THE ASSESSEE THAT PENALTY U/S. 271(1)( C ) IS NOT LEVIABLE ON THE SAID ADDITION OF RS.80 000/- ON THE FACTS OF THE CASE. I N SUPPORT ASSESSEE HAS SUBMITTED VARIOUS DECISIONS INCLUDING THE DECISIONS CONTENDING THAT MENS REA IS REQUIRED TO BE PROVED FOR LEVYING PENALTY U/S.271(1)(C ). VIDE PARA 3.1 OF HIS ORDER CIT(A) UPHELD ITA NO 364 & 365/PN/2009 DIPTI TRADERS & SHAH TRADERS A.Y.2005-06 PAGE OF 5 5 THE LEVY OF THE PENALTY. AGGRIEVED WITH THE ORDER OF T HE CIT(A) THE ASSESSEE FILED THIS APPEAL BEFORE US. THE ARGUMENTS OF THE PARTIES ARE IDENTICAL TO THOSE MENTIONED IN PARA 4 ABOVE. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. FACTUAL MATRIX OF THIS APPEAL IS COMPARABLE TO THAT OF THE ONE DECI DED VIDE THE ITA NO. 364/PN/2009 FOR ASSTT YEAR 2005-06 MENTIONED IN THE P ARAGRAPHS ABOVE. THE REASONING AND THE DECISION GIVEN BY US IN THAT APPEA L VIDE PARA 5 ABOVE IS EQUALLY APPLICABLE TO THIS APPEAL TOO. ACCORDINGLY THE GROU NDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 9TH DAY OF SEPTE MBER 2010. SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER PUNE DATED THE 9TH SEPTEMBER 2010 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANTS 2. THE RESPONDENTS 3. THE CIT- I NASHIK 4. THE CIT(A)-II NASHIK 4. THE D.R. A BENCH PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE