Smt. Minaben Shaileshbhai Shah, Surat v. The Income tax Officer,Ward-8(4),, Surat

ITA 3843/AHD/2007 | 2001-2002
Pronouncement Date: 27-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 384320514 RSA 2007
Assessee PAN ACVPS5378Q
Bench Ahmedabad
Appeal Number ITA 3843/AHD/2007
Duration Of Justice 2 year(s) 3 month(s) 16 day(s)
Appellant Smt. Minaben Shaileshbhai Shah, Surat
Respondent The Income tax Officer,Ward-8(4),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 27-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 27-01-2010
Date Of Final Hearing 21-01-2010
Next Hearing Date 21-01-2010
Assessment Year 2001-2002
Appeal Filed On 11-10-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD BBENCH BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.3843/AHD/2007 [ASSTT.YEAR:2001-02] DRAFTED:27.01.10 SMT. MINABEN SHAILESHBHAI SHAH VS. INCOME TAX OFFICER PROP. OF MINA GEMS 402 SHANTAM WARD- 8(4) SURAT APARTMENT BABU NIWAS-NI-GALI TIMALIAWAD NANPURA SURAT PAN NO.ACVPS5378Q ITA NO.1905/AHD/2009 [ASSTT. YEAR:2001-02] SMT. MINABEN SHAILESHBHAI SHAH VS. INCOME TAX OFFICER PROP. OF MINA GEMS 402 SHANTAM WARD- 8(4) SURAT APARTMENT BABU NIWAS-NI-GALI TIMALIAWAD NANPURA SURAT PAN NO.ACVPS5378Q REVENUE BY: SMT. NEETA SHAH SR. DR ASSESSEE BY: SHRI R.N. VEP ARI AR DATE OF ORDER RESERVED: 21/01/10 O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE TWO APPEALS BY ASSESSEE ARE ARISING OUT OF D IFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS)-V SURAT IN AP PEAL NOS. CAS-V/503& 37/06- 07/2008-09 BOTH DATED 31-08-2007 AND 30-03-2009. TH E ASSESSMENT WAS FRAMED BY THE INCOME-TAX OFFICER WARD-8(4) SURAT U/S. 143(3) OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATE 26-12-2006 FOR THE ASSESSMENT YEAR 2001-02. THE PENALTY UNDER DISPUTE WAS LEVIED BY THE ITO WARD- 8(4) SURAT U/S.271(1) OF THE ACT VIDE HIS ORDER DA TED 17-04-2008. ITA NO.3843/AHD/2007 & 1905/AHD/2009 A.Y. 2001-02 SMT. MINABEN SHAILESHBHAI SHAH V . ITO WD-8(4) SURAT PAGE 2 FIRST WE WILL DEAL WITH ASSESSEES APPEAL IN ITA NO .3843/AHD/2007. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE IS AS REGARDS TO RE-OPENING OF ASSESSMENT. FOR THIS THE ASSESSEE HAS RAISED THE F OLLOWING GROUND NO.1 :- (I) REOPENING OF THE ASSESSMENT:- (1) THE ASSESSMENT IS REQUIRED TO BE CANCELLED BECA USE THE REQUIRED PROCEDURE FOR REOPENING INCLUDING GROUNDS FOR REOPE NING WAS NOT FURNISHED. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE HAS N OT PRESSED THIS ISSUE AND ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. 4. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF CASH CREDITS. FOR THIS THE ASSESSEE HAS RAISED THE FOL LOWING GROUND NO.(II) :- (II) CASH CREDITS:- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING THE ADDITIONS IN FOLLOWING CASES IN RESPECT OF AMOU NTS BORROWED FROM THEM. (I) JIGAQR DIAMONDS RS.1 75 000/- (II) M/S. FANCY GEMS RS.1 50 000/- (III) M/S. VEER GEMS RS.1 00 000/- (2) THE APPELLANT SUBMITS THAT IN THE ABOVE CASES C ONFIRMATIONS HAVING BEEN FU9RNISHED AND WHATEVER POSSIBLE REQUIREMENTS WERE SUBMITTED THE ADDITION MAY BE DELETED. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED IN RESPECT OF ABOVE THREE CASH CREDITORS THAT THESE WE RE NOT PRODUCED FOR EXAMINATION AND ACCORDINGLY THE ABOVE ADDITION WAS MADE ON ACC OUNT OF UN-EXPLAIN CASH CREDITS U/S.68 OF THE ACT. AGGRIEVED THE ASSESSEE PREFERRE D APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED AS THE ASSESSEE COULD NOT PRO DUCE THOSE PARTIES BEFORE THE ASSESSING OFFICER AND EVEN THE NOTICES ISSUED TO TH ESE PARTIES RETURNED UN-SERVED. ACCORDING TO HIM VERACITY OF THE PARTIES COULD NOT BE VERIFIED VIS--VIS IDENTITY CREDITWORTHINESS AND GENUINENESS. AGGRIEVED ASSESS EE CAME IN SECOND APPEAL BEFORE US. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SHRI R.N. VEPARI STATED THE FACTS REGARDING THE CASH CREDIT OF JIGAR DIAMONDS. HE REF ERRED TO ASSESSEES PAPER BOOK ITA NO.3843/AHD/2007 & 1905/AHD/2009 A.Y. 2001-02 SMT. MINABEN SHAILESHBHAI SHAH V . ITO WD-8(4) SURAT PAGE 3 AT PAGES-34-37 AND DEMONSTRATED THAT THIS AMOUNT OF RS.1.75 LAKHS IS REFLECTED IN THE BALANCE-SHEET AND AUDITED ACCOUNT OF JIGAR DIAM ONDS AND HE FURTHER STATED THAT JIGAR DIAMONDS IS ASSED TO TAX AND HAS ALREADY FILE D THE COMPLETE INCOME-TAX ASSESSMENT DETAILS INCLUDING PAN NO. AS REGARDS TO M/S. FANCY GEMS HE STATED THE PARTICULARS THAT THE CREDITOR IS ASSESSED TO TAX AN D PAN IS PROVIDED TO THE LOWER AUTHORITIES AND ALSO STATED THAT THE STATEMENT OF A CCOUNT IN THE BOOKS OF M/S. FANCY GEMS ALSO SUBMITTED BUT HE FAIRLY CONCEDED THE POSI TION THAT NO OTHER DETAILS WERE PROVIDED BEFORE THE LOWER AUTHORITIES. AS REGARDS T O M/S. VEER GEMS HE STATED THAT HE HAS FILED ONLY INCOME-TAX PARTICULARS I.E. PAN O F THE CREDITOR I.E. M./S. VEER GEMS. APART FROM THIS LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT IN ALL THE THREE CASES PAYMENTS ARE RECEIVED BY ACCOUNT PAYEE CHEQUES AND EVEN THIS AMOUNT WERE RETURNED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES. IN VIEW OF THIS ARGUMENT HE STATED THAT HE HAS DISCHARGED HIS ONUS BY FILING AL L DETAILS AND THE ADDITION CONFIRMED BY CIT(A) BE DELETED. ON THE OTHER HAND LD SR. DR SMT. NEETA SHAH STATED THAT THE ASSESSING OFFICER SPECIFICALLY REQUIRED THAT TH OSE PERSONS BE PRODUCED BEFORE HIM FOR EXAMINATION AND FOR PROVING THE CREDITWORTH INESS OF THESE CREDITORS. IN RESPECT OF M/S. VEER GEMS SHE STATED THAT NOTHING WAS PRODUCED BEFORE THE ASSESSING OFFICER EXCEPT CONFIRMATION AND IN REGARD TO M/S.JIGAR DIAMONDS SHE STATED THAT NO DOUBT THE AMOUNT IS STANDING IN BALA NCE-SHEET BUT THE SOURCE OF THE TRANSACTION HAS NOT BEEN EXPLAINED BEFORE AO BY PRO DUCING THE CASH CREDITOR. IN VIEW OF THE ARGUMENTS SHE URGE THE BENCH TO CONFIR M THE ADDITION. 7. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE CASE RECORDS WE FIND THAT IN RESPECT OF M/S. JIGAR DIAMONDS THE ASS ESSEE PRODUCED THE BALANCE- SHEET WHERE THE AMOUNT OF ADVANCE TO THE ASSESSEE I.E. RS.1.75 LAKHS WAS REFLECTED AND IT WAS THE CLAIM OF THE ASSESSEE WHICH IS FACTU AL PROVED THAT THE AMOUNT WAS RECEIVED BY ACCOUNT PAYEE CHEQUES AND ALSO RETURNED BACK BY ACCOUNT PAYEE CHEQUES. THE CREDITOR BEING ASSESSED TO TAX AND AMO UNT REFLECTED IN THE BALANCE- SHEET WE FAIRLY FEEL THAT THE ASSESSEE IS ABLE TO PROVE THE CREDITWORTHINESS IN VIEW OF THE ABOVE DOCUMENT. ACCORDINGLY WE DELETE THIS ADD ITION IN RESPECT OF CASH CREDIT OF M/S. JIGAR DIAMONDS. IN RESPECT OF M/S. FANCY GEMS AND M/S. VEER GEMS THE ASSESSEE HAS FILED ONLY CONFIRMATION AND WHEN ENQU IRED BY THE ASSESSING OFFICER ABOUT THESE TWO CREDITORS THE ASSESSEE COULD NOT P RODUCE AND EVEN IT IS NOT EXPLAINED WHY THE NOTICE SERVED AT THE ADDRESSEE RE TURNED BACK. WE FIND THAT EVEN ITA NO.3843/AHD/2007 & 1905/AHD/2009 A.Y. 2001-02 SMT. MINABEN SHAILESHBHAI SHAH V . ITO WD-8(4) SURAT PAGE 4 IN THESE CASES THE ASSESSEE COULD NOT PROVE THE ID ENTITY AND CREDITWORTHINESS OF THESE TWO CASH CREDITORS. ACCORDINGLY WE CONFIRM T HESE CASH CREDITS AND UPHELD THE ORDER OF CIT(A). ACCORDINGLY THIS ISSUE OF THE AS SESSEES APPEAL IS PARTLY ALLOWED AS INDICATED ABOVE. 8. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AS REGARDS TO DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) ON ACCOUNT OF EXPENSES OF RS.27 540/- OUT OF LABOUR CHARGES RS.7 560/- O UT OF TELEPHONE EXPENSES. 9. AFTER HEARING RIVAL CONTENTIONS ON THIS ISSUE W E FIND THAT THE ASSESSEE HAS INCURRED EXPENSES ON ACCOUNT OF TELEPHONE AT RS.45 244/- AND THE ASSESSING OFFICER HAS DISALLOWED 1/6 TH OF THE TELEPHONE EXPENSES BY TREATING THE SAME AS PERSONAL. THE ASSESSEE BEFORE US NOW ONLY REQUESTED TO MAKE T HE DISALLOWANCE AT REASONABLE IN RESPECT OF TELEPHONE EXPENSE AND ACCORDINGLY WE RESTRICT THE DISALLOWANCE AT 1/10 TH AND DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE DISALLOWANCE. AS REGARDS TO THE LABOUR EXPENSES DISALLOWED BY THE ASSESSING OFFICER THE ASSESSEE INCURRED LABOUR EXPENSE ON ACCOUNT OF AMOUNT PAID TO VARIOUS PARTIES AT RS.27 12 574/-. THE AO ON ACTUAL VERIFICATION OF BILLS & VOUCHERS FOUN D THE EXPENSES AS UN-VOUCHED TO THE EXTENT OF RS.27 560/- AND DISALLOWED. THE CIT(A ) ALSO CONFIRMED THE DISALLOWANCE. WE FIND THAT THE ASSESSEE EVEN NOW BE FORE US COULD NOT PRODUCE ANYTHING TO PROVE THAT THESE EXPENSES WERE MADE BY THE ASSESSEE. AS THE ASSESSEE FAILED TO PRODUCE ANYTHING WE CONFIRM THE DISALLOW ANCE. ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS PARTLY ALLOWED AS INDICATE D ABOVE. NOW COMING TO ASSESSEES APPEAL IN ITA NO.1905/AHD/ 2009. 10. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE I S AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY BY THE ASSESS ING OFFICER U/S/271(1)(C) OF THE ACT. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWI NG TWO GROUNDS :- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN CONFIRMING PENALTY U/S.271(1) OF THE ACT AMOUNTING TO RS.1 6 7 076/- (2) THE APPELLANT SUBMITS THAT HAVING NOTED THE DIR ECT JUDGEMENTS OF GUJARAT HIGH COURT BROUGHT TO HIS NOTICE THE LEARNED COMMIS SIONER OF INCOME-TAX (APPEALS) HAS NOT ONLY NOT FOLLOWED THEM BUT HAS NO T GIVEN ANY REASONS WHY HE HAS NOT FOLLOWED. ITA NO.3843/AHD/2007 & 1905/AHD/2009 A.Y. 2001-02 SMT. MINABEN SHAILESHBHAI SHAH V . ITO WD-8(4) SURAT PAGE 5 11. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE STA TED THAT THE PENALTY PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON BOTH THE REASONS I.E. FOR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME. HE DE MONSTRATED FROM THE ASSESSMENT ORDER AND ALSO STATED THAT THE PENALTY W AS LEVIED FOR CONCEALMENT OF INCOME AND ALSO FOR FURNISHING OF INACCURATE PARTIC ULARS OF INCOME. THE LD. COUNSEL STATED THAT THIS ISSUE SQUARELY COVERED BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NEW SORATHIA ENGINEERING CO. V. CIT (2006) 282 ITR 642 (GUJ). ON THE OTHER HAND LD. SR. DEPARTMENTAL REPRESENTATIVE SM T. NEETA SHAH RELIED ON THE ORDERS OF LOWER AUTHORITIES. 12. AFTER HEARING THE RIVAL CONTENTIONS AND GOING T HROUGH THE CASE RECORDS WE FIND THAT ASSESSING OFFICER HAS INITIATED THE PENAL TY ON BOTH THE REASONS THAT FURNISHING INACCURATE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR O F ASSESSEE AND AGAINST THE REVENUE BY THE JURISDICTIONAL HIGH COURT IN THE CAS E OF NEW SORATHIA ENGINEERING CO. (SUPRA) REFERRED BY THE LD. COUNSEL WHEREIN IT IS HELD AS UNDER:- IN THE FACTS OF THE PRESENT CASE THE SUBTLE DIFFER ENCE BETWEEN THE TWO STAGES WOULD NOT MATTER. IT IS NOBODYS CASE AND IT IS NOT POSSIBLE TO CONTEND THAT THE TRIBUNAL WAS NOT BOUND BY A DECISION OF THE JURISDI CTIONAL HIGH COURT ESPECIALLY WHEN ITS ATTENTION WAS INVITED TO THE SA ID DECISION. THEREFORE WHETHER THE TRIBUNAL HAS RECORDED ANY FINDING OR NO T BECOMES IMMATERIAL. IN THE FACTS AS ARE AVAILABLE ON THE RECORD IT IS APPA RENT THAT THE RATIO OF A DECISION OF THIS COURT IN THE CASE OF CIT V. MANU ENGINEERING WORKS [1980] 122 ITR 306 APPLIES ON ALL FOURS. IN THE CASE OF CIT V. MANU ENGINEERING WORKS [1980] 122 ITR 306 THIS IS WHAT IS LAID DOWN BY THIS COURT AT PAGE 310 OF THE REPOR TS: WE FIND FROM THE ORDER OF THE INSPECTING ASSISTANT COMMISSIONER IN THE PENALTY PROCEEDINGS THAT IS THE FINAL CONCLUS ION AS EXPRESSED IN PARA. 4 OF THE ORDER: I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID TH AT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR THAT I T HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. NOW THE LANGUAGE OF AND/OR MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORD ER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRIMINAL CASE BUT IT WAS INCUMBENT UPON THE INSPECTING ASSISTANT COMMISSIONER TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCO ME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF S UCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT F INDING WAS REACHED BY THE INSPECTING ASSISTANT COMMISSIONER AN D ON THAT GROUND ITA NO.3843/AHD/2007 & 1905/AHD/2009 A.Y. 2001-02 SMT. MINABEN SHAILESHBHAI SHAH V . ITO WD-8(4) SURAT PAGE 6 ALONE THE ORDER OF PENALTY PASSED BY THE INSPECTIN G ASSISTANT COMMISSIONER WAS LIABLE TO BE STRUCK DOWN. THE PENALTY ORDER AND THE ORDER OF THE COMMISSIONER (APPEALS) SHOW THAT NO CLEAR-CUT FINDING HAS BEEN REACHED. THE TRIBUNAL HA S FAILED TO APPRECIATE THIS LEGAL ISSUE. APPLYING THE RATIO TO THE FACTS OF THE CASE IT IS APPARENT THAT THE ORDER OF PENALTY CANNOT BE SUSTAINED AND THE TRIBUN AL COULD NOT HAVE SUSTAINED THE SAME. THE TRIBUNAL HAVING FAILED TO T AKE INTO CONSIDERATION AND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH C OURT IT WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CO NTROVERSY INVOLVED AND HENCE THE IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE UPHELD. AS THE ISSUE IS SQUARELY COVERED BY THE JURISDICTIO NAL HIGH COURT IN FAVOUR OF THE ASSESSEE WE DELETE THE PENALTY. 14. IN THE RESULT ASSESSEES APPEAL IN ITA NO.3843/AHD /2007 IS ALLOWED PARTLY AND THAT OF ASSESSEES APPEAL ITA NO.1905/AH D/2009 IS ALLOWED. ORDER PRONOUNCED ON THIS DAY OF 27 TH JANUARY 2010 SD/- SD/- (DR.O.K.NARAYANAN) (MAHAVIR SINGH) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : 27/01/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ // DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD