The ITO, Ward-8(2),, Ahmedabad v. M/s Skyjet Aviation Pvt.Ltd.,, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 4170/AHD./2008 ASSESSMENT YEAR : 1983-1984 INCOME TAX OFFICER WARD-2 AHMEDABAD VS.- SKYJET AVIATION PVT. LTD. AHMEDABAD (PAN : AACCS 6404 K) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANAND MOHAN SR. D.R. RESPONDENT BY : SHRI J.P. SHAH O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 17.10.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XIV AHMEDABAD FOR THE ASSESSMENT YEAR 1983-84 CANCELLING THE PENALTY OF RS.4 00 000/- LEVIED BY T HE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT ON ACCOUNT OF DISALLOWANCE OF CASH CREDITS AS PEAK AND INTEREST ON LOAN. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY. IN THIS CASE A SEARCH WAS CONDUCTED ON 22.03.1985 AND SUBSEQUENTLY ASSESSMENT ORDER WAS PASSED ON 21.02.2006. AGAINST WHICH AN APPEAL WAS FILED BEFORE THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS). THEREAFTER APPEAL WAS FILED BEFORE THE ITAT BY THE DEPARTMENT AS WELL AS ASSESSEE. THE ITAT DIRECTED TO DRAW A CONSOLIDATED CASH CREDIT AMOUNT AND WORK OUT THE BALANCE ON EACH DAY OF THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS AND THE PEAK CREDIT SO WORKED OUT SHALL BE THE ADDITION SUSTAINED ON ACCOUNT OF CASH CREDIT AND ACCORDINGLY IT WAS WORKED OUT AT RS.5 32 575/-. THIS AMOUNT ALONGWITH THE AMOUNT OF INTEREST OF RS.10 15 5/- WAS DISALLOWED. SUBSEQUENTLY ON THIS ADDITION THE A.O. LEVIED THE PENALTY OF RS.4 00 00 0/- AS AGAINST PENALTY @ 100% OF TAX SOUGHT TO BE EVADED WORKED OUT TO RS.3 61 595/-. 3. ON APPEAL AGAINST THE ORDER LEVYING PENALTY OF RS.4 00 000/- BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE CO NTENDED THAT THE A.O. HAS NOT CONSIDERED THE ORDER OF FIRST LEARNED COMMISSIONER OF INCOME T AX(APPEALS) DATED 13.02.1987 AND SECOND 2 ITA NO. 4170/AHD/200 8 LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DATED 0 7.06.1991 BOTH OF WHOM GAVE FULL RELIEF IN RESPECT OF THE ADDITIONS MADE BY THE A.O. ON THE GROUND OF CASH CREDITS FOR WHICH THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT IS IM POSED. IT WAS FURTHER SUBMITTED THAT THE A.O. HAD NOT CONSIDERED THE FIRST ORDER OF TRIBUNAL IN I TA NO. 1185/AHD/1987 DATED 16.05.1994 READ WITH 20.05.1994 WHEREIN THE HON'BLE ACCOUNTAN T MEMBER HAD PLEASED TO HOLD THAT BOTH THE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX(APPEAL S) ARE IN ACCORDANCE WITH LAW AND CONFIRMED THEIR ORDER. THE A.O. HAS ALSO NOT CONSID ERED THE FACT THAT THE HON'BLE A.M. HAS DELETED FULL ADDITION MADE UNDER THE HEAD CASH CRE DITS WHEREAS THE LD. JUDICIAL MEMBER CONFIRMED THE ADDITION. IT WAS ALSO SUBMITTED THAT THE ITAT VIDE ITS ORDER DATED 20.05.1994 HELD THAT THERE EXISTS DIFFERENCE OF OPINION AND THEREF ORE THE MATTER SHOULD BE REFERRED TO THE HON'BLE PRESIDENT ITAT. BEFORE THE LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) RELIANCE WAS ALSO PLACED BY THE ASSESSEE ON THE FOLLOWING JU DGMENTS :- (I) NATIONAL TEXTILE [249 ITR 125 (GUJ.)] (II) DILIP N. SHROFF [291 ITR 519 (SC)] (III) T. ASHOK PAI VS.- CIT [210 CTR 259 (SC)] (IV) VINAYCHANDRA HARILAL [120 ITR 752 (GUJ.)] & (V) CIT VS.- HARSHAVARDHAN CHEMICALS & MINERALS LTD. [133 TAXMAN 320 (RAJ.)]. TO SUM UP IT WAS CONTENDED THAT PENALTY IS NOT LEV IABLE WHERE ISSUE IS DEBATABLE AND TWO OPINIONS ARE EXIST AND BURDEN WAS ON THE DEPARTMENT TO PROVE THAT EXPLANATION OFFERED BY THE ASSESSEE WAS FALSE. THE EXPLANATION OF THE ASSESSEE WAS BONAFIDE. THIS IS CONCLUSIVELY PROVED BY THE FACT THAT IN THE QUANTUM PROCEEDINGS THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE. FURTH ER IN APPELLATE PROCEEDINGS BEFORE THE ITAT ALSO HON'BLE ACCOUNTANT MEMBER ACCEPTED THE EXPLAN ATION OF THE ASSESSEE. AFTER CONSIDERING THE VARIOUS SUBMISSIONS IN THE IMPUGNED ORDER THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE PENALTY FOR THE DETAILED REASONS GIVEN IN PARA 2.3. WHICH READS AS UNDER :- 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE AS WE LL AS THE SUBMISSIONS AS ADVANCED BY THE A.R. OF THE APPELLAN T. IT IS SEEN THAT THE A.O. LEVIED THE PENALTY ON THE GROUND THAT ADDITION OF PEAK CREDIT WAS SUSTAINED. ON VERIFICATION OF DETAILS/ EVIDENCES FU RNISHED BY THE A.R. IT IS SEEN THAT INITIALLY THE CIT.(A) HAD HELD THE CAS H CREDITS IN RESPECT OF VARIOUS PARTIES AS GENUINE SO ALSO THE ACCOUNTANT M EMBER HAD HELD. THE ADDITION NOW SUSTAINED IS BECAUSE OF THE DIRECT ION OF HON'BLE ITAT 3 ITA NO. 4170/AHD/200 8 THAT ONLY PEAK CREDIT SHOULD BE ADDED. FURTHER THE C.I.T.(APPEALS) IN 1 ST AND 2 ND ORDER HAD FIELD THAT THE CREDITS WERE GENUINE AND THE ADDITION HAS BEEN MADE TO THE TOTAL INCOME BECAUSE OF DIFFERENCE OF OPINION BETWEEN JUDICIAL AUTHORITIES AND HENCE I A M IN AGREEMENT WITH THE ARGUMENT OF THE APPELLANT THAT BY REJECTION OF ASSESSEES CLAIM BY RELYING ON DIFFERENT INTERPRETATION IT COULD NOT B E SAID THAT PARTICULARS OF INCOME HAD BEEN CONCEALED . I FIND THAT THE APPE LLANT HAS FURNISHED FULL DETAILS AND HAS ALSO FURNISHED EXPLANATION REG ARDING THE CASH CREDITS. THE EXPLANATION FILED BY THE APPELLANT HAS BEEN REJECTED BY THE A.O. AND THE TRIBUNAL. THE DECISION OR DELHI HIGH C OURT IN CIT VS. EICHER GOODEARTH LTD. REPORTED IN 170 TAXMAN 27 (D EL.) WHEREIN IT WAS HELD THAT THERE IS NO JUSTIFICATION TO LEVY PEN ALTY WHEN THE AO HAD NOT FOUND PARTICULARS FURNISHED BY THE ASSESSEE TO BE FALSE AND HAD ALSO NOT UNEARTHED ANY MATERIAL FACTS OR PARTICULARS WHI CH ASSESSEE HAD NOT DISCLOSED IS SQUARELY APPLICABLE TO THE FACTS OF TH E CASE OF THE APPELLANT AS THE PARTICULARS FURNISHED BY THE APPELLANT HAVE NOT BEEN FOUND TO BE FALSE BY THE A.O. IT IS ALSO SEEN THAT THE ADDITION OF CASH CREDITS WAS MADE DUE TO INTERPRETATION MADE BY THE A.O. AND CON SIDERING THE OBSERVATIONS MADE BY THE CIT(APPEALS) AS WELL AS TH E HON'BLE ITAT THE ISSUE UNDER QUESTION IS HIGHLY DEBATABLE AND TH E ADDITION MADE ON A DEBATABLE ISSUE WOULD NOT HOWEVER AMOUNT TO CONCEAL MENT OF INCOME AND/OR FURNISHING INACCURATE PARTICULARS OF ITS INC OME AND THEREFORE THE PENALTY LEVIED IN THIS RESPECT CANNOT BE SUSTAI NED. IT IS FURTHER NOTICED THAT THE APPELLANT HAS FILED A RECTIFICATIO N APPLICATION BEFORE THE A.O. ON 19.1.2008 SAYING THAT WHILE MAKING ADDI TION OF PEAK CREDIT THE OPENING BALANCE IN PEAK WORKING OF RS.2 78 210/ - AS ON 1.4.1982 SHOULD HAVE BEEN REDUCED WHICH HAS NOT BEEN RECTIFI ED AS ON DATE. THE ADDITION IS FOUND TO HAVE BEEN MADE BY REJECTING T HE DETAILS / EVIDENCES FURNISHED BY THE APPELLANT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS BUT IT IS NOT A CASE OF DELIBERATE ATT EMPT ON THE PART OF THE APPELLANT TO CONCEAL ITS INCOME AND/OR FURNISH INAC CURATE PARTICULARS OF ITS INCOME. FURTHER AS PER THE CASE LAWS CITED BY THE A.R. CONFIRMATION OF ADDITION AT THE APPELLATE STAGE WOULD NOT ITSELF AMOUNT TO CONCEALMENT OF INCOME. CONSIDERING THE FACTS OF THE CASE AND SUBMISSIONS OF THE A.R. I AM OF THE OPINION THAT I T IS NOT A FIT CASE FOR LEVY OF PENALTY FOR CONCEALMENT AS THERE IS NO MALA FIDE INTENTION ON THE PART OF THE APPELLANT IN CLAIMING THE SAID CASH CRE DITS AS GENUINE AND DIRECT THE A.O. TO DELETE THE PENALTY LEVIED IN THI S CASE TO THE TUNE OF RS.4 00 000/-. 4. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING SHRI ANAND MOHAN SR. D. R. APPEARING ON BEHALF OF REVENUE POINTED OUT THAT FINALLY ADDITION IS CONFIRMED BY T HE TRIBUNAL. THE MINIMUM PENALTY WORKS OUT TO 4 ITA NO. 4170/AHD/200 8 RS. 3 61 595/- AS AGAINST THE A.O. HAS LEVIED THE P ENALTY OF RS.4 00 000/-. THEREFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIE D IN CANCELLING THE SAME. 6. ON THE OTHER HAND SHRI J.P. SHAH ADVOCATE APPE ARING ON BEHALF OF ASSESSEE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IT IS WELL SETTLED LAW THAT ON DEBATABLE ISSUE PENALTY UNDER SECTION 271(1 )(C) IS NOT LEVIABLE. IN THIS CASE THE EXPLANATION OF THE ASSESSEE WAS BONAFIDE WHICH IS EVIDENT FROM THE FACT THAT THIS WAS ACCEPTED BY THE FIRST APPELLATE AUTHORITY WHO DELETED THE E NTIRE ADDITION. NOT ONLY THIS ON FURTHER APPEAL BY THE DEPARTMENT THE HON'BLE ACCOUNTANT MEMBER AG REED WITH THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THERE WAS A DI FFERENCE OF OPINION AMONGST THE MEMBERS OF ITAT THEREFORE THE MATTER WAS REFERRED UNDER SECTION 255(4) OF THE INCOME TAX ACT TO THE HON'BLE PRESIDENT ITAT. IN THESE CIRCUM STANCES THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORREC T IN CANCELLING THE PENALTY OF RS.4 00 000/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT 1961. 7. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND PERUSED THE MATERIAL PLACED BEFORE US. TH E FACTS NARRATED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER ARE NOT DISPUTED BY THE LD. D.R. FROM THE PAPER BOOK FILED BEFORE US IT CAN BE SEEN THAT THE ENTIRE ADDITION MADE UNDER SECTION 68 WAS DELETED THE LEARNED COMMISSIONER OF INCOME TAX( APPEALS). ON FURTHER APPEAL BY THE DEPARTMENT THE HON'BLE ACCOUNTANT MEMBER AGREED WI TH THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). IN OUR OPINION THIS IS ENOUGH TO HOLD THAT THIS IS NOT A FIT CASE TO LEVY THE PENALTY UNDER SECTION 271(1)(C). I N THESE CIRCUMSTANCES WE ARE INCLINED TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 09.04.2010 . SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09 / 04 /2010 5 ITA NO. 4170/AHD/200 8 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.