The ITO, Ward-9(2),, Surat v. Shri Haribhai Devrajbhai Babariya, Surat

ITA 96/AHD/2011 | 2006-2007
Pronouncement Date: 21-12-2011 | Result: Dismissed

Appeal Details

RSA Number 9620514 RSA 2011
Assessee PAN AAFHB7781A
Bench Ahmedabad
Appeal Number ITA 96/AHD/2011
Duration Of Justice 11 month(s) 7 day(s)
Appellant The ITO, Ward-9(2),, Surat
Respondent Shri Haribhai Devrajbhai Babariya, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 21-12-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-12-2011
Assessment Year 2006-2007
Appeal Filed On 13-01-2011
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI D.K.TYAGI JM AND A. K. GARODIA AM. INCOME-TAX OFFICER WARD -9(2) SURAT. VS. SHRI HARIBHAI DEVRAJBHAI BABARIYA 27 KASTURBA NAGAR SOCIETY VARACHHA ROAD SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI JAMES KURAIR DR RESPONDENT BY:- NONE DATE OF HEARING :2/12/2011 DATE OF PRONOUNCEMENT : 21.12.11. O R D E R PER D. K. TYAGI JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 25.10.2010 WHEREIN THE FOLLOWING GROUN DS HAVE BEEN RAISED:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 8 36 957/- IMPOSED ON THE ASSESSEE U/S 271(1)(C) OF THE IT ACT ON THE ADDITION MADE U/S 68 WITHOUT APPRECIATING THE FACT THAT THE AO HAD BROUGHT ON RECORDS VARIOUS MATERIAL EVIDENCES T O PROVE THAT THE LOANS WERE NOT GENUINE. ITA NO.96/AHD/2011 ASST. YEAR :2006-07 ITA NO.96/AHD/2011 ASST. YEAR 2006-07 2 (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 8 36 957/- IMPOSED ON THE ASSESSEE U/S 271(1)(C) OF THE IT ACT ON THE ADDITION MADE U/S 68 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE DEPOSITORS DURING ASSESSMEN T PROCEEDINGS AS WELL AS DURING THE PENALTY PROCEEDIN GS. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. SO AFTE R HEARING THE LD. DR AND GOING THROUGH THE MATERIAL ON RECORD WE PROC EEDED TO DECIDE THE APPEAL. 3. THE EFFECTIVE GROUND IS REGARDING DELETION OF PE NALTY OF RS.8 64 100/- LEVIED U/S 271(1)(C) BY AO ON THE ADD ITION MADE U/S 68 OF THE ACT. THE FACTS OF THE CASE ARE THAT THE TOTAL I NCOME OF THE ASSESSEE WAS ASSED AT RS.27 08 800/- AGAINST THE RETURNED INCOME OF RS.1 49 500/- HENCE AN ADDITION OF RS.25 49 000/- WAS MADE ON ACC OUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT AND RS.50 295/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTY U/S 69 OF THE IT ACT. THE LD. CIT(A) CONFIRMED THE ABOVE ADDITIONS MADE BY THE AO. THE A O ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE WHY PENALTY SHOULD NOT BE IMPOSED U/S 271(1)(C). NO REPLY WAS FURNISHED BY THE ASSESSEE. AS NO RESPONSE WAS GIVEN BY THE ASSESSEE THE AO LEVIED A MINIMUM PENAL TY OF RS.8 64 100/- @ 100% OF TAX SOUGHT TO BE EVADED ON THE CONCEALED INCOME OF RS.25 92 300/-. ITA NO.96/AHD/2011 ASST. YEAR 2006-07 3 4. THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APP ELLATE AUTHORITY. THE SUBMISSIONS FILED BY THE LD. AR VIDE HIS LETTER DATED 21.10.2010 ARE REPRODUCED AS UNDER :- THE ONLY GROUND OF APPEAL INVOLVED IS THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AT RS.8 64 100/- ON THE ADDITIONS OF RS. 25 59 000/- MADE U/S 68 OF THE ACT IN THE ASSESSMENT ORDER U/S 143(3) OF TH E ACT DTD. 29.12.2008. THE ASSESSEE HAS ACCEPTED THE LOAN FROM FOLLOWING P ERSONS :- NAME & ADDRESS PAN AMOUNT SOURCE OF INCOME OF DEPOSITOR TO ADVANCE LOAN JAYANTIBHAI VIRJIBHAI BABARIA (HUF) 56 MAHESHWARI SOCIETY VARACHHA ROAD SURAT AAFHB7781A 2 50 000/- RS.1 86 281/- CASH ON HAND AS ON 31.03.05 AND INCOME OF RS.98 630/- DURING THE YEAR LILYBEN HARIBHAI BABARIA 27 KASTURBA NAGAR SOCIETY NR. BARODA PRESTIGE VARACHHA ROAD SURAT. AJSPB 5809A 3 25 000/- BUSINESS INCOME OF ASST. YEAR 2005-06 AND ASST. YEAR 2006-07 AS PER THE ENCLOSED RETURN OF INCOME. LILABEN VIRJIBHAI 56 MAHESHWARI SOCIETY VARACHHA ROAD SURAT. AJTPB2072P 3 50 000/- BUSINESS INCOME OF ASST. YEAR 2006-07 AND ASST. YEAR 2006-07 AS PER THE ENCLOSED RETURN OF INCOME. NARESHBHAI HARIBHAI (HUF) 27 KASTURBA NAGAR SOCIETY NR. BARODA PRESTIGE VARACHHA ROAD SURAT. AAFHB7780R 2 25 000/- BUSINESS INCOME OF ASST. YEAR 2006-07 AS PER THE ENCLOSED RETURN OF INCOME SMITH JAYANTIBHAI 56 MAHESHWARI SOCIETY VARACHHA ROAD SURAT AFYPB 2106K 49 000/- OUT OF BUSINESS INCOME OF MOTHER VIRJIBHAI DEVRAJBHAI (HUF) 56 MAHESHWARI SOCIETY VARACHHA ROAD SURAT. AAFHB7783N 7 50 000/- OUT OF BUSINESS AND AGRICULTURE INCOME OF ASST. YEAR 2005-06 & ASST. YEAR 2006-07 HARIBHAI D. BABARIA HUF 27 KASTURBA NAGAR SOCIETY NR. BARODA PRESTIGE VARACHHA ROAD SURAT. AAFHB7782P 6 00 000/- OUT OF BUSINESS AND AGRICULTURE INCOME OF ASST. YEAR 2005-06 & ASST. YEAR 2006-07. ITA NO.96/AHD/2011 ASST. YEAR 2006-07 4 THE ASSESSEE HAD SUBMITTED THE NAMES ADDRESSES PA NS CONFIRMATIONS BALANCE SHEET PROFIT AND LOSS ACCOUNT AND COMPUTAT ION OF INCOME OF ABOVE DEPOSITORS TO AO ON 08.12.2008. THE OTHER FAC TS ARE AS UNDER :- DATE OF SUBMISSION OF ALL EVIDENCES OF CREDITWORTHINESS OF DEPOSITORS TO AO 08.12.2008 DATE OF ORDER SHEET REQUIRING THE ASSESSEE TO PRODUCE THE DEPOSITORS 18.12.2008 DATE OF ATTENDANCE FIXED BY ASSESSING OFFICER TO PRODUCE THE DEPOSITORS 23.12.2008 DATE OF RECORDING OF STATEMENT OF DEPOSITORS ON 23.12.2008 ASSESSEE PRODUCED 1) JAYANTIBHAI V. BABARIYA (HUF) 2) SMITH JAYANTIBHAI 3) NARESHBHAI HARIBHAI BABARIYA AND 4) VIRJIBHAI DEVRAJBHAI BABARIYA REASONS FOR NON-PRODUCTION OF 3 DEPOSITORS SINCE A SHORT TIME WAS ALLOWED THE 3 DEPOSITORS 1) HARIBHAI V. BABARIYA 2) LILABEN VIRJIBHAI AND 3) LILYBEN HARIBHAI BEING OUT OF STATION COULD NOT BE PRODUCED. DATE OF ISSUE OF SHOW CAUSE NOTICE NO SHOW CAUSE NO TICE WAS ISSUED BEFORE MAKING THE ADDITION. EVEN THE COPY OF STATEMENT RECORDED IN CASE OF 4 PERSONS WAS NOT GIVEN TO ASSESSEE. BASED ON THE ABOVE FACTS THE ASSESSEE SUBMITS THE F OLLOWING EVIDENCES: 1. THE COPY OF SUBMISSION DTD.27.01.2009 TO CIT(A) CON TAINING 1 TO 28 PAGES INCLUDING THE EVIDENCES OF ABOVE DEPOSI TORS SUBMITTED TO AO. 2. THE COPY OF DECISION OF THE HONBLE GUJARAT HIGH CO URT REPORTED AT 245 ITR 125 (PAGE 29 TO 37). THE HONBL E GUJARAT HIGH COURT IN THE IDENTICAL CASE HELD THAT EVEN IF THE ASSESSEE COULD NOT PRODUCE THE DEPOSITORS AND CASH CREDIT AD DED AS INCOME OF THE ASSESSEE THE PENALTY CANNOT BE LEVIED . IN THE CASE OF ASSESSEE ALL THE EVIDENCES WERE SUBMITTED TO AO AND EVEN THE DEPOSITORS WERE PRODUCED. ALL THE DEPOSITORS ARE AS SESSED TO TAX AND THEY ARE REGULARLY FILING THE RETURN OF INCOME. THEREFORE THE EXPLANATION OF THE ASSESSEE OUGHT TO HAVE BEEN ACCEPTED BY THE AO. 3. THE COPY OF DECISION OF HONBLE ITAT IN ITA NO.1147 /A/2009 DTD. 26.05.2009 (PAGE 38 TO 40) IN WHICH HONBLE IT AT HELD ITA NO.96/AHD/2011 ASST. YEAR 2006-07 5 THAT EVEN IF THE ADDITIONS ARE MADE U/S 68 OF THE A CT THE CASH CREDITS ARE NOT DISPROVED BUT IT CAN BE SAID THAT I T IS UNPROVED AND PENALTY CANNOT BE LEVIED AS THE FOUR DEPOSITORS ARE EXISTING AND APPEARED BEFORE THE AO AND ADMITTED TO HAVE ADV ANCED LOAN TO ASSESSEE THE TRANSACTIONS WITH THESE 4 PERS ONS ARE NOT DISPROVED. THE OTHER 3 DEPOSITORS HAVE SOUGHT TIME FOR APPEARANCE AS VERY LITTLE TIME WAS ALLOWED TO THEM. THE COPY OF LETTER DTD.24.12.2008 IS ENCLOSED. THEREFORE THEIR DEPOSITS ARE ALSO NOT DISPROVED. IN VIEW OF THE FACTS AND EVIDEN CES SUBMITTED THE DEPOSITS ARE GENUINE IN VIEW OF THE IDENTITY OF DEPOSITORS PROVED BEFORE AO THE TRANSACTION BEING GENUINE AS THE LOAN WERE ACCEPTED BY ACCOUNT PAYEE CHEQUES. THE ONLY DI SPUTE IS ON ACCOUNT OF CREDITORWORTHINESS OF DEPOSITORS NOT ACC EPTED BY AO FOR WHICH PENALTY CANNOT BE LEVIED. THE PENALTY SHO ULD THEREFORE BE DELETED. 5. THE LD. CIT(A) AFTER GOING THROUGH THE PENALTY O RDER AND TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE DELETED THE PENALTY BY RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF DHIRUBHAI GAJERA VS. ITO IN ITA NO.1147/AHD/2009 AND THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILE VS. CIT 249 I TR 125 (GUJ). AGAINST THIS ORDER OF THE LD. CIT(A) THE REVENUE I S IN APPEAL BEFORE THE TRIBUAL. 6. THE LD. DR SUPPORTING THE ORDER OF AO SUBMITTED THAT THE LOANS WERE NOT GENUINE AND WERE ADDED TO TOTAL INCOME OF THE ASSESSEE U/S 68. THE ADDITION WAS ALSO CONFIRMED BY THE LD. CIT(A). THEREFORE IN VIEW OF THE ADDITION THE PENALTY WAS RIGHTLY LEVIED BY THE AO WHICH HAS BEEN WRONGLY DELETED BY THE LD. CIT(A). ITA NO.96/AHD/2011 ASST. YEAR 2006-07 6 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD. WE FIND THAT IN SUPPORT OF THE CLAIM THE ASSESSEE H AD SUBMITTED THE NAMES AND ADDRESSES PANS CONFIRMATIONS COMPUTATION OF INCOME PROFIT & LOSS ACCOUNT AND BALANCE SHEET ACKNOWLEDGEMENTS OF IT RETURNS OF ALL THE CREDITORS BEFORE THE AO. FOUR OUT OF SEVEN CREDITOR S WERE PRODUCED BEFORE AO AND THE REMAINING THREE CREDITORS COULD N OT BE PRODUCED DUE TO SHORTAGE OF TIME. THIS IS A CASE WHERE EXPLANATION OF THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. THE LEVY OF PENALT Y IS MERELY ON AN ADDITION OF RS.25 49 000/- ON ACCOUNT OF UNEXPLAINE D CASH CREDIT U/S 68 AND RS.50 295/- ON ACCOUNT OF UNEXPLAINED INVESTMEN T IN PROPERTY U/S 69 OF THE ACT AND NOT FINDING OF CONCEALMENT OF ANY PA RTICULARS OR MALA FIDE INTENTION TO REDUCE THE TAXABLE INCOME. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT 249 ITR 12 5 HAS HELD THAT PROVISIONS OF SECTION 68 PERMITS THE AO TO TREAT UN EXPLAINED CASH CREDITS AS INCOME FOR MAKING CERTAIN ADDITIONS IF THERE IS FAILURE BY THE ASSESSEE TO GIVE AN EXPLANATION. HOWEVER THE ADDITION MADE ON THIS COUNT AUTOMATICALLY CANNOT JUSTIFY THE PENALTY LEVIED U/S 271(1)(C). HONBLE HIGH COURT FURTHER HELD THAT FOR LEVY OF PENALTY U/ S 271(1)(C) TWO FACTORS MUST CO-EXIST (I) THERE MUST BE SOME MATERIAL OR C IRCUMSTANCES LEADING TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES R EPRESENT THE ASSESSEES INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE ITA NO.96/AHD/2011 ASST. YEAR 2006-07 7 WAS ANIMUS I.E. CONSCIOUS CONCEALMENT OR ACT OF FU RNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. EXPLANATIO N -1 TO SECTION 271(1)(C) HAS NO BEARING ON FACTOR NO.1 BUT HAS A BEARING ONL Y ON FACTOR NO.2. THE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONC LUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE A SSESSEE. NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANCES ARE E QUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT C ONCEALED INCOME WITH THE HYPOTHESIS THAT IT DOES. IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE T HAT THE ASSESSEES CASE IS FALSE THE EXPLANATION CANNOT HELP THE DEPARTMEN T BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE. THIS CASE IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL AHMEDABAD IN THE CASE OF ACIT VS. EXCEL FORGING (P) LTD. IN ITA NO.1709/AHD/2005 DATED 26.12.2008 WHEREIN IT HAS BE EN HELD THAT NON- AVAILABILITY OF CONFIRMATION AND OTHER DETAILS ARE VALID POINTS FOR MAKING ADDITION U/S 68. BUT BECAUSE THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE GENUINENESS OF DEPOSITS IS NOT ACCEPTED IT CANNOT STRAIGHT AWAY RESULT INTO PENALTY. IN THE PRESENT CASE THE ASSESS EE IS A PUBLIC LIMITED COMPANY ACCEPTING DEPOSIT IN LARGE NUMBER FROM PUBL IC. THE ASSESSEE FAILED TO PRODUCE SOME OF THE DEPOSITORS TO PROVE T HE GENUINENESS AND CREDITWORTHINESS IN SPITE OF THE EFFORTS MADE IT R ESULTED INTO ADDITION U/S ITA NO.96/AHD/2011 ASST. YEAR 2006-07 8 68 BUT IT CANNOT LEAD TO PENALTY FOR FURNISHING INA CCURATE PARTICULARS OF INCOME. THEREFORE IN OUR CONSIDERED OPINION THE LD . CIT(A) HAS RIGHTLY DELETED THE PENALTY. THERE IS NO INFIRMITY IN HIS O RDER. WE UPHOLD THE SAME. THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 21.12.11. SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 7/12/2011. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 13/12/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..