Income Tax Appellate Tribunal - Jaipur
Gulab Devi Mutha , Jaipur vs Assessee on 9 January, 2015
1 ITA No. 717/JP/2012
Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur
IN THE INCOME TAX APPELLATE TRIBUNAL
JAIPUR BENCH, JAIPUR
(BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA)
ITA No. 717/JP/2012
Assessment year: 2006-07
PAN : ABWPN 9880 H
Smt. Gulab Devi Mutha vs. The ITO
W/o Shri Mohan Lal Mutha Ward- 6 (1)
C-11,Raja Park, Jaipur Jaipur
(Appellant) (Respondent)
Assessee by : Shri Siddharth Ranka, Advocate
Department by: Shri Ajay Malik, Addl. CIT
Date of Hearing: 26-11-2014
Date of Pronouncement: 09 -01-2015
ORDER
PER R.P. TOLANI, JM
This is an appeal filed by the assessee against the order of the ld. CIT(A)-II, Jaipur dated 2-05-2012 for the assessment year 2006-07 challenging the imposition of penalty of Rs. 2,58,970/- imposed u/s 271(1)(c) of the Act.
2.1 Brief facts of the case are that the assessee is engaged in the business of commodity trading of Guwar and Sarson in the name of M/s. Achal Finance & Investments. During the course of assessment proceedings, the AO found that the assessee in her balance sheet has shown unsecured loans 2 ITA No. 717/JP/2012 Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur of Rs. 1,71,25,616/-, explanation for the same was called. The assessee filed all the relevant confirmations except the following two confirmations.
1. Shri Bhattu Singh Rs. 3.50 lacs
2. Smt.Rupa Devi Rs. 3.50 lacs Besides qua the following unsecured loans, there were differences in the closing balances for which also explanation was called:
1. Shri Hasti Mal Samar Rs. 2,70,308/-
2. Smt. Manju Samar Rs. 3,85,777/-
3. Smt. Vimla Devi Jain Rs. 1,90,205/-
Rs. 8,46,290/-
Vide reply filed dated 11-07-2008 the assessee furnished copies of confirmations of these persons, reflecting following closing balances:
1. Shri Hasti Mal Samar Rs. 2,25,000/-
2. Smt. Manju Samar Rs. 3,25,000/-
3. Smt. Vimla Devi Jain Rs. 1,50,000/-
Rs.7,00,000/-
Thus there was a difference of Rs. 1,46,290/- in respect of confirmations of these three creditors. As the assessee could not furnish the confirmations in respect of above three creditors and could not justify the difference of Rs. 1,46,290/- in respect of three creditors. The AO asked the assessee to 3 ITA No. 717/JP/2012 Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur furnish the explanation in this behalf, since the assessment was getting time barred and the assessee was not able to procure further evidence as was directed by the AO, the assessee expressed her inability to produce them and offered to surrender these amounts as her income to avoid further proceedings.
2.2 Penalty proceedings were initiated, assesse filed her reply. The same did not find favour with the AO imposed penalty by following observations.
''As stated supra the assessee has failed to furnish confirmations in cases of Shri Bhattu Singh and Smt. Rupa Devi and further the confirmations in cases of Shri Hasti Mal Samar, Smt. Manju Samar and Smt. Vimla Devi Jain were not complete. The assessee has surrendered the amount at the time of assessment proceedings. No confirmations in these cases are furnished during penalty proceedings also. Thus it is proved that after providing many opportunities at the time of assessment proceedings as well as penalty proceedings, the assessee failed to confirm the loan of Rs. 8,46,290/-. The assessee has not filed appeal against assessment order. This clarify that assessee has committed the mistake for furnishing inaccurate particulars of income. Therefore, it is a fit case to impose penalty u/s 271(1)(c ).'' 2.3 Aggrieved, the assessee appealed before ld. CIT(A) where the action of the AO imposing penalty u/s 271(1)(c ) of the Act was assailed on the basis of various pleadings, evidence and summary of case laws whereof is as under:-
4 ITA No. 717/JP/2012
Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur
1. In respect of Bhattu Singh - Bank certificate from Vijaya Bank bearing S.B. A/c No.11524 certifying that cheque of Rs. 1.00 lac was debited to his account and credited to the account of Achal Finsac & Investments on 4-07-2005. The copy of account from the books of account of the assessee showing closing balance of Rs. 3.50 lacs with PAN was confirmed by the said bank.
2. In respect of Smt. Rupi Devi - Bank certificate from Corporation Bank bearing S.B. A/c No.01001840 certifying that cheque of Rs. 1.00 lac was debited to her account and credited to the account of Achal Finsac & Investments on 20-
06-2005, Bank Certificate from Vijaya Bank, Jaipur bearing S.B. A/c No. 700200300002192 certifying cheque of Rs. 1.50 lacs was debited to her account and credited to the account of Achal Finsac & Investments on 25-06-2005, Bank Certificate from State Bank of India, Jaipur bearing S.B. A/c No.56229002695 certifying that the cheque of Rs. 1.00 lac was debited to her account and credited to the account of Achal Finsac & Investments on 20-06-2005. Smt. Rupa Devi gave an declaration that she had advanced an amount of Rs. 3.50 lacs 5 ITA No. 717/JP/2012 Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur 2.4 As regards the other 3 creditors whose a/cs could not be reconciled i.e. Shri Hasti Mal Samar, Smt. Manju Devi Samar and Smt. Vimla Devi Jain, the expenses and genuineness of the cash credits were not doubted. Only the difference was surrendered by the assessee. The same mainly consisted of difference on account of interest as the assessee has credited interest to their account and the parties did not credit it in their account. All the three persons are assessed to tax. The TDS was deducted from the interest paid to them. 2.5 It was pleaded that levy of penalty is not automatic and merely because an addition has been offered for surrender, it does not lead to automatic penalty. The penalty being distinct and separate, the assessee can file fresh evidence and explanation to defend the penalty proceedings. The assessee has given valid explanation. Shri Bhattu Singh and Smt. Rupi Devi were income tax assessee. Their PAN accounts were supplied to the AO. In the penalty proceedings, the AO did not get cross verified from the departmental record whether these persons had advanced these amounts or not. Since the AO has failed to controvert assessee's explanation in the penalty proceedings by cross-verifying from the departmental records, the penalty imposed is arbitrary and unjustified.
2.6 Apropos the issue of three cash creditors there was difference due to the accounting of interest. The AO ought to have verified whether those 6 ITA No. 717/JP/2012 Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur assessees had offered interest income and claimed TDS credit or not. Thus the AO failed to carry out even minimum of the cross-verification in order to be fair in inquiries and to protect the interest of the Revenue. Thus ignoring the copious submissions and evidences furnished by assesse in penalty proceedings and merely relying on the surrender AO has held the assessee liable for penalty. The ld. CIT(A) though reproduced the explanation of the assesse however confirmed the order of the AO.
2.7 Aggrieved, the assessee is before us.
2.8 The ld. Counsel for the assessee reiterated the facts and drew our attention to arguments as made before the ld. CIT(A) and contends that ld. Ld. CIT(A) failed to appreciate the fact that penalty proceedings are distinct than assessment proceedings. The assesse has right to furnish evidence old as well as new and raise pleas in the penalty proceedings. During the course of assessment proceedings, the above amount was surrendered as it was not possible for assesse to furnish the evidence as required by the AO and offered the amount for taxation, it does not mean that assesse filed inaccurate particulars for penalty proceedings. It is trite law that penalty proceedings are distinct and separate and the assessee can raise fresh evidence in the penalty proceedings. Accordingly, the assessee furnished detailed explanation and evidence to demonstrate that they were genuine 7 ITA No. 717/JP/2012 Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur cash creditors and her case was not liable to be visited with penalty. It is also a trite law that merely because some amount is surrendered during assessment that by itself does lead to automatic levy of penalty as long as the assessee is able to give proper explanation. To this effect assessee has furnished proper explanation and has been mentioned in detail by the ld. CIT(A). The pertinent explanation furnished during the penalty proceedings has been ignored and penalty has been imposed merely relying on surrender. When all the creditors are assessed to income tax, their PAN, confirmations are filed, it was obligatory on the part of the AO to rebut the explanation filed by the assessee by cross-verifying the departmental record and to give a finding based on the explanation itself. Thus as the record stands assesses explanation remains rebutted, in that eventuality penalty has no justification. 2.9 The ld. DR supported the orders of the lower authorities and relied on the judgement of Hon'ble Supreme Court in the case of Mak Data (P) Ltd. vs. CIT ,358 ITR 593 (SC).
2.10 The ld. Counsel for the assessee in reply contends that Mak Data (P) Ltd. vs. CIT (supra) case is not applicable in assessee's case as the assessee during penalty proceedings filed all the details desired by the AO alongwith proper explanation. In Mak Data case assessee's explanation was found to 8 ITA No. 717/JP/2012 Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur be totally unsatisfactory whereas in this case proper evidence and explanation is filed.
2.11 We have heard the rival contentions and perused the materials available on record. We find merit in the arguments of the ld. Counsel for the assessee that penalty proceedings are separate and distinct than assessment proceedings. Looking from this aspect, in penalty proceedings the assessee submitted relevant evidence with proper explanation before the lower authorities. The pleadings demonstrate that all the cash creditors were having income tax nos. and in cases of difference in accounts the same was due to accounting of interest, there is no worthwhile rebuttal of assessee's explanation during the penalty proceedings. We are inclined to agree with the submissions of the ld. AR that none rebuttal of explanation or cross verification from the departmental record cannot be used as a tool to penalize the assessee. Thus in the entirety of the facts and circumstances, we find that the assesse furnished a proper explanation supported by evidence in penalty proceedings. In our considered view the same is reasonable, the case law as cited by the ld. DR during the course of hearing i.e. Mak Data (P) Ltd. vs. CIT ,(supra) is not applicable to the facts of the assessee's case more particularly when the same remains unrebutted . Thus in view of the facts 9 ITA No. 717/JP/2012 Smt. Gulab Devi Mutha vs. ITO , Ward- 6 (1), Jaipur and circumstances of this case, we are of the view that the assessee's case does not deserve to be penalized u/s 271(1) (c) of the Act which is deleted. 3.0 In the result, the appeal of the assessee is allowed.
The order is pronounced in the open Court on 09-01-2015
Sd/- Sd/-
(T.R. MEENA) (R.P. TOLANI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Jaipur
Dated: 9th JAN 2015
*Mishra
Copy forwarded to:-
1.Smt Gulab Devi Mutha, Jaipur
2. The ITO, Ward- 6 (1), Jaipur
3. The ld. CIT(A)
4. The ld. CIT By Order
5..The ld. DR
6.The Guard File (IT No. 717/JP/2012)
AR ITAT, Jaipur