Gujarat High Court
Principal Commissioner Income Tax, ... vs Gaurangbhai Pramodchandra Upadhyay on 25 February, 2020
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, Bhargav D. Karia
C/TAXAP/98/2020 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 98 of 2020
With
R/TAX APPEAL NO. 100 of 2020
With
R/TAX APPEAL NO. 103 of 2020
With
R/TAX APPEAL NO. 104 of 2020
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PRINCIPAL COMMISSIONER INCOME TAX, SURAT-1
Versus
GAURANGBHAI PRAMODCHANDRA UPADHYAY
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Appearance:
MRS KALPANAK RAVAL(1046) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 25/02/2020
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. Since the questions of law proposed by the Revenue in all the captioned Tax Appeals are common, those were heard analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience, the Tax Appeal No.98/2020 is treated as the lead appeal.
3. This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short the "Act1961") is at the instance of the Revenue and is directed against the order dated 12.07.2019 passed by the Income Tax Page 1 of 7 Downloaded on : Mon Jun 15 11:21:34 IST 2020 C/TAXAP/98/2020 ORDER Appellate Tribunal, Ahmedabad in ITA No.216/SRT/2017 for the Assessment Year 201314.
4. The facts giving rise to this appeal may be summarized as under: 4.1 A search action under Section 132 of the Act1961 was carried out on 18.02.2014 in the group cases of Creative Trendz Group of Surat.
4.2 During the course of the search action few incriminating documents were recovered and seized from the residence of one Shri Piyush Ghanshyam Modi, Residing at:Surat. The documents seized were found to be linked with Mr.Gaurangbhai P Upadhyay.
4.3 In such circumstances, after recording the reasons, the case of the assessee was selected for scrutiny by issuing notice under Section 153C read with Section 153A of the Act1961 for the Assessment Years 200910, 201011, 201213 and 201415, respectively. Later, the penalty under Section 271D and 271E was levied in the Assessment Years 200910, 201011, 201112, 201213, 201314. It appears that the Assessing Officer noticed from the materials seized from the residence of Shri Piyush Ghanshyam Modi that the assessee had obtained loan in cash from one Dilip C Sojitra and the said loan was repaid with interest in cash. The total amount repaid in cash was to the tune of RS.2,18,00,000/ and the interest paid on the same was to the tune of Rs.19,64,400/ for the year under consideration.
Page 2 of 7 Downloaded on : Mon Jun 15 11:21:34 IST 2020C/TAXAP/98/2020 ORDER 4.4 While finalizing the assessment, the interest
paid in cash of Rs.19,64,400/ was added to the total income of the asseessee for the year under consideration under Section 69C of the Act1961 treating the same as unexplained. Ultimately, the assessment under Section 143(3) read with Section 153(C) of the Act was made on 28.03.2016 determining the total income of Rs.42,35,560/.
4.5 The assessee being dissatisfied with the assessment order preferred an appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee for the Assessment Years 200910, 201011, 201213 and 201415, respectively.
4.6 The Revenue being dissatisfied with the order passed by the CIT(A) went in appeal before the Appellate Tribunal. The appellate Tribunal dismissed the appeal preferred by the Revenue on the ground of low tax effect without going into the merits of the matter. It appears that the JCIT, Central Range, Surat took the view that the assessee had repaid the loan amounting to Rs.2,18,00,000/ in contravention of the provisions of Section 269T read with Section 271 of the Act1961. In such circumstances, the JCIT, Central Range, Surat, levied penalty under Section 271E of the Act.
4.7 Being aggrieved by the penalty order made under Section 271E of the Act1961,the assessee preferred an appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.
Page 3 of 7 Downloaded on : Mon Jun 15 11:21:34 IST 2020C/TAXAP/98/2020 ORDER 4.8 Being dissatisfied with the order passed by
the CIT(A), the Revenue preferred an appeal before the ITAT. The ITAT, vide its impugned order, dismissed the appeal preferred by the Revenue.
4.9 Being dissatisfied with the order passed by the Appellate Tribunal, the Revenue is here before this Court with the present appeal.
5. The Revenue has proposed the following questions of law for the consideration of this Court.
"5(i) Whether on the facts and circumstances of the case and in aw, the Hon'ble ITAT is right in upholding the order of Ld CIT(A) in deleting the penalty under Section 271E of the IT Act ignoring that penalty under Section 271E has been levied after considering material seized in the course of search under Section 132 of the IT Act on 18.02.2014 and based on statement recorded?
(ii) Whether on the facts and circumstances of the case in law, the Hon'ble ITAT is right in upholding the order of Ld.CIT(A) in deleting the penalty under Section 271E of the IT Act holding that presumption of Section 132(4A) as well as Section 292 of the IT Act is not available in the case of the assessee ignorning that material seized in the case of Shri Piyush Modi and statement recorded of Shri Dilip C Sojithra, who categorically explained the manner in which cash loan transactions were recorded in the seized material?
(iii) Whether on the facts and circumstances of the case in law, the Hon'ble ITAT is right in upholding the order of Ld CIT(A) in deleting the penalty under Section 271E of the IT Act holding that presumption of Section 132(4A) as well as Section 292C of the IT Act is not available in the case of the assessee ignoring the corroborative evidence seized from third party?Page 4 of 7 Downloaded on : Mon Jun 15 11:21:34 IST 2020
C/TAXAP/98/2020 ORDER
6. We straightway go to the findings of the fact recorded by the Appellate Tribunal in its impugned order: "8. We have heard the rival submissions and perused the material available on record. We have gone through the assessment order and penalty order in the assessment years under consideration.
It is observed that the addition of interest payment under Section 69C was made on account of documents seized from third party which were reflected some cash loans transactions i.e. receipts and payments. However, these documents were not found from the possession of the assessee. Therefore, presumption under Section 132(4A) as well as under Section 292C is not available in the case of assessee. Further, the statement on which the Assessing Officer has based his findings has not found to be acceptable due to changing stand of the parties concern which were also third party. Further, the transactions were not found to be true as these were not deciphered by persons from whose possession these were recovered, DCIT, Circle1(3), Surat Vs. Shri Gauranghai P Upadhyay / ITA No.'s 208 TO 216/SRT/2017 Page 9 of 10. Therefore, the charge of the Assessing Officer that loans were rightly taken and repaid in cash has not been established. The Ld. CIT(A) has given this clear cut findings in quantum appeal in the case of assessee against which the appeal is also dismissed at the level of ITAT. Hence, Ld. CIT(A)'s order has attained finality in the quantum proceedings. Therefore, just because the assessee has business relations with a persons (not even the person from whom the documents were recovered) nor it is proved that unsubstantiated entry found recorded in the simlar name is true and belongs to the assessee. We are therefore inclined to agree with the findings recorded by the ld.CIT(A) in penalty proceedings that no corroborative or substantive evidence has been brought on record to suggest that he assessee has taken any loan in cash or repaid any loan in cash and done the transactions reflected in the seized material recovered from third party.
Page 5 of 7 Downloaded on : Mon Jun 15 11:21:34 IST 2020C/TAXAP/98/2020 ORDER Therefore, considering the totality of the facts, we find no reason to deviate from findings recorded by the Ld.CIT(A). Accordingly, the appeal of the Revenue in respect of penalty under Section 271D and 271E is dismissed. Consequently, all the grounds of appeal of the Revenue as reproduced above are dismissed."
7. Thus, the learned Tribunal took into consideration the following aspects: A. The addition of interest payment under Section 69C of the Act1961 was made on the basis of the documents seized from a third party.
B. Such documents seized from the third party reflected loan transactions in cash.
8. The Tribunal took notice of the fact that such documents were not found or recovered from the possession of the assessee. In such circumstances, no presumption under Section 132(4A) as well as under
Section 292C of the Act1961 could be drawn. The Tribunal also took notice of the fact that the Assessing Officer had based his findings on the basis of a statement, but the statement has not been found to be acceptable in view of the conflicting stance. The Tribunal concurred with the findings recorded by the CIT(A) that it is not established that the loans were obtained and repaid in cash. The Tribunal also took notice of the fact that the quantum proceedings had attained finality. In short, in view of the concurrent findings of the fact recorded by the two authorities, there is nothing to substantiate the case of the Revenue that the assessee had obtained Page 6 of 7 Downloaded on : Mon Jun 15 11:21:34 IST 2020 C/TAXAP/98/2020 ORDER the loan in cash and the same was also repaid in cash.
9. In view of the aforesaid findings of fact recorded by the Tribunal, we are of the view that none of the questions, as proposed by the Revenue, could be termed as substantial questions of law. In the result, all the captioned Tax Appeals fail and are hereby dismissed.
(J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) GIRISH Page 7 of 7 Downloaded on : Mon Jun 15 11:21:34 IST 2020