Income Tax Appellate Tribunal - Ahmedabad
Jaysun Enterprise, Surat vs Assessee on 30 March, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH AHMADABAD
Before Shri D.K.Tyagi, Judicial Member and
Shri T.R. Meena, Accountant Member
ITA No. 1889/Ahd/2010
Assessm ent Year :2004-05
Jaysun enterprise, V/s. Income Tax Officer
606/A Tirupati Plaza, W ard 5(2), Surat
Nr. Collection Office,
Athwagate, Surat
PAN No. AACHJ3841A
(Appellant) .. (Respondent)
अपीलाथȸ कȧ ओर से Shri Rasesh Shah, A.R.
By Appellant
ू×यथȸ कȧ ओर से/By Respondent Shri T. Sankar, Sr. D.R.
सुनवाई कȧ तारȣख/Date of Hearing
28.05.2013
घोषणा कȧ तारȣख/Date of Pronouncement 05.07.2013
ORDER
PER : T.R.Meena, Accountant Member
This is an appeal at the behest of the assessee which has emanated from the order of CIT(A)-IV, Surat, dated 30.03.2010 for assessment year 2004-05. The sole ground of appeal is against confirming the penalty u/s.271(1)(c) of Rs.5,03,535/-.
2. The assessment for the A.Y. 04-05 was completed on 26.12.2006 wherein addition of Rs.13,20,000/- was made u/s. 68 and excess claim depreciation of Rs.83,582/- was made by the A.O. Penalty u/s. 271(1)(C) was initiated for furnishing inaccurate particulars of income by the A.O. The I T A No . 1 88 9 /A h d/ 1 0 A. Y. 04- 0 5 Page 2 assessee filed appeal before the CIT(A) but addition had been confirmed. Thereafter, no second appeal had been filed before the ITAT by the appellant. The ld. A.O. before imposing penalty u/s. 271(1)(C) had given the show cause notice for imposing penalty on 05.08.2008. The assessee did not furnish any reply to the A.O. on hearing fixed for 06.08.2008. Again notice was given on 16.03.2009 and case was fixed for 19.03.2009. The assessee again not appeared and not submitted any reply on or before 20th March 2009. On final hearing, the assessee filed reply on 23.03.2009 which has been considered by the ld. A.O. and assessee's explanation had been considered by him. The A.O. held that the assessee would not adduce any evidence for destruction of books in flood and cannot explain the difference in unsecured loan as shown in the assessee's balance sheet and confirmed by the creditor in their respective statement which is not accepted. The assessee has not defaulted in FIR with the police department and no insurance claim was made for loss in flood. The onus lies on the assessee to prove the identity of person, genuineness of the transaction and creditworthiness of the creditor which has not been discharged by him at the time of penalty order. The appellant had fraudulently introduced unaccounted cash amount to Rs.13,20,000/-. Various Courts held that mere filing of Income Tax file numbers of the creditors is not enough and amount received through cheque are not sacrosanct nor can it make a non-genuine transaction genuine. The ld. A.O. finally relied in case of I T A No . 1 88 9 /A h d/ 1 0 A. Y. 04- 0 5 Page 3 Vimal Ginning and Pressing Factory vs. CIT, 279 ITR 100 (MP), which is reproduced as under:
"In our considered opinion, it is difficult to take a different view than the one taken by the three authorities on the basis of the factual explanation offered by the assessee on the question involved. In the first place, it is a case of concealment on the part of the assessee. Secondly it is a case where the assessee made an attempt to explain but could not persuade the three authorities of his explanation. Thirdly, the reference court cannot go into the adequacy of the explanation again in its reference jurisdiction in abstract form for want of any legal issue/interpretation involved any lastly, once the addition is upheld then the penalty has got to be imposed consequent upon the rejection of the explanation offered by the assessee is rejected then in that event, a case for imposition of penalty under section 271(1)(C) is made out. It is much more so when there is no technical issue is involved."
After analyzing the facts and legal aspect on this issue, the ld. A.O. imposed penalty at Rs.3,05,620/- which is 100% tax sought to be evaded.
3. The assessee carried the matter before the CIT(A) who has also confirmed the addition by observing as under:
"I have carefully considered the reasons given by assessing officer and also the submissions of appellant. After carefully going through the same, I am of the opinion that assessing officer has rightly imposed penalty as assessee has clearly failed to prove the I T A No . 1 88 9 /A h d/ 1 0 A. Y. 04- 0 5 Page 4 genuineness of loans received from various parties. It has been contended that assessee was unable to file the proof as its books of accounts have been destroyed in flood. However, it is relevant to mention here that assessing officer has also recorded statement of depositors and the loans shown by assessee in their names have only been partly confirmed by them. As such the addition has been made on sound basis and therefore, concealment of income stands proved. As regards, disallowance of depreciation also, it is seen that assessee has wrongly claimed depreciation for full year on various items which were purchased after 30th September of the financial year. Hence, it is clear that assessee has furnished inaccurate particulars of income. As such penalty imposed by assessing officer stands confirmed."
4. Now, the assessee is before us. Ld. Counsel for the appellant contended that the appellant did not file any appeal before the Hon'ble ITAT against quantum addition. The appellant had received account payee loans which have been shown in the tax audit report. It is true creditors had not confirmed fully loan but assessee's explanation was bonafide. He further relied in case of National Textiles v. CIT, 249 ITR 125 (Guj), CIT vs. Jalaram Oil Mills, 253 ITR 192 (Guj) and claimed that assessee's explanation was not found false and depreciation was claimed for the all years. The assessee also relied upon the Price Water House Coopers Pvt. LTd. vs. CIT [SC], Civil Appeal No. 6924 of 2012 & Manish Organics India Ltd. vs. ACIT, 725/A/2010 for A.Y. 1993-94, wherein penalty imposed on the basis of discrepancy I T A No . 1 88 9 /A h d/ 1 0 A. Y. 04- 0 5 Page 5 between opening balance and closing balance. The co-ordinate bench deleted the penalty u/s. 271(1)(C) of the IT Act.
5. At the outset, ld. Sr. D.R. argued that by receiving the money through the cheque, are not sacrosanct and prove the identity of the persons. Ld. Sr. D.R. filed written reply and submitted that the statements of Smt. Hansha P. Kaneria an Smt. Hansaben Jentibhai Patel were recorded by the A.O. who had part loan given by them in the presence of partner of the assessee firm and A.R. of the assessee firm. The appellant vide letter dated 08.12.2006 had admitted that he agreed with the statements given by both the creditors. The appellant relied on the decision of Hon'ble Gujarat High Court in case of National Textiles v. CIT (supra) & CIT vs. Jalaram Oil Mills (supra), are misplaced in as much as there have been amendment in the provisions of the Act. The assessee himself was present when the statements so called were recorded by the A.O. and the assessee had admitted the same, no plausible explanation had been furnished by the assessee. No satisfaction had been made in respect of loss of books of insurance claimed etc. and no bonafide explanation have been given by the appellant before any authority. He further argued that in case of Shri Saurabh Bansal vs. ITO in ITA No.351/Ahd/2008 for A.Y. 2002-03, the Ahmadabad 'D' Bench had distinguished the applicability of case laws in case of National Textiles v. CIT (supra) & CIT vs. Jalaram Oil Mills (supra), ACIT vs. Zeo Chem (P.) Ltd. [2011] 12 taxmann.com 72 (Ahd.) and Hon'ble ITAT, Ahmadabad had upheld the penalty on unexplained cash I T A No . 1 88 9 /A h d/ 1 0 A. Y. 04- 0 5 Page 6 credit. Further excess claim of depreciation, ld. Sr. D.R. also argued that Price Water House Coopers Pvt. LTd. vs. CIT (supra), case is not applicable as the facts of the case are different, as much as the disallowance quantity in audit report but omitted to be added in computation. However, in appellant's case no quantification of depreciation was made by the Auditor of the appellant. There was no inadvertent error in corrupted in case of appellant. He prayed to confirm the penalty.
6. We have heard the rival contentions and perused the material on record. Ld. A.O. has examined the cash creditors in the presence of the partner as well as presence of A.R. of the appellant. Creditors had denied having been given cash loan to that extent as shown by the appellant in the books of account. There is no evidence of destroying the books of account in flood. No copy of FIR or insurance claim had been filed by the appellant before any authority. The appellant had not filed second appeal before the ITAT against the quantum addition. The case laws cited by the A.R. squarely not applicable as ld. A.O. had proved that this is the concealed income of the assessee. Hon'ble ITAT, Ahmadabad 'D' Bench in case of Shri Saurabh Bansal vs. ITO(supra), held that after amending the provision in Explanation 1 to Section 271(1)(C), the Hon'ble Gujarat High Court's decision in case of National Textiles v. CIT (supra) & CIT vs. Jalaram Oil Mills (supra), would not be applicable in respect of addition made in the A.Y. 2002-03. The assessee claimed depreciation on Rs.11,21,844/- after claiming the addition in assets I T A No . 1 88 9 /A h d/ 1 0 A. Y. 04- 0 5 Page 7 before 30.09.2003 but actually the addition in asets before 30.-09.2003 was Rs.4,53,189/- which was accepted by the assessee during the course of assessment. If the assessee's case has not been scrutinized, then it would result in concealing the income and tax as held by the Hon'ble Delhi High Court in case of Zoom Communications. We accordingly hold that there is a case of deemed concealment of income by virtue of explanation 1(B) to Section 271(1)(C) and tax sought to be evaded has to be calculated by invoking Clause a to Explanation 4 to Section 271(1)(C). Therefore, we confirmed the order of the CIT(A).
7. In the result, the assessee's appeal is dismissed.
This Order pronounced in open Court on O5.07.2013
Sd/- Sd/-
(D.K.Tyagi) (T.R. Meena)
Judicial Member Accountant Member
True Copy
S.K.Sinha
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।