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Income Tax Appellate Tribunal, AHMEDABAD SMC BENCH, AHMEDABAD
ITA No.1855/Ahd/2013 Assessment Year : 2005-06 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [Coram : Pramod Kumar, Accountant Member] ITA No.1855/Ahd/2013 Assessment Year: 2005-06 Jayantilal K. Harsora …...…..……… Appellant Plot No.1-2 Survey No.128, Opp. Agro Petrol Pump, N.H. No.8, Kamrej Char Rasta, Surat – 394185 [PAN : AADPH 9972 P] Vs. Income Tax Officer Ward 5(2), Surat. ……………. Respondent Appearances by : Rasesh Shah, for the appellant Prasoon Kabra, for the respondent Date of concluding the hearing : 05.07.2017 Date of Pronouncing the order : 22.09.2017 O R D E R
By way of this appeal, the assessee appellant has challenged correctness of the order dated 2nd April 2013, passed by the learned CIT(A)-I, Surat, upholding penalty of Rs.1,22,400/- imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961 (‘the Act hereinafter’), for the Assessment Year 2005-06.
Grievances raised by the appellant are as follows:-
“1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of the Assessing Officer in imposing penalty of Rs.1,22,400/- u/s.271(1)(c) of the I.T. Act, 1961 on the addition of Rs.4,00,000/- made u/s.68 of the I.T. Act, 1961.
ITA No.1855/Ahd/2013 Assessment Year : 2005-06 Page 2 of 4 2. It is therefore prayed that the above penalty levied by Assessing Officer and confirmed by CIT(A) may pleased be deleted.” 3. To adjudicate on this appeal only a few material facts need to be taken note of. The impugned penalty has been levied in respect of quantum addition of Rs.4,00,000/- in the hands of the assessee under section 68 of the Act. This loan was received by way of two demand drafts of Rs.2,00,000/- each and stated to have been received from one Shri Mahesh Shah. The source of these monies in the hands of Shri Mahesh Shah was stated to be of sale of agricultural proceeds. Assessing Officer, however, noted that there were no major deposits in the bank deposits of Shri Mahesh Shah and the explanation given by the assessee was not found to be satisfactory. Addition was thus made for Rs.4,00,000/- as unexplained cash credit. Assessee carried the matter in appeal before the learned CIT(A). It was in this backdrop penalty of Rs.1,22,400/- was levied being equivalent to 100% of tax sought to be evaded by the assessee. The learned CIT(A) also confirmed the penalty with the observation that “the fact that Mr. Maheshbhai Shah deposited cash just before the issue of cheque to the appellant and did not make any other deposit of similar quantum in spite of having a bank account is highly improbable and is a made-up story as held in the quantum appeal.” With this observation, penalty was confirmed. Assessee is not satisfied and is in further appeal before me.
I have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 5. I have noted that not only the creditor had appeared before the Assessing Officer, he also gave evidence of his agricultural income. As a matter of fact, the
ITA No.1855/Ahd/2013 Assessment Year : 2005-06 Page 3 of 4 person who stated to have bought products from loan creditor did not appear before the Assessing Officer. It was inter alia for this reason that the addition was made.
As regards learned Departmental Representative’s contention that the alleged buyer of agricultural products confirmed that he did not have any transaction with the assessee. I have noted that the transaction was in fact between the buyer of the product and the depositor and it did not have direct relationship with the assessee. Therefore, nothing really turns on the buyer of agricultural products denying transaction having been entered into with the assessee. In my view, the assessee has given a reasonable explanation though he has not been able to prove it to the hilt and, therefore, it is certainly not a fit case for imposition of penalty. I have also noted that the learned CIT(A) has merely proceeded on the basis of findings given in the quantum proceedings but when, as is the legally settled position, findings in the quantum proceedings by itself cannot constitute a legally sustainable basis for imposition of penalty as well. In view of these discussions and bearing in mind entirety of the case, I am of the considered view that the learned CIT(A) was indeed in error in confirming the impugned penalty. I, therefore, delete the impugned penalty. Assessee gets the relief accordingly.
In the result, appal is allowed. Pronounced in the open court today on the 22nd day of September, 2017.
Sd/- Pramod Kumar (Accountant Member) Dated: Ahmedabad, the 22nd day of September, 2017. PBN/*
ITA No.1855/Ahd/2013 Assessment Year : 2005-06 Page 4 of 4 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File
By order Assistant Registrar Income Tax Appellant Tribunal Ahmedabad Benches, Ahmedabad