D.b. Income Tax Appeal 187/2014 Girraj Mehta v. The Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR D.B. Income Tax Appeal 187/2014Girraj Mehta, Proprietor M/s Oswal Udyogv.The Commissioner of Income Tax Date of order7.1.2016 Hon'ble Mr. Justice Ajay RastogiHon'ble Mr. Justice J.K. Ranka Mr. P.K. Kasliwal, counsel for appellant By the Court (per J.K. Ranka, J.) 1.The instant appeal u/sec. 260A is directed against order dated18.7.2014 passed by the Income Tax Appellate Tribunal, Jaipur Bench,Jaipur, in M.A. No.1/JP/2013 in ITA No.1069/JP/2010. It relates toassessment year 2007-08. 2.For the reasons assigned, the application u/sec. 5 of theLimitation Act stands allowed and the delay in filing appeal standscondoned. 3.The brief facts noticed for disposal of the said appeal are that the appellant-assessee submitted a return declaring income ofRs.2,15,330/- and thereafter on examination of books of account it wasnoticed that the assessee has shown sundry creditors of Rs.4,76,537/- in the name of Dee Jay Steels, New Delhi, and on a further enquiry fromthe said creditor u/sec. 133(6) it transpired that notice which was sent by the Assessing Officer to the address given by the appellant of thesaid creditor, returned undelivered by the postal authorities. The AOagain desired the assessee to file complete address of the party as alsothe confirmation and other material to substantiate the entry shown inthe name of said creditor. On further enquiry it was noticed by the AOthat the account was squared up in the financial year relevant to theassessment year 2007-08 and payment of Rs.1,50,000/- was shownthrough three cheques of Rs.50,000/- each and balance amount wasshown to be paid in cash below Rs.20,000/- on various dates. On afurther enquiry by the AO from the concerned bank where the chequeswere drawn the bank conveyed that all the three cheques werepresented over counter by bearer of the cheques and favouring self.Faced with the said material brought on record by the AO, the assesseefiled a reply on 4.12.2009 mentioning therein that it could not get theconfirmation from the said creditor and surrendered the amount fortaxation in order to avoid further litigation and to have mental peace,and thus entire amount of Rs.4,76,537/- was offered for taxation. TheAO accordingly made an addition u/sec. 41(1)(a) of the Income TaxAct, 1961. The other additions were also made. 4.The matter was carried in appeal before the learnedCommissioner of Income Tax (Appeals), who also insofar as the aboveaddition is concerned, after analysing the material on record upheld the addition. On a further appeal by the assessee, the Tribunal also upheldthe addition. Against the order of the Tribunal dated 27.5.2011 anappeal u/sec. 260A came to be filed by the assessee-appellant. Counselfor the appellant in the said appeal contended that the appellant wasadvised to file rectification application u/sec. 154 of the Act and thatcame to be dismissed and against that order a separate appeal was filedbefore the learned Tribunal which is still subjudice and pendingconsideration, and on prayer of the counsel for the appellantaccordingly the said appeal was dismissed with liberty, if so advised, tofile appeal after being aware of the outcome of pending appeal beforethe learned Tribunal. The Tribunal vide order dated 18.7.2014 in M.A.No.1/JP/2013 arising out of ITA No.1069/JP/2010, dismissed themiscellaneous application. 5.Learned counsel for the appellant contended that the surrenderwas made by the assessee subject to avoid further litigation and to havemental peace, that is to say that the AO ought not to have issuedpenalty notice u/sec. 271(1)(c), and ought not to have initiated theproceedings for concealment and furnishing of inaccurate particulars ofincome and it was only subject to this rider that the amount wassurrendered but the AO though assured of not initiating penaltyproceedings, has also issued notice u/sec. 271(1)(c) and has alsoimposed penalty later-on which is contrary to the assurance granted to the appellant. He further contended that the CIT(A) had accepted thecontention of the assessee but wrongly upheld the addition and entirelya different case was made out so also the Tribunal erred in upholdingthe addition and contended that the order of the Tribunal is perverseand substantial questions of law arise out of the order of the Tribunal. 6.We have heard the counsel for appellant and perused theimpugned order so also the material on record and in our view nosubstantial question of law can be said to arise out of the order of theTribunal. We have already noticed the backdrop of the addition ofRs.4,76,537/- and it would be appropriate to quote the written reply of the assessee addressed to AO dated 4.12.2009 :- “With reference to the above it is since we could not get theconfirmation from the following sundry creditors,unsecured loans, we are hereby surrendering the followingamounts for taxation in order to avoid further litigation andhave the mental peace.confirmation from the following sundry creditors,unsecured loans, we are hereby surrendering the followingamounts for taxation in order to avoid further litigation andhave the mental peace. Sundry CreditorsAmountM/s Dee Jay Steels, New DelhiRs.4,76,537/-” 7.In our view, merely mentioning to avoid further litigation and tohave mental peace does not make out that the assessee had offered thesame amount subject to non initiation of penalty proceedings, andleaving that apart, the AO in our view could not have assured theassessee of non initiation of proceedings u/sec. 271(1)(c) of the Act ornon imposition of penalty u/sec. 271(1)(c) for concealment andfurnishing of inaccurate particulars of income as they are independent and separate proceedings. The AO had also found as a finding of factthat it was established on record that the assessee has shown a bogusliability in the books of account and even the AO was able to go intofurther detail that even bearer cheques were issued which were “selfcheques” and the amount was withdrawn by the assessee himself andeven subsequent amounts were debited to the account of the creditor onseveral different dates showing payment to have been made by cash tothe said creditor - Dee Jay Steels, New Delhi, all amounts belowRs.20,000/-. All such findings of fact noticed by all the threeauthorities being essentially finding of fact, in our view the impugnedorder of the Tribunal is well reasoned and is not required to beinterfered with as no perversity is noticed. We find no substantialquestion of law involved in the instant appeal. 8.Accordingly, the appeal being devoid of merit, is herebydismissed. (J.K. Ranka) J.(Ajay Rastogi) J. db69[All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.]Deepankar Bhattacharya PS