Principal Commissioner Income-tax, Surat-1 v. Gaurangbhai Pramodchandra Upadhyay
[Citation -2020-LL-0225-60]

Citation 2020-LL-0225-60
Appellant Name Principal Commissioner Income-tax, Surat-1
Respondent Name Gaurangbhai Pramodchandra Upadhyay
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 25/02/2020
Assessment Year 2013-14
Judgment View Judgment
Keyword Tags corroborative evidence • interest payment • seized material • penalty order • cash loan • repayment of loan
Bot Summary: For the sake of convenience, the Tax Appeal No.98/2020 is treated as the lead appeal. Page 2 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/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 Act 1961 treating the same as unexplained. 4.7 Being aggrieved by the penalty order made under Section 271E of the Act 1961,the assessee preferred an appeal before the CIT(A). Page 3 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/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. Presumption under Section 132(4A) as well as under Section 292C is not available in the case of assessee. Accordingly, the appeal of the Revenue in respect of penalty under Section 271D and 271E is dismissed. No presumption under Section 132(4A) as well as under Section 292C of the Act 1961 could be drawn.


IN 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 PRINCIPAL COMMISSIONER INCOME TAX, SURAT-1 Versus GAURANGBHAI PRAMODCHANDRA UPADHYAY Appearance: MRS KALPANAK RAVAL(1046) for Appellant(s) No. 1 for Opponent(s) No. 1 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 questions of law proposed by Revenue in all captioned Tax Appeals are common, those were heard analogously and are being disposed of by this common judgment and order. 2. For sake of convenience, Tax Appeal No.98/2020 is treated as lead appeal. 3. This Tax Appeal under Section 260A of Income Tax Act, 1961 (for short Act 1961 ) is at instance of Revenue and is directed against order dated 12.07.2019 passed by Income Tax Page 1 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/TAXAP/98/2020 ORDER Appellate Tribunal, Ahmedabad in ITA No.216/SRT/2017 for Assessment Year 2013 14. 4. facts giving rise to this appeal may be summarized as under: 4.1 search action under Section 132 of Act 1961 was carried out on 18.02.2014 in group cases of Creative Trendz Group of Surat. 4.2 During course of search action few incriminating documents were recovered and seized from residence of one Shri Piyush Ghanshyam Modi, Residing at:Surat. documents seized were found to be linked with Mr.Gaurangbhai P Upadhyay. 4.3 In such circumstances, after recording reasons, case of assessee was selected for scrutiny by issuing notice under Section 153C read with Section 153A of Act 1961 for Assessment Years 2009 10, 2010 11, 2012 13 and 2014 15, respectively. Later, penalty under Section 271D and 271E was levied in Assessment Years 2009 10, 2010 11, 2011 12, 2012 13, 2013 14. It appears that Assessing Officer noticed from materials seized from residence of Shri Piyush Ghanshyam Modi that assessee had obtained loan in cash from one Dilip C Sojitra and said loan was repaid with interest in cash. total amount repaid in cash was to tune of RS.2,18,00,000/ and interest paid on same was to tune of Rs.19,64,400/ for year under consideration. Page 2 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/TAXAP/98/2020 ORDER 4.4 While finalizing assessment, interest paid in cash of Rs.19,64,400/ was added to total income of asseessee for year under consideration under Section 69C of Act 1961 treating same as unexplained. Ultimately, assessment under Section 143(3) read with Section 153(C) of Act was made on 28.03.2016 determining total income of Rs.42,35,560/ . 4.5 assessee being dissatisfied with assessment order preferred appeal before CIT(A). CIT(A) allowed appeal of assessee for Assessment Years 2009 10, 2010 11, 2012 13 and 2014 15, respectively. 4.6 Revenue being dissatisfied with order passed by CIT(A) went in appeal before Appellate Tribunal. appellate Tribunal dismissed appeal preferred by Revenue on ground of low tax effect without going into merits of matter. It appears that JCIT, Central Range, Surat took view that assessee had repaid loan amounting to Rs.2,18,00,000/ in contravention of provisions of Section 269T read with Section 271 of Act 1961. In such circumstances, JCIT, Central Range, Surat, levied penalty under Section 271E of Act. 4.7 Being aggrieved by penalty order made under Section 271E of Act 1961,the assessee preferred appeal before CIT(A). CIT(A) allowed appeal of assessee. Page 3 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/TAXAP/98/2020 ORDER 4.8 Being dissatisfied with order passed by CIT(A), Revenue preferred appeal before ITAT. ITAT, vide its impugned order, dismissed appeal preferred by Revenue. 4.9 Being dissatisfied with order passed by Appellate Tribunal, Revenue is here before this Court with present appeal. 5. Revenue has proposed following questions of law for consideration of this Court. 5(i) Whether on facts and circumstances of case and in aw, Hon'ble ITAT is right in upholding order of Ld CIT(A) in deleting penalty under Section 271E of IT Act ignoring that penalty under Section 271E has been levied after considering material seized in course of search under Section 132 of IT Act on 18.02.2014 and based on statement recorded? (ii) Whether on facts and circumstances of case in law, Hon'ble ITAT is right in upholding order of Ld.CIT(A) in deleting penalty under Section 271E of IT Act holding that presumption of Section 132(4A) as well as Section 292 of IT Act is not available in case of assessee ignorning that material seized in case of Shri Piyush Modi and statement recorded of Shri Dilip C Sojithra, who categorically explained manner in which cash loan transactions were recorded in seized material? (iii) Whether on facts and circumstances of case in law, Hon'ble ITAT is right in upholding order of Ld CIT(A) in deleting penalty under Section 271E of IT Act holding that presumption of Section 132(4A) as well as Section 292C of IT Act is not available in case of assessee ignoring corroborative evidence seized from third party? Page 4 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/TAXAP/98/2020 ORDER 6. We straightway go to findings of fact recorded by Appellate Tribunal in its impugned order: 8. We have heard rival submissions and perused material available on record. We have gone through assessment order and penalty order in assessment years under consideration. It is observed that 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 possession of assessee. Therefore, presumption under Section 132(4A) as well as under Section 292C is not available in case of assessee. Further, statement on which Assessing Officer has based his findings has not found to be acceptable due to changing stand of parties concern which were also third party. Further, transactions were not found to be true as these were not deciphered by persons from whose possession these were recovered, DCIT, Circle 1(3), Surat Vs. Shri Gauranghai P Upadhyay / ITA No.'s 208 TO 216/SRT/2017 Page 9 of 10. Therefore, charge of Assessing Officer that loans were rightly taken and repaid in cash has not been established. Ld. CIT(A) has given this clear cut findings in quantum appeal in case of assessee against which appeal is also dismissed at level of ITAT. Hence, Ld. CIT(A)'s order has attained finality in quantum proceedings. Therefore, just because assessee has business relations with persons (not even person from whom documents were recovered) nor it is proved that unsubstantiated entry found recorded in simlar name is true and belongs to assessee. We are therefore inclined to agree with findings recorded by 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 transactions reflected in seized material recovered from third party. Page 5 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/TAXAP/98/2020 ORDER Therefore, considering totality of facts, we find no reason to deviate from findings recorded by Ld.CIT(A). Accordingly, appeal of Revenue in respect of penalty under Section 271D and 271E is dismissed. Consequently, all grounds of appeal of Revenue as reproduced above are dismissed. 7. Thus, learned Tribunal took into consideration following aspects: A. addition of interest payment under Section 69C of Act 1961 was made on basis of documents seized from third party. B. Such documents seized from third party reflected loan transactions in cash. 8. Tribunal took notice of fact that such documents were not found or recovered from possession of assessee. In such circumstances, no presumption under Section 132(4A) as well as under Section 292C of Act 1961 could be drawn. Tribunal also took notice of fact that Assessing Officer had based his findings on basis of statement, but statement has not been found to be acceptable in view of conflicting stance. Tribunal concurred with findings recorded by CIT(A) that it is not established that loans were obtained and repaid in cash. Tribunal also took notice of fact that quantum proceedings had attained finality. In short, in view of concurrent findings of fact recorded by two authorities, there is nothing to substantiate case of Revenue that assessee had obtained Page 6 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 C/TAXAP/98/2020 ORDER loan in cash and same was also repaid in cash. 9. In view of aforesaid findings of fact recorded by Tribunal, we are of view that none of questions, as proposed by Revenue, could be termed as substantial questions of law. In result, all captioned Tax Appeals fail and are hereby dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) GIRISH Page 7 of 7 Downloaded on : Tue Mar 17 12:11:18 IST 2020 Principal Commissioner Income-tax, Surat-1 v. Gaurangbhai Pramodchandra Upadhyay
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