Subject : Specifically asked to ascertain the creditworthiness,
Referred Section:
Section 143(3) of the Income Tax Act,
Section 40A(3)
Section 271 (1)( c).
Referred Cases / Judgments
CIT vs. Reliance Petroproducts Pvt. Ltd.
CIT vs Upendra Vs Mithani in IT
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
I.T.A. No. 1396/Del/2015
A.Y. : 2010-11
SAKET AGARWAL, vs. INCOME TAX OFFICER-3
PROP. M/S SAKET FURNITURE & HALDWANI
DECORATORS,
C/O SH. SAUBHAGYA AGARWAL,
PARTNER, A.S. LEGAL,
LAW OFFICES,
FIRST FLOOR, NEW FRIENDS
COLONY,
NEW DELHI 110 025
(PAN: AAPPA0183M)
(Appellant ) (Respondent )
Assessee by : Sh. SATYAJIT, CA
Department by : Sh. K. TEWARI, SR. DR.
ORDER
PER H.S. SIDHU, JM
This appeal by the Assessee is directed against the order of the
Ld. Commissioner of Income Tax (Appeals)-II, New Delhi dated
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06.1.2015 pertaining to assessment year 2010-11 on the following
grounds:-
I) That having regard to the facts and circumstances of the
case, Ld. CIT(A) has erred in law and on facts in confirming
the action of AO in levying penalty of Rs. 90,000/- and that
too without assuming jurisdiction as per law and without
considering the facts and circumstances of the case and
without considering the submission of assessee and latest
position of law in this regard and the impugned penalty
order being illegal and void ab-initio.
II) That having regard to the facts and circumstances of the
case, Ld. CIT(A) has erred in law and on facts in confirming
the action of AO in passing the impugned penalty order
being contrary to law as the assessment order framed
under section 143(3) dated 6.3.2013 was also illegal,
beyond jurisdiction and void ab-initio.
III) That having regard to the facts and circumstances of the
case, Ld. CIT(A) has erred in law and on facts in confirming
the action of AO in levying penalty u/s. 271(1)(c) on the
additions made in the assessment order u/s. 143(3) dated
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6.3.2013 as these additions / disallowances are also
contrary to law and facts.
IV) That having regard to the facts and circumstances of the
case, Ld. CIT(A) has erred in law and on facts in confirming
the action of AO in levying penalty u/s. 271(1)(c) is bad in
law being beyond jurisdiction and barred by limitation and
contrary to the principles of natural justice and has been
passed by recording incorrect facts and findings and without
giving adequate opportunity to the assessee and the same
is not sustainable on various legal and factual grounds.
V) That having regard to the facts and circumstances of the
case, Ld. CIT(A) has erred in law and on facts in confirming
the action of AO in framing the impugned penalty order and
that too without recording mandatory "satisfaction" as per
law which is a pre-requisite condition as per law.
VI) That the assessee craves the leave to add, alter or amend
the grounds of appeal at any stage and all the grounds are
without prejudice to each other.
2. The brief facts of the case are that the return of income was filed by
the assessee declaring total income of Rs. 3,91,770/- on 15.10.2010.
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The assessment was completed on total income at Rs. 5,66,770/-
under section 143(3) of the Income Tax Act, 1961 on 06.3.2013. In
his return of income the assessee has declared income from furniture
shop, income from property dealing and income from printing of
newspaper business in the name and style of `Uttaranchal Deep
Publications'. In addition to that the assessee has also shown his
income from agricultural activities of Rs. 1,20,000/-. On examination
of book of accounts of M/s Saket Furniture & Decorator it was
discovered that the assessee made cash transactions with 08 parties
mentioned in the penalty order. During the course of assessment
proceedings, the assessee was required to explain the nature as well
as to establish the genuineness of these transactions claimed to be
entered with different persons. Further, the assessee was specifically
asked to ascertain the creditworthiness and genuineness of the
transactions; also required to discharge his burden of proof with
regard to cash transactions appearing in his books of account by
producing the documents and in response thereto assessee contended
that the eight persons have genuinely advanced the money for
purchase of goods but due to any reasons they have taken their
money back which they had advanced earlier. But due to lack of their
addresses it is very difficult to either present them or get their
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confirmation. Thereafter, the AO observed that assessee has been
found to be in the habit of introduction of unaccounted cash in his
books of accounts (as the assessment order u/s. 143(3) and the
penalty order u/s. 271(1)© for AY 2009-10 suggests). Therefore,
under the circumstances the AO observed that there is sufficient
element to establish the fact of concealment on the part of the
assessee, hence, he levied the penalty of Rs. 90,000/- equivalent to
200% of the tax evaded u/s. 271(1)© of the Act vide order dated
30.9.2013.
3. Against the above Penalty Order dated 30.9.2013 passed by the
Assessing Officer, assessee appealed before the Ld. First Appellate
Authority, who vide impugned order dated 06.1.2015 dismissed the
appeal of the assessee.
4. Against the above order of the Ld. CIT(A) dated 06.1.2015,
assessee is in appeal before the Tribunal.
5. Ld. Counsel of the assessee reiterated the grounds of appeal as
well as the submissions made before the Ld. CIT(A). He filed a Paper
Book containing pages 1 to 12 having the copy of assessment order
dated 6.3.2013 passed in assessee's own case u/s. 143(3) during
quantum proceedings; copy of notice u/s. 271(1)© dated 6.3.2013
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issued alongwith the said order; copy of assessee's reply dated
7.9.2013 filed to AO during the course of penalty proceedings; copy of
written submissions dated 26.8.2014 filed before Ld. CIT(A) and copy
of further submissions dated 6.1.2015 filed before Ld. CIT(A). He
further stated that Ld. CIT(A) has wrongly confirmed the action of AO
in levying penalty of Rs. 90,000/- and that too without assuming
jurisdiction as per law and without considering the facts and
circumstances of the case and without considering the submission of
assessee and latest position of law. He further submitted that
Ld.CIT(A) has erred in confirming the action of AO in passing the
impugned penalty order being contrary to law as the assessment
order framed under section 143(3) dated 6.3.2013 was also illegal,
beyond jurisdiction and void ab-initio. In support of his contention, he
relied upon the decision of the Apex Court in the case of CIT vs.
Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR-158 (SC) and
submitted that the penalty in dispute is unwarranted and may be
deleted.
6. Ld. Departmental Representative controverted the arguments
advanced by the Ld. Counsel of the assessee and he relied upon the
orders of the revenue authorities.
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7. We have heard both the counsel and perused the orders passed
by the Revenue authorities as well as the Paper Book of the assessee
containing pages 1 to 12 having the copy of assessment order dated
6.3.2013 passed in assessee's own case u/s. 143(3) of the Act during
quantum proceedings; copy of notice u/s. 271(1)© dated 6.3.2013
issued alongwith the said order; copy of assessee's reply dated
7.9.2013 filed to AO during the course of penalty proceedings; copy of
written submissions dated 26.8.2014 filed before Ld. CIT(A) and copy
of further submissions dated 6.1.2015 filed before Ld. CIT(A). We find
that in the assessment proceeding u/s. 143(3) the Act the Addition on
account of unsubstantiated cash deposit Rs. 1,20,000/- ; ii) Addition
on account of contravention of the provisions of section 40A(3)
Rs.35000.00 and iii) Addition of provision of salary payable of
Rs.20000/- alleging that fake provision were made. We find that with
regard to addition of Rs.1,20,000/- the assessee had fully explained
the entries as mentioned in its books because all the persons and
transaction are genuine from whom amount was accepted as loan for
just financial assistance and on being comfortable all transactions of
loans were returned back. Confirmation of all persons were filed before
the lower authorities. We note that at the time of assessment the
assessee had given a consent to add the loans in their income to
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avoid litigation and save valuable time but which does not mean that
the amount entered in the books in name of different persons are
unverifiable therefore it cannot be treated as unsubstantiated cash
deposit. But the AO has wrongly alleged in penalty order that the
assessee contended the persons have genuinely advance the money
for purchase of goods but due any reasons they have taken their
money back which they have advanced earlier lack of their addresses
it is very difficult to either present them or get their confirmations. As
regard the second addition was made due to cash payment of Rs.
35,000/- it cannot be treated as concealment of income or furnishing
of inaccurate particulars because the payment was made to M/s
Shakurnbhary Straw Products as accepted in assessment order which
is also supported by voucher. In this regard the only default was
contravention of the provision of section 40A(3). Since there was no
concealment of income nor furnishing of inaccurate particulars
therefore penalty cannot be imposed on this point. The third addition
was made by disallowing the provision of salary payable which was
made for salary expenses incurred genuinely for previous year, at the
time of assessment the assessee could not produce the person to
whom the salary was given because that person was left job therefore
consent of addition had been given, but this does not mean that
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assessee had concealed income or furnished inaccurate particulars.
However, later, the assessee had received the confirmations from the
persons to whom the amount of salary was given and produced the
same before the Ld. CTI(A), which was not considered.
7.1 In view of above, there was no concealment of income nor
furnishing of inaccurate particulars on the above points because mere
non-acceptance of explanation offered cannot form a basis for the
satisfaction of assessing authority to the effect that the assessee has
concealed particulars of his income. In this regard, we draw support
from the decision of the Hon'ble Apex Court in the case of CIT Vs
Reliance Petro products Pvt. Ltd. (2010) 3 taxmann.com 47 (SC)
wherein the Hon'ble Supreme Court has held that merely because the
assessee had claimed the expenditure, which claim was not accepted
or was not acceptable to the Revenue that by itself would not attract
the penalty under section 271 (1)( c). We further find support from the
decision in the case of CIT Vs Upendra Vs Mithani in IT A No. 1860 of
2009 dated 05.8.2009 wherein the Hon'ble High Court of Bombay has
held that if the assessee gives the explanation which is unproved but
not disproved i.e., it is not accepted but circumstances do not lead to
the reasonable and positive inference that the assessee's case is false
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then penalty imposable. However, in this case the explanation remains
unproved but it cannot be said to disproved. We further find that as
regards furnishing of inaccurate particulars, no information given in
the return was found to be incorrect or inaccurate. We further find that
section 271(1)(c) postulates imposition of penalty for furnishing of
inaccurate particulars and concealment of income. Therefore, the
assessee has not at all concealed any particulars of such income and
has also not furnished inaccurate particulars of income.
7.2 In the background of the aforesaid discussions and respectfully
follow the precedents, as aforesaid, we are of the considered view
that the assessee has neither concealed the income nor furnished
inaccurate particulars of income and there are no findings of the
Assessing Officer and the CIT (Appeals) that the details furnished by
the assessee in his return are found to be incorrect or erroneous or
false. Under these circumstances, in our view the penalty in dispute is
totally unwarranted and deserve to be deleted. Accordingly, we
delete the penalty of Rs. 90,000/- made u/s. 271(1)(c) of the
I.T. Act and quashed the orders of the authorities below on the issue
10
in dispute.
8. In the result, the appeal filed by the Assessee stands allowed.
Order pronounced on 03/07/2018.
Sd/- Sd/-
[PRASHANT MAHARISHI] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date: 03-07-2018
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR,
ITAT
TRUE COPY By Order,
Assistant Registrar
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