TaxTMI 
TaxTMI 
2018 (7) TMI 1616
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....s 143(3) of the Act on 20/12/2010 and assessed total income of Rs. 37, 75, 147/-. The Assessing Officer initiated proceedings U/s 271(1)(c) of the Act on undisclosed income and levied the penalty of Rs. 10, 17, 829/-, which is 100% of the tax sought to be evaded. The ld. CIT(A) has confirmed the levy of penalty. 3. Now the assessee is in appeal before the ITAT. While pleading on behalf of the assessee, the ld AR has reiterated the arguments as made before the ld. CIT(A). He has further submitted as under: The assessee is carrying on business under the name and style of M/s Rajdhani Gas Service at Jaipur since 1981. The assessee is also Director of M/s Tiger Continental Wild Life Resorts Ltd. The company entered into an agreement for the sale of the resorts land with constructed portion with Suresh Agarwal, Dinesh Agarwal, Vijay Bansal Ajay Bansal, for a sale consideration of Rs. 8, 41, 00, 000/- on 29/03/2007. The company as per board resolution dated 26/02/2007 has authorized Mr. H. S. Randhawa "the assessee" to sign this agreement for and on behalf of the company. The company further resolved in board meeting held on 26/02/2007 to receive the cheques from the purchase....
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....k Ltd. 10, 00, 000. 00 Vijay Bansal 06-11-2007 905208 Indusind Bank Ltd. 9, 00, 000. 00 02-04-2007 624457 Indusind Bank Ltd. 9, 00, 000. 00 03-04-2007 624458 Indusind Bank Ltd. 9, 00, 000. 00 03-04-2007 624459 Indusind Bank Ltd. 9, 00, 000. 00 04-04-2007 624460 Indusind Bank Ltd. 9, 00, 000. 00 04-04-2007 905201 Indusind Bank Ltd. 9, 00, 000. 00 05-04-2007 905202 Indusind Bank Ltd. 11, 00, 000. 00 Out of these cheques, the following cheques of the following parties were deposited in the personal bank account of the assessee in the bank of Rajasthan Ltd. , Adarsh Nagar Branch, Jaipur. Out of these cheques some were honored and some were dishonored . The details of which are as under. :- Name Chq. No. Amt. Remarks Dinesh Agarwal 718737-46 1, 25, 00, 000. 00 Honored Suresh Agarwal 605295 06, 00, 000. 00 Honored 108411 10, 00, 000. 00 Honored 108412 10, 00, 000. 00 Hon....
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....see was maintaining complete books of accounts of his business being in the name of M/s Rajdhani Gas Service and these accounts of business were audited u/s 44AB under the Income Tax Act. These audited accounts were filed with the AO during scrutiny. No personal balance sheet was ever prepared in the past and in this year. The bank statement was filed before Assessing Officer during scrutiny. From the perusal of the bank statement there was a credit balance of Rs. 64, 00, 000/- as on 01-04-2007 thereafter the cheques received from the purchaser were credited, which were credited at the time of deposit but on receipt of intimation from the purchaser's bank, 6 cheques which were returned dishonored were debited in assessee's Bank A/c. Out of the honored cheques the assessee purchased one FDR for Rs. 50, 00, 000/- on 12-04-2007. Thereafter the assessee purchased another FDR on 25-04-2007 for 3500000/-. It will further be observed the assessee use to withdraw cash from the bank and if the same was not utilized was deposited back in the bank account . In this respect we are enclosing here with the cash account(See P. B. Pg. No. 10) for your kind perusal . From the statement you....
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.... imposing penalty under this chapter shall be made - (a) By the Income Tax officer , where the penalty exceeds RS 10000; (b) By the Assistant Commissioner (or Deputy Commissioner ), where the penalty exceeds twenty thousand rupees, Except with the prior approval of Joint Commissioner (3) An Income Tax Authority on making an order under this chapter imposing a penalty , unless is himself the assessing officer shall forth with send the copy of such order to the Assessing officer From the reading of the penalty order it is no where mentioned that the AO has taken prior Approval of Joint Commissioner as mentioned in sub-section (2) of 274. In Circle-3 , Jaipur there was no Joint Commissioner at the time of passing of the penalty order . There was only one additional Commissioner of Income Tax . The CIT(A) confirmed the action of the AO of imposing penalty u/s 271(1) (c). The assessing officer made addition of cash deposit in the Bank by the assessee. The addition was made only on the ground that it was a cash deposit. Whereas the penalty was imposed taking a ground that the income escaped assessment and the income was co....
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....ipt was explained and written submission was made how the receipt has been taken as income from undisclosed source. There is a set law by the Honorable Supreme Court in CIT v. Reliance Petro chemical case that the officer imposing penalty must prove beyond doubt that there was intentional non disclosure which is not the case here. 5. The claim of appellant was bonafide. It is not either a case of concealment of particulars of income. Appellant has been able to substantiate as to how cash was received and deposited in the account. Therefore, Expl. 1 to section 271(1)(c) is also not attracted. In such a situation penalty is not leviable. Therefore the finding of the Learned CIT(A) is exfacie incorrect. Hence, the impugned order is liable to be set aside. Reliance is placed on CIT v. Pawan Kumar Garg 334 ITR 241. It has been held by the Hon'ble High Court as under. :- " Held dismissing the appeal that the officer who issued the warrant of authorisation on 25. 05. 2000 was not a Joint Director of Income-tax, but was the Additional Director of Income-tax (Investigation). Secondly, the notification that was necessary in the present case, was a notification by the Board ....
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....mount to furnishing inaccurate particulars regarding the income of the assessee, such a claim made in the return cannot amount to the inaccurate particulars. " The ITAT Ahemdabad bench in ITO v. Bipin Chandra Velji (41 TTJ 347, 350) has held that. :-(See. P. B. of judgements Pg. No. 19-22) "While an addition can be made on a balance of probabilities, penalty can be imposed only if the default is proved beyond reasonable doubt. Since, as stated above, another view is possible on the facts, it cannot be said the assessee's default is proved beyond reasonable doubt. On the basis of the above possible view the assessee could at least have entertained a bona fide belief that he had incurred a business loss. Also since a different view as indicated above is possible, this is not a fit case for levy of penalty. " Similar view has been expressed in the case of Buddish Chandra, ChimanLal Shah v. ITO (43 TTJ 262) ITAT, Jaipur bench in the case of Aditya Mills Ltd. v. IAC (44 TTJ 363, 375) has held as under. :- " Certain circumstances or factors may have created suspicion but due to fact that full enquiry or investigation was not made or not possible to be made ....
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....O was not justified to impose the penalty under s. 271(1)(c) on the assessee. " ITAT, Jaipur Bench has held in the case of Parasmal Parekh v. CIT (1996) 58 ITD 34, 41, 42 (JP):(See. P. B. of judgements Pg. No. 53-65) " By virtue of explanation 1 to section 271(1) (c), though presumption were raised against the assessee, those were rebuttable presumptions. And in the process of rebuttal, if the explanation of the assessee was not accepted or was found to be false, that itself would not constitute sufficient material to attract penal provisions. The entirety of circumstances must point to the conclusion of concealment before penalty could be imposed. This principle has been enunciated by their Lordships in Calcutta High Court in the case of CIT v. BhuramalManik Chand (1980) 121 ITR 840. " It is therefore respectfully prayed that the penalty imposed by CIT(A) u/s 271(1) (c) is bad in law as per the provision contained in section 274. The Hon'ble ITAT Jaipur Bench in the case of Sh. Gyan Chand Jain in ITA 53/JP/2011 for A. Y. 1998-99 following the Supreme Court decision and Delhi High Court decision in the case of Pawan Kumar Garg. A copy of ITAT order is being enclosed ....
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....ector. Total cash of Rs. 48 lacs is said to have been given by the buyers, in lieu of dishonoured cheques. The following points about this explanation furnished by the appellant, merit consideration- (a) The appellant has not given confirmation of the persons who are said to have given the cash, in spite of numerous opportunities having been given. Also, the appellant has not been able to produce the persons who are said to have given this cash. Also, no evidences, in the form of cash book, bank book, bank statement etc, showing the source of this cash in hands of the persons giving the cash were produced or submitted. The appellant has submitted Xerox copies of cash receipts but these receipts contained only the signature of the appellant and not of the buyers / persons said to have given cash. Furthermore, these receipts also do not contain the dates on which this cash was received. The appellant has filed a copy of the FIR filed by the buyers / person said to have given cash which states that the buyers have given a sum of Rs. 3, 51, 00, 000/- by cheque and cash. In this FIR, the amount of cash given or the date on which this cash was given, has not been mentioned. It i....