TaxTMI 
TaxTMI 
2018 (12) TMI 811
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.... was filed by the assessee. The Assessing Officer also recorded his satisfaction for imposition of penalty u/s 271(1)(c) on account of the addition so made. The matter was carried in appeal before the CIT(Appeals) who partly allowed the assessee's appeal, on appraising the evidences filed by the assessee before him ,deleting the additions made to the extent of Rs. 20 lacs and upholding the balance amounting to Rs. 21,59,000/-. Thereafter the Assessing Officer initiated penalty proceedings by issuing notice u/s 274 of the Act. The assessee requested the matter be kept in abeyance till the disposal of the appeal filed against the order of the CIT(Appeals) to the I.T.A.T and nothing was stated on the merits of the case. The Assessing Officer rejected the plea of the assessee and thereafter levied penalty on the addition confirmed by the CIT(Appeals) of unsecured loans amounting to Rs. 21,59,000/- @ 100% of the tax evaded on the same, amounting to Rs. 7,72,271/-. 3. The assessee filed appeal against the penalty order so passed to the CIT(Appeals). During the course of proceedings before the CIT(Appeals) the assessee pleaded that it had been unable to adduce evidences to prove the gen....
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.... were received back unserved. This fact was brought to the notice of the assessee requesting him to either intimate the addresses of these persons or to produce them in person. But the assessee expressed his inability to produce the said persons and also did not give their addresses, stating that the loans were taken many years back and had also been returned since then and the assessee had no more any link with the said persons. The CIT(Appeals) thereafter proceeded to adjudicate the appeal before him and held that the penalty had been rightly imposed by the Assessing Officer since the assessee had failed to establish the genuineness of the loans either before the Assessing Officer, the CIT(Appeals) or I.T.A.T. in quantum proceedings. The relevant findings of the Ld.CIT(Appeals) at para 4.1 of his order are as under: "4.1 Grounds of Appeal Nos. 1 & 2 pertain to imposition of penalty u/s 271(l)(c). The assessee is aggrieved against the order of the AO imposing penalty amounting to Rs. 7,72,271/- u/s 271(l)(c). The AO has mentioned that a search u/s 132 was conducted in this case on 25.02.2009 and in response to notice u/s 153A, assessee filed return on 02.09.2009 declaring loss o....
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....opportunity to produce them during the appellate proceedings, in order to confirm the loans given by them. The presence was required to establish whether the loans in their names were genuine or these were assessee's own unaccounted funds introduced in the garb of unsecured loans. However, it has clearly been mentioned that 'they cannot be produced'. This casts doubt about the genuineness of the loans shown in their names. The confirmations filed by the AR remains unsubstantiated as these persons have not come forward to give statement about the truthfulness of the facts mentioned in the document. They were required to confirm the facts mentioned in the document filed as confirmation. In the absence of the same, the confirmations filed are not found sufficient to prove the genuineness of the loans from these four persons. The money introduced has to be treated as assessee's own unaccounted income, the particulars of which have been concealed. The penalty has been imposed by the AO for concealing the particulars of income and having furnished inaccurate particulars of the income by giving a different treatment to the credit entries leading to evasion of tax. The ....
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....by the CIT (A) against the facts and circumstances and detailed submissions filed before him and also before the Assessing Officer have not been considered properly. 3. That the Worthy CIT (A) has erred in not entertaining and rejecting the application for additional evidence filed before him. 4. That the levy of penalty is otherwise not valid since no specific charge has been made against the assessee as per the decision in the case of SSA's Emerald Meadows of the Apex Court. 5. Notwithstanding the above, it is submitted that addition made by the Assessing Officer was partly deleted by the CIT(A) in appeal, thus, no penalty u/s 271(1)(c) can be levied as has been upheld by various Courts. 6. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 5. During the course of hearing before us, the Ld. counsel for assessee first took up the issue relating to admission of additional evidences and stated that the CIT(Appeals) had merely followed the observations of the I.T.A.T. in quantum proceedings to reject the admission of the same holding that the said documents could not be construed as evidences f....
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....s of the loans following again the findings of the I.T.A.T. in quantum proceedings. 7. On the merits of the case, the argument advanced by the Ld. counsel for assessee was that for the purpose of levying penalty on account of the additions made of unsecured loans, there had to be conclusive findings that the amount represented the assessee's income and penalty could not have been levied on the findings that the evidences were insufficient to prove the genuineness of the loans, merely reiterating the findings in quantum proceedings. The Ld. counsel for assessee relied upon the following judgements in support of its contention: * CIT vs Bhoj Raj and Co.(2001) 247 ITR 696(P&H) * National Textiles Vs. CIT, 249 ITR 125(Guj) * CIT Vs. Jalaram Oil Mills, 253 ITR 192 (Guj), * Ariel Sarees Pvt. Ltd. Vs. ITO in ITA No.3180/Ahd/2011, dated 23.10.2015 (I.T.A.T. Ahmedabad Bench) * Bhartesh Jain Vs. ITO (2011) 137 TTJ (Delhi) 200. 8. The Ld. counsel for assessee stated that even otherwise the evidences filed by the assessee, though may not have conclusively proved the genuineness of the transaction, but could not have been discarded as being irrelevant also. The Ld. counsel for asses....
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....ments referred to before us. 12. The issue before us relates to levy of penalty u/s 271(1)(c) of the Act for concealment and/or furnishing of inaccurate particulars of income. The income, particulars relating to which were held to be concealed or inaccurate particulars furnished, related to unsecured loans shown to have been taken by the assessee amounting to Rs. 21,59,000/-, the genuineness of which could not be proved by the assessee. 13. The assessee, we find, had filed additional evidences before the CIT(Appeals) in penalty proceedings in three Paper Books which consisted of the following: 1) Details of receipt of impugned loans. 2) Copy of bank statement showing receipt of loans by way of cheques. 3) Copy of accounts of later years depicting repayment of loans and interest being paid to the loan creditors. 4) Copies of TDS Certificates showing TDS on the interest paid. 5) Confirmations of receipt of loans from four parties. 14. The CIT(Appeals), refused to admit the said additional evidences following the order of the I.T.A.T. in quantum proceedings, wherein the above documents were also filed as additional evidences but were refused to be admitted for the r....
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....d also filed confirmations from four parties which had not been filed to the I.T.A.T. in quantum proceedings. The aforesaid documents therefore throw some light on the fact that loans had been taken by the assessee, though they may not be sufficient enough to conclusively prove the genuineness of the transactions. In the light of these documents ,the unsecured loans shown to be taken by the assessee cannot be categorically held to be a bogus transaction, though it may be sufficient for making addition u/s 68 of the Act .The documents therefore are relevant for the purpose of determining whether the assessee had concealed /furnished any inaccurate particulars of income, for the levy of penalty. The rejection of the same for admission by the Ld.CIT(Appeals) is therefore set aside. . Even otherwise, as rightly pointed out by the Ld. counsel for assessee, the Ld.CIT(Appeals) had taken cognizance of these additional evidences and held them to be insufficient for proving the genuineness of the unsecured loans. Therefore, having taken cognizance of the same, the findings of the CIT(Appeals) that it had rejected the additional evidences merits no consideration and is wholly irrelevant. ....