TaxTMI 
TaxTMI 
2020 (4) TMI 216
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cash. However the AO during assessment proceedings treated such unsecured loan as unexplained cash credit under section 68 of the Act, and added to the total income of the assessee. The issue travelled to the ITAT Rajkot. The Hon'ble ITAT set aside the file to the AO for verification of identity, genuineness and creditworthiness of the parties/ transactions. But the assessee failed to appear before the AO in such set aside proceedings. Accordingly the AO continued with the original addition and initiated penalty proceedings under section 271(1)(c) of the Act, for furnishing inaccurate particular of income. 3.1 In view of the above the AO issued notice under section 274 r.w.s. 271(1)(c) of the Act. But the assessee again failed to submit or furnished any reply before the AO. Therefore the AO in absence of any reply or submission held that the assessee has furnished inaccurate particular of income and imposed penalty of Rs. 1,61,568/- being 100% of tax sought to be evaded. 4. Aggrieved assessee preferred an appeal before the learned CIT (A) who confirmed the penalty imposed by the AO by holding as under: 6.3 It is apparent that even during penalty proceeding the appellant is onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Provisions under which penalty imposable should be clearly stated Where there is no clear cut finding recorded by the assessing officer on the point whether he intends to levy penalty for assessee 's concealing the particulars of income or for his furnishing inaccurate particulars of such income, the order of penalty is liable to be struck down. It is for the assessing officer to clearly say as to under which provision he is going to impose penalty. -Vide CIT v. Manu Engineering Works ( 1980) 122 ITR 306 (Guj) and CIT v. Lakhdir Lalji (1972) 85 ITR 77 (Guj). See also Navinbhai M. Patel v. ITO (1988) 27 ITD 411 (Ahd-Trib). 4 In view of the above legal position the penalty levied being not sustainable in the eye of law may kindly be cancelled. 5 As regards merits of the case it may be submitted as under : 5.1.1 The admitted position by the Ld. A.O. as per para 5 of the assessment order is that that the assessee has shown unsecured loan of Rs. 9,70,0007- out of which Rs. 4,90,0007- pertains to 26 persons is old loan pertaining to earlier years. When the Ld. A.O. has accepted identical position for earlier years, the loan received during this years ought to have been accep....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Dharamchand L. Shah 2. 142ITR747(Mad.) Saubhagmal Mahaveerchand 3. 16 TTJ 491 (Ahd.) Sharadchandra C. Patel 7. More ever also when there is no specific satisfaction in original as well as reassessment order, notice issued consequently itself: 1. 277 ITR 337(Del.) Vikas Promoters Pvt. Ltd. 2. 278 ITR 32(Del.) Auto Lampes Ltd. 3. 41 Taxman 496(Kar.) M. W. Pvt. Ltd. 8. It is therefore submitted that penalty levied may kindly cancelled. 6. On the other hand the ld. DR vehemently supported the order of the authorities below. 7. We have heard the learned DR and perused the materials available on record. In the present case the penalty has been levied with respect to the addition made on account of unexplained cash credit under section 68 of the Act. As such the assessee failed to substantiate the cash credit of Rs. 4.80 lakhs based on identity, creditworthiness of the parties and genuineness of the transaction in pursuance to the provisions of section 68 of the Act. Accordingly the AO during the penalty proceedings held that the assessee has furnished inaccurate particular of income with respect to such unexplained cash credits. Thus the penalty was levied by the AO for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tored this issue to the file of the AO for fresh adjudication with the direction to the assessee to furnish the necessary details about the parties from whom it has taken loan. The relevant extract of the order is reproduced as under: The assessee should produce the loan creditors before the AO as required by the AO. The assessee should also produce the documentary evidence regarding repayment of the loan in the subsequent period. The assessee will also produce the evidence about identity and the creditworthiness of the loan creditors as well as the genuineness of transactions and therefore, the AO will pass as order as per law after providing reasonable opportunity of being heard to the assessee. 7.3 But the assessee failed to furnish the necessary details. Thus it is transpired that the assessee with the mala-fide intent has furnished the inaccurate particulars of cash credit in the guise of loan from the parties. 7.4 We are also conscious to the fact that the addition in the present case has been made under the provisions of section 68 of the Act, representing the sum credited in the books of accounts but the assessee offers no explanation about in nature and source thereof ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he impossibility of performance releases the Revenue from its obligation to verify such liability in the present facts and circumstances. A default occurs only when an obligation is not performed. We also find support from the legal maxim "lex non cogit ad impossibilia" meaning thereby that the law does not compel a man to do what he cannot possibly perform. In holding so we find support & guidance from the judgment of Hon'ble Supreme Court in the case of Krishna Swamy S. PD. & ANR Vs. Union of India & ors reported in 281 ITR 305 wherein it was held that : "The other relevant maxim is, lex non cogit ad impossibilia-the law does not compel a man to do what he cannot possibly perform. The law itself and its administration is understood to disclaim as it does in its general aphorisms, all intention of compelling impossibilities, and the administration of law must adopt that general exception in the consideration of particular cases. [See : U.P.S.R.T.C. vs. Imtiaz Hussain 2006 (1) SCC 380, Shaikh Salim Haji Abdul Khayumsab vs. Kumar & Ors. 2006 (1) SCC 46, Mohammod Gazi vs. State of M.P. & Ors. 2000 (4) SCC 342 and Gursharan Singh vs. New Delhi Municipal Committee 1996 (2) SCC 459]."....