TaxTMI 
TaxTMI 
2020 (4) TMI 216
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Rs. 4,80,000/- from 24 different persons in 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 apparen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cifically required to arrive at a charge specifically. 3.3 In view of the above it is humbly submitted that 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 perta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....subsequent thereto, repeating to make no inquiry nor calling addressed of the assessee's, cash creditors the same is also not sustainable in view of the following judicial guidelines 1. 204 ITR 462(Bom.) 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 trans....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the parties such as identity, creditworthiness of the parties and genuineness of the transactions despite the necessary opportunities were provided to it. As such, it is the 2nd round of appeal before us. On the earlier occasion the ITAT in ITA number 322/Rjt/2012 vide order dated 30-08-2012 has restored 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 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so encompass the concept of severe impracticability. In our humble opinion, the doctrine of impossibility of performance applies in this case. Due to uncontrollable circumstances, the performance of the obligation to verify the loan creditors was not possible by the Revenue as no details were furnished by the assessee. Thus the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hout mentioning the specific charge. The relevant extract of the order is reproduced below: 9. Regarding the contention that the Assessing Officer was ambivalent regarding under which head the penalty was being imposed namely for concealing the particulars of income or furnishing inaccurate particulars, we may record that though in the assessment order the Assessing Officer did order initiation of penalty on both counts, in the ultimate order of penalty that he passed, he clearly held that levy of penalty is sustained in view of the fact that the assessee had concealed the particulars of income. Thus insofar as final order of penalty was concerned, the Assessing Officer was clear and penalty was imposed for concealing particulars of income. In light of this, we may peruse the decision of this Court in case of Manu Engineering Works (supra). In the said decision, the Division Bench came to the conclusion that language of "and/or" may be proper in issuing a notice for penalty, but it was incumbent upon the Assessing Authority to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had be....