TaxTMI 
TaxTMI 
2021 (7) TMI 870
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.... The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said penalty of Rs. 7,73,859/-. 2. In the facts and circumstances of the case and in law the ld. AO has erred in imposing penalty under section 271(1)(c) without specifically pointing out in the show cause notice, whether the penalty was proposed on concealment of particulars of income or for furnishing inaccurate particulars of income." 4. During the course of hearing, the ld AR submitted that as far as addition of Rs. 2,79,000/- and of Rs. 10,05,301/- confirmed by the CIT(A) is concerned, the impugned penalty order should have been passed by 31.03.2011 and given that the penalty order has been passed on 22.03.2013, hence, as far as the above two additions are concerned, they have become barred by limitation on 31.03.2011 and cannot be made a part of the order of penalty passed on 22.03.2013. These two items may, therefore, be deleted from the impugned penalty order. Regarding the third addition of Rs. 8,30,000 is concerned, it was submitted that the only basis on which the penalty was levied was that the addition of Rs. 8,30,000/- had be....
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....oans through cheque but genuineness not proved 8,30,000/- Set-aside back to AO for re-examination 4. Unexplained advances against flat bookings 10,05,301/- Addition confirmed by ITAT 5. Disallowance u/s 40A(3) 1,33,200/- Addition confirmed by ITAT Total 38,28,001/- In view of the items at S.No. 1 & 3 above being set-aside back to the file of the AO, the ITO, Ward 3(1) passed an order u/s 143(3)/250/set-aside on 06.12.2010 at a total income of Rs. 37,26,110/- in which the amounts of Rs. 15,80,000/- and of Rs. 8,30,000/- were added back as unexplained credits. Being aggrieved of the said order, the Appellant appealed to the CIT(A) who deleted the addition of Rs. 15,80,000/- (which was later on added in the hands of the sister concern M/s Orbit Polytech Pvt. Ltd.) and confirmed the addition of Rs. 8,30,000/-, vide her order dated 19.09.2011. No appeal was apparently filed against the said order. Thereafter, the impugned penalty order u/s 271(1) (c) was passed on 22.03.2013. 3. That ,as the facts narrated above, which are mentioned in the penalty order, out of the 3 additions on which penalty has been levied, 2 , namely those of Rs. 2,79,000/-....
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....ase, by 31.03.2011. It was passed on 22.03.2013, hence, as far as the above two additions are concerned, they have become barred by limitation on 31.03.2011 and cannot be made a part of the order of penalty passed on 22.03.2013. These two items may, therefore, be deleted from the impugned penalty order. 4. Now what is left is only the addition of Rs. 8, 30,000/- which is the total of the credits received by the following creditors: S.No. Name of Creditor Amount 1. Shri Roop Singh Rathore 1,65,000/- 2. Shri Dashrath Singh 75,000/- 3. Shri Dinesh Sharma 2,00,000/- 4. Shri Shrawan Lal 3,00,000/- 5. Shri Surendra Singh 90,000/- Total 8,30,000/- GROUND NO. 1 OF APPEAL: Before, these credits are discussed, it may be submitted that penalty proceedings have been held to be proceedings separate from assessment proceedings inasmuch as assessment proceedings are taxing proceedings while penalty proceedings are criminal proceedings in their very nature and a decision given in an assessment proceedings cannot possibly bind the authority who tries the assessee for an offence. For this proposition, strength is drawn from the following case laws: 1)....
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....has taken unsecured loans of Rs. 8,30,000/- from five persons through cheques. Since the amounts were received through banking channel, it automatically proves the identity of the lenders and the genuineness of the transactions. Since the payment was received from banking channels, the AO, using his statutory powers, could have gathered further evidence from these persons as well as the bank directly. On account of such inaction on the part of the AO the assessee company has already suffered tax and interest thereon. In view of the fact that the AO himself stated that the amounts have been received through cheques, no penalty is imposable." From the explanation offered above, it is clear that: admittedly the amounts in question had been received through cheques. Hence, the identity of the creditors, and the genuineness of transaction stood proved. b) the source of the credit was the bank account of the creditor, hence his creditworthiness stood proved. If the AO had any doubt about the source, he could have and should have made inquiries from the concerned bank, using his statutory powers. this was not done. c) since the creditors claimed to be agriculturists, they were not....
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.... should have made fresh inquiries at his level.. For example, if the creditors were agriculturists, he could have got inquiries made as to their land holding, the quantum of agriculture produce, the likely amount for which it could have been sold, to try and find out their worth in money terms, and whether they had the financial wherewithal to advance that much amount of money. He could have obtained a copy of the relevant bank account to find out how much money was there in the bank, and whether the credit could be explained from the bank balance. This he did not do, and relied solely and totally on the findings at the quantum level balance. This procedure is against established law as expounded in the case laws mentioned above, hence needs to be rejected. Further, once creditors had owned up the credit, and their identity was established, the addition, if it had to be made, should have been considered in the hands of the creditors. This is the import of the decision of the Hon'ble Supreme Court in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC) wherein the Hon'ble Apex Court held that if share application money is received by the assessee company f....
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....v. SSA's Emerald Meadows [2016] 242 Taxman 180 (SC); c) Yum Restaurants (India) (P.) Ltd. v. ITO[2017] 58 ITR(T) 107(Delhi-Trib.); d) Mohd. Sharif Khan v. Dy. CIT [2017] 58 ITR(T) 260(Jaipur- Trib.). Copies of the decisions at S.No. b), c) & d) above are annexed herewith and marked as Annexures A/5, A/6 & A/7. It is pertinent to point out that in the case of Mohd. Sharif Khan supra the Hon'ble ITAT, Jaipur has, after considering the relevant case laws, has held that if the relevant portion of the penalty notice is not ticked, then the notice is invalid , and the penalty proceedings are to be quashed. In the said decision, reference is also made of the decision of the Hon'ble Rajasthan High Court in the case of Sheveta Construction Co. (P.) Ltd. v. ITO [DB IT Appeal No. 534 of 2008] whose ratio decidendi is the same. Hence, in view of the binding decision of the jurisdictional High Court in the case of Sheveta Construction Co. (P.) Ltd. supra and of the ITAT, Jaipur Bench in the case of Mohd. Sharif Khan supra, it is submitted that the present penalty order also deserves to be quashed." 5. Per contra, the ld. DR submitted that the penalty order has been duly p....
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....Hon'ble ITAT as the matter was pending with theAO and it was premature for imposing penalty under sec. 271(1)(c) of the I.T. Act, 196. The penalty under sec. 271(1)(c) of the I.T. Act, 1961 was imposed only after the order dated 19.09.2011 of the ld. CIT(A). The said penalty has been imposed with the stipulated time frame after the receipt of the order of Ld. CIT(A)." 6. Further, the ld. DR relied on the finding of the lower authorities and our reference was drawn to the findings of the ld. CIT(A) which are contained at para 5 which read as under:- "5 शास्ति आदेष में वर्णित तथ्योें और अपीलार्थी के लिखित निवदेन में दिये गये तर्कों पर विचार करनेे के उपरांत अप....
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....ceedings, the matters which were remanded by the Tribunal were again brought to tax by the AO against which the assessee carried the matter in appeal before the ld CIT(A) where part relief was granted and part addition were confirmed. And with the order of the ld CIT(A) dated 19.09.2011, the matter in the quantum proceedings attained finality and no further appeal was filed by either of the parties. The AO thereafter passed the penalty order on 22.03.2013 u/s 271(1)(c) of the Act which has been confirmed by the ld CIT(A) and against which the assessee is in appeal before us. 8. Coming specifically to the three issues which have been considered for levy of penalty u/s 271(1)(c) as apparent from Para 6 of the penalty order, it is noted that in respect of addition of Rs. 2,29,500/- on account of unsecured loans below Rs. 20,000/-, the assessee has not preferred any appeal and the matter has attained finality with the passing of the original assessment order u/s 143(3) dated 28.12.2007. 9. In respect of addition of Rs. 10,05,301/- on account of unexplained advances against flat bookings, the assessee preferred an appeal before the ld CIT(A) and thereafter, before the Tribunal wherein....
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....t is the provisions contained in section 275(1)(a) of the Act. In terms of section 275(1)(a), it has been provided that no order imposing a penalty under this chapter shall be passed in a case where the relevant assessment order is the subject-matter of an appeal to the Commissioner(Appeals) under section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever period expires later. 13. By way of proviso to section 275(1)(a), it has been further provided that where the relevant assessment or other order is subject matter of appeal to the ld CIT(A), order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the....
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....International Limited vs CIT [2018] 91 taxmann.com 287 (Delhi) wherein the Hon'ble Delhi High Court was pleased to held as under: "11. A plain and textual reading of Section 275(1A) (section 275(1)(a)) clarifies that the expiry of six months prescribed is to be reckoned "from the date of completion of proceedings or from the end of the month in which the order of the CIT(A) or as the case may be the appellate tribunal is received." If the logic of the provision is kept in mind, it is obviously an adjudicatory "order" which culminates in "the proceedings" (i.e. an order that determines inter alia the rights of the parties finally) that is to be deemed a terminus quo for the completion of penalty proceedings. Any other interpretation would inject a great deal of uncertainty because in either case of maintainability of an appeal preferred by either the revenue or the assessee, in the eventuality of withdrawal of that appeal, without an adjudicatory order, the period of limitation would be deemed to subsist. The law abhors uncertainty. Therefore, the dependence of the period of the limitation upon whether an order becomes final at the instance of one party, i.e. that filing and pro....
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....stated that "in view of aforesaid discussion, it is clearly established and satisfied that the assessee has concealed the income to the tune of Rs. 21,14,801/- and is liable for penalty u/s 271(1)(C) of the Act." We therefore find that even though at the time of initiation of penalty proceedings, the AO was not decisive about the specific charge, however while passing the penalty order, the AO has given a clear and specific finding as to how it is a case of concealment of income and which shows apparent consideration and application of mind on part of the AO. In this regard, useful reference can be drawn to the decision of the Third Member in case of HPCL Mittal Energy ltd [2018] 97 taxmann.com 3 (Amritsar-Trib) wherein various decisions relied upon by the ld AR have also been considered and it was held as under: " 21. Apart from the above three situations in which the AO has clear-cut satisfaction, there can be another fourth situation as well. It may be when it is definitely a case of under-reporting of income by the assessee for which an addition/disallowance has been made, but the AO is not sure at the stage of initiation of penalty proceedings of the precise charge as to ....
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....ce against flat booking of Rs. 10,05,301/- had been confirmed by the ld. CIT(A) as well as Hon'ble ITAT which also established that the assessee had introduced its unaccounted money in its books of accounts in the shape of cash credits. Further, the facts of the case laws quoted by the AR of the assessee are completely different from the instant case. Thus, it is clear that the assessee company had introduced its undisclosed income to the extent of Rs. 21,14,801/- (Rs. 2,79,500 + 8,30,000 + Rs. 10,05,301). Further, it is mentioned here than if the case of the assessee had not been selected under scrutiny then the amount to the extent of Rs. 21,14,801/-, as discussed above, would have not been taxed. Therefore, it is clearly established that the assessee has introduced his undisclosed income by way of introducing unexplained/bogus credits in various forms. 11. In view of aforesaid discussion, it is clearly established and satisfied that the assessee has concealed the income of Rs. 21,14,801/- and it is liable for penalty u/s 271(1)(c) of Act 1961. Thus, it is a fit case for levy of penalty u/s 271(1)(c). I therefore, proceed to levy penalty of Rs. 7,73,859/-. " 21. We therefore....
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....n the following decisions:- CIT vs. P Mahan Kal (2007) 291 ITR 278 (SC) CIT vs. Hanuman Agarwal (1985) 151 ITR 150 (Pat.) 8. The ld. D/R on the other hand has tried to justify the orders of the lower authorities that none of the three requirements of section 68 i.e. identity, creditworthiness of the creditor and genuineness of transaction has been established by the assessee. 9. Considering the above submissions, we, in the interest of justice remand the matter to the file of the AO with this direction that if the assessee had filed confirmations of the creditors before the AO, then AO in case of doubt will issue summons to the creditors on the given address to verify the correctness thereof and decided the issue afresh accordingly after affording opportunity of being heard to the assessee. The ground no.2 is thus allowed for statistical purpose." 23. We therefore find that the assessee has submitted before the Tribunal that the payment have been received through cheque, all creditors have confirmed the amount and filed their confirmations, all the transactions have been entered in the books of accounts and bank balance show sufficient funds and basis such contentions, the....