TaxTMI 
TaxTMI 
2005 (10) TMI 209
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.... cash loans to various persons. He recorded the statement of Shri Harbans Lal, wherein he stated that he had advanced loans of Rs. 80,000 repayable in instalments of Rs. 100 per day. He further stated that he advanced fresh loan after the first loan was returned by the borrower. Since Shri Harbans Lal was not able to explain the source of various loans advanced to parties, he disclosed income under VDIS to cover these loans. The assessment was accordingly completed in the case of Shri Harbans Lal. Thereafter, it appears that the Assessing Officer obtained copies of the accounts of various persons to whom he had given loans. The Assessing Officer observed that the assessee had advanced loans in cash to various persons including these two persons in violation of the provisions of section 269SS. He, therefore, referred the case to JCIT, Bhatinda, for consideration of levy of penalty under section 271D of the Income-tax Act. Accordingly, the JCIT issued show-cause notices to the aforesaid persons. Since he was not satisfied with the explanation of the aforesaid persons, he imposed penalties of the following amounts for the below mentioned assessment years: ----------------------------....
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.... was specifically pointed out that repayment of certain amounts duly acknowledged by Shri Harbans Lal was not entered in the respective accounts of the parties in the books of account of M/s. Juneja Traders. It was also contended that all these persons were poor and illiterate. None of them was assessed to tax. Therefore, they were not aware of the provisions of the Act that acceptance of cash loans exceeding the prescribed limit attracted levy of penalty. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326. It was also submitted that the penalty should not be levied on these persons because the default was not intentional. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26. In addition, reliance was also placed on the decision of I.T.A.T. Chandigarh Bench in ITO v. Rajendera Trading Co. [1994] 48 ITD 210 (SMC)/48 ITD 211 and some other cases. The learned CIT(A) considered these submissions. He observed that the Assessing Officer has imposed penalty in all these cases by relying copies of....
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....ch in the case of Sangrur Vanaspali Mills Ltd. v. Asstt. CIT 23 IT Rep. 572, where it has been held that assessment based on oral evidence or statement of witness recorded in the absence of the assessee without allowing him an opportunity of cross examination and additions made by relying on certain documents obtained from the 3rd party without affording an opportunity to the assessee to rebut the material contained therein violated the principles of natural justice and could not be sustained (A copy of this decision is also placed before us). (b) The judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT v. Radhey Sham Sita Ram [2003] 22 IT Rep. 667, where it was held that the addition made by relying on the statement of third party without allowing an opportunity to the assessee to cross examine the witnesses could not be sustained (A copy of the judgment was placed before us). (c) The decision of the ITAT Delhi Bench in the case of Dolly Farms & Resort (P.) Ltd. v. Dy. CIT 15-IT Rep. 159 (TM), where it was held that the justice should be done even if the heaven falls. (A copy of the judgment was placed before us). (d) The decision of the ITAT (Delhi Benc....
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....rders of the authorities below and referred to the respective pages of the paper book to which our attention has been drawn. The undisputed facts of the cases are that penalty under section 271D has been imposed in all the cases by relying on the copies of accounts of these parties appearing in the books of account of M/s. Juneja Traders obtained by the Assessing Officer during the course of assessment proceedings in the case of M/s. Juneja Traders. The copies thereof were not given to these persons during the penalty proceedings. Further, we have also noticed that a copy of statement of Shri Harbans Lal recorded by the Assessing Officer during the course of assessment proceedings was not given to these persons during the penalty proceedings. No opportunity to cross examine Sh. Harbans Lal was allowed to these persons. Thus, the action of the Jt. CIT in levying the impugned penalty in all these cases by relying on the copies of accounts of these persons appearing in the books of account of a third party without confronting the same to the affected parties and without allowing an opportunity to cross examine Shri Harbans Lal violated the principles of natural justice. It is a trite ....
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....ghly doubtful and the same could not form the basis of levy of penalty under section 271D in these cases. 7.2 The learned CIT(A) has sustained penalty of Rs. 30,000 each for each of the assessment years by taking notice of the fact that these persons had stated in their statements that they availed of loans two or three times in their life span. There is no finding recorded by the ld. CIT(A) whether such loans exceeded the prescribed limit for which penalty was leviable and consequently whether these loans were taken after the old had been returned. If these persons had taken loans twice or thrice in the entire life span, how could a penalty of Rs. 30,000 in each case for each assessment year could be sustained purely on ad hoc basis. This is not a case of G.P. addition. No penalty can be levied or sustained purely on ad hoc basis or estimated basis. The authority concerned is required to record a specific finding about a particular transaction entered by these persons in violation of the provisions of section 269SS. No such finding has been recorded by the learned CIT(A) after accepting the position that the department has not been able to place any evidence in support of levy ....
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....no doubt true that ignorance of law is of no excuse. But there is also no presumption that every person knows the law. Reliance in this regard is placed on the judgment of Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1978] 118 ITR 326. 7.4 Mere violation of the provisions of section 269SS does not automatically invite levy of penalty under section 271D of the Income-tax Act. Section 274 provides that no penalty shall be imposed until the assessee has been allowed reasonable opportunity of being heard. This necessarily implies that in a case where the assessee has explained that he acted in a bona fide belief and his conduct was not contumacious and dishonest, no penalty can be imposed. Reliance in this regard is placed on the often cited judgment in the case of Hindustan Steel Ltd., where the Hon'ble Supreme Court has held: "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in a c....
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....nt requesting him for sending of unsigned proposed draft order as required in Clause 6 of 'Convention to be observed by the Members' as contained in the Departmental book "Convention and Other useful Information for Members of the Income Tax Appellate Tribunal" under the head 'Procedure in the cases of dissent' and Ld. AM refused to do the same on the plea that these are only conventions and not the provisions of the Act. Thereafter I personally conveyed to him that in view of Division Bench's order, which is contrary to findings and content ions as recorded in Ld. AM's proposed signed draft order, so these cases should be refixed for hearing or reference should be made to the Hon'ble President for constitution of Special Bench as there are good number of other cases of similar nature, pending before the Bench. It was also made clear to Ld. AM that in view of Hon'ble President's letter D.O. No. P. 25/2004 dated October 6, 2004, who while quoting decisions of Hon'ble Supreme Court in Sundarjas Kanyalal Bhatija v. Collector, Thane, Maharashtra [l990] 183 ITR 130 and Union of India v. Paras Laminates (P.) Ltd. [1990] 186 ITR 722, directed that coordinate Bench should follow order of t....
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..... 13-3-1995 12,000 in cash 5. 24-3-1995 10,000 in cash 6. 29-3-1995 10,000 in cash -------- Total 82,000 -------- Assessment year: 1996-97 -------------------------------------- S.No. Date Amount Mode -------------------------------------- 1. 19-7-1995 10,000 in cash 2. 23-8-1995 20,000 in cash 3. 27-8-1995 10,000 in cash 4. 27-6-1995 150 in cash 5. 17-10-1995 10,000 in cash 6. &....
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....proceedings in the case of M/s. Juneja Traders, Fazilka, showed that the assessee is making the repayment of the loans regularly. Further, the proof attached by the assessee i.e. PNB, Fazilka's letter dated 25-10-1999 shows that the assessee has raised loan from the bank to run the business of tailoring and stitching of cloth and not to repay the loan. Therefore, the reply of the assessee was considered to be a made-up story by the Jt. CIT(A) and the same was held to be not acceptable. So, the Jt. CIT imposed penalties of Rs. 82,000 and Rs. 1,00,150 for the assessment years 1995-96 and 1996-97 respectively by holding that there is contravention to the provisions of section 269SS of the Act. 6. Against this order of imposition of penalties, the assessee took up the matter in appeal and it was contended by the counsel of the assessee in appeal proceedings that the assessee is employed as salesman in a cloth shop at Fazilka and has never filed income-tax return. It was further stated that the Assessing Officer, while making the assessment of M/s. Juneja Traders, Fazilka, found that this concern has advanced loans to various persons against interest. During the course of assessment ....
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....e cases of M/s. Harpal Singh Jaswant Singh, Malout; M/s. Rattan Singh Mann Singh, Malout and M/s. Jagir Singh Balraj Kumar, Malout to plead that the I.T.A.T. has held that bona fide belief will constitute a reasonable cause for not invoking the provisions of sections 271D and 271E of the Income-tax Act. He has also relied upon the decision of the I.T.A.T., Chandigarh Bench in ITO v. Rajendera Trading Co. [1994] 48 ITD 210 (SMC). 7. The learned Counsel for the assessee further pleaded before the first appellate authority that the department has imposed the penalties under section 271D merely on the strength of entries in the books of Shri Harbans Lal Juneja, Prop. M/s. Juneja Traders, Fazilka treating them as conclusive. The Assessing Officer has supplied the photocopy of the account of the assessee as appearing in the books of Shri Harbans Lal Juneja, Prop. M/s. Juneja Traders, Fazilka. A perusal of the same would disclose that the entries in the books of account of Shri Harbans Lal cannot be said to be conclusive on account of the following reasons: (i) The third party has written the date of 21-12-1995 as 21-12-1996 in the ledger account of the appellant for the period from....
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....further pleaded that the department has not allowed the assessee to cross examine Shri Harbans Lal. In view of the above facts, the learned Counsel pleaded that the penalties imposed may kindly be deleted. 11. The Assessing Officer on the other hand, observed that the assessee indulged in the contravention of the provision of section 269SS and rendered himself liable to the penalty under section 271D of the Income-tax Act, 1961 and accordingly he imposed penalties of Rs. 80,000 for the assessment year 1995-96 and Rs. 1,00,150 for the assessment year 1996-97 and the said section of the Income-tax Act, 1961. 12. The learned CIT(A) while considering and accepting the plea of the assessee partly has concluded to uphold the penalty of Rs. 30,000 for each of these two years and by allowing relief of Rs. 52,000 and Rs. 70,150 for the assessment year 1995-96 and assessment year 1996-97 respectively. 13. Still aggrieved, the assessee is in further appeal and while reiterating the submissions as made before the lower authorities, it was pleaded that since the assessee has not contravened any of the provisions of law, therefore, no amount of penalty is leviable in this case and the l....
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....s from Shri Harbans Lal to the extent referred to in the penalties orders. Statements of some of the persons on whom penalty has been imposed were also recorded. It was also stated that they have taken loans 2 or 3 times from Shri Harbans Lal during their whole life span. The learned CIT(A) further observed that the department was not in a position to produce any original records, on the basis of which impugned penalties were levied. Taking into account these facts, the learned CIT(A) observed that it would be reasonable to assume that all these persons must have taken loans of Rs. 30,000 i.e. three times each. Accordingly he sustained penalty of Rs. 30,000 each in all these cases. It was also contended by the learned counsel for the assessee that none of the persons on whom penalties have been levied is being assessed to tax. They are poor and illiterate persons and had not maintained any books of account. He submitted that the Jt. CIT has levied penalties by obtaining photocopies of the accounts of the parties in the books of account of M/s. Juneja Traders and by relying on the statement of Shri Harbans Lal, neither the copies of accounts obtained from M/s. Juneja Traders nor cop....
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....assessee cannot be allowed and order of learned CIT(A) should be upheld. 15. Both the sides have been heard and material on record has been perused in the light of case law cited by rival sides. Before adverting to the facts of the present case, it would be appropriate to reproduce relevant portion of section 269SS which reads as under: "269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account-payee cheque or account-payee bank draft if,- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is [twenty] thousand rupees or more (since the case of the assessee does not fall within the purview of ....
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....ving the object of such legislation, it would be a valid piece of legislation. The entries, in a legislative list should be given their fullest meaning and widest amplitude and be held to extend to all ancillary and subsidiary matters which can fairly and reasonably be said to be comprehended in them. It is only when a Legislature which has no power to legislate, or the legislation is camouflaged in such a way as to appear to be within its competence when it knows that it is not, that it can be said that the legislation so enacted is a colourable legislation and that there is no legislative competence. If any legislation which is intended to achieve the collection of income-tax and to make it easier and systematic is enacted, such legislation would certainly be within the competence of Parliament. When a provision in a statute is challenged on the ground of colourable legislation, what has to be proved to the satisfaction of the court is that though the statute ostensively is within the legislative competence of the Legislature in question, in substance and in reality, it covers a field which is outside its legislative competence." 17. In the context of penalty under section ....
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....ontext of penalty provision, the Full Bench of Hon'ble Patna High Court in the case of CWT v. Jagdish Prasad Choudhary [1995] 211 ITR 472 has held that for existence of reasonable cause the assessee is entitled to offer a factual explanation. It is incumbent upon the Assessing Officer to be satisfied about the existence or the absence of the reasonable cause in the context of the explanation offered. The Assessing Officer, in arriving at his satisfaction in such a situation, acts in a quasi-judicial capacity. The proceeding for imposition of penalty is a quasi-criminal proceeding. The satisfaction has to be reached by the Assessing Officer objectively and on consideration of relevant materials only and to the total exclusion of extraneous and irrelevant considerations. 19. So from the afore decisions of the courts including that of highest court of the land, the provision under section 269SS has been held to be valid provision and while upholding such validity, at the same time, Hon'ble Supreme Court in the case of Kum. A. B. Shanthi has held as under: "It is important to note that another provision, namely section 273B was also incorporated which provides that not withstandi....
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....h bona fide and under ignorance of the provisions of the Income Tax law, ignoring the fact that ignorantia legis non-excusat (ignorance of law is no excuse)?" 21. After noting the facts of the case, in the said judgment, the conclusion as arrived at by Income Tax Appellate Tribunal was reproduced as under: "We have considered the facts and circumstances of the case presented before us. We have also perused the decision of the Tribunal rendered in the case of Vit Sales Corporation. The decision is direct on the point. No contrary decision was brought before us. In the instant case, a transaction was between the sister concerns. It was with a view to meet the business exigencies. It was under the bona fide belief and under the ignorance of relevant provision of law. We hope that it constitutes a valid excuse and reasonable cause within the meaning of section 273B read with sections 271D, 271E of the Income-tax Act, 1961. Accordingly, we direct the Assessing Officer to delete the penalties." 22. On having heard both the sides and considering the record, Hon'ble jurisdictional High Court has opined that in addition to the question of law of which determination has been sought ....
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....es out with a totally different plea and also filed fresh evidence in the shape of photocopies of the receipts stated to have been issued by Shri Harbans Lal without formally applying for admission of such evidence and ld. CIT(A) without adhering to the provisions of Rule 46A of IT Rules, not only admitted such evidence but even considered the same before arriving at the conclusion drawn by him. There is no mention about statement of Shri Harbans Lal having been recorded or forming part of penalty proceeding but learned CIT(A) is found to have not only mentioned about such statement, he has also considered the same for arriving at the conclusion drawn. Learned CIT(A) while discussing the case has referred to repayment of loan in instalment of Rs. 100 or Rs. 200 per day but if She photocopies of the receipts filed by the assessee, it would transpire that these receipts do not support such inferences drawn by learned CIT(A) because wherever dates are mentioned those do not indicate either Rs. 100 per day or of Rs. 200 per day. For example receipt No. 003934 dated 3-2-1996 indicates receipt of Rs. 1,200 from 3-2-1996 to 6-2-1996 which is for four days which could be Rs. 300 per day an....
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....se of action adopted by learned CIT(A) is not in accordance with the settled position because before admitting any material in the proceeding learned CIT(A) should have confronted such material to the Assessing Officer and should have sought his objection which he failed to do so. It is also settled law that necessary opportunity is required to be given by the officer imposing the penalty and if such opportunity is lacking, the proper course is that the matter should be remanded back to the file of the officer for giving adequate opportunity. Hon'ble Supreme Court in the case of Tin Box Co. v. CIT [2001] 249 ITR 216 has opined as under: "Held, reversing the decision of the High Court, that once the Tribunal found that the Income-tax Officer had not given to the assessee proper opportunity of being heard, that the assessee could have placed the evidence before the appellate authority or before the Tribunal was really of no consequence for it was the assessment order that counted; that order had to be made after the assessee had been given a reasonable opportunity of being heard." The Hon'ble Supreme Court accordingly set aside the orders of the High Court, the Tribunal and the....
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.... of M/s. Juneja Traders, Fazilka found that this concern has advanced loans to various persons against interest. During the course of assessment proceedings Shri Harbans Lal Juneja, Prop, of the firm is found to have advanced cash loans to various persons aggregating to Rs. 20,000 and above in cash i.e. otherwise than crossed cheque or bank draft as required under section 269SS. The Assessing Officer referred the matter to Jt. CIT who issued notice to the assessee with respect to acceptance of cash loan of Rs. 30,000 and Rs. 45,000 on two and four occasions for the assessment years 1995-96 and 1996-97 respectively. The first notice remained uncomplied with and in response to second notice, the assessee submitted that due to financial crisis, he opened a tea stall and closed his business; that he took loan of Rs. 20,000 by cheque on 12-1-1995 as the same was required for smooth running of his business; that other amounts mentioned in the notices were never taken by him; that his income never cross the taxable limit; that due to these reasons, he never violated the provisions of section 269SS; that therefore, proceedings may kindly be dropped. Another opportunity was given to the ass....
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....stances, can be entirely deleted or matter can be restored back on the file of the Assessing Officer for reconsideration?" Per Shri Joginder Pall, Accountant Member.- Normally I would have immediately agreed to the draft question proposed by my Ld. brother for reference under section 255(4) of the Income-tax Act, 1961. But after I had sent my proposed draft order on 3-9-2004 and receipt of proposed order of the JM, on 25-4-2005, there have been some developments of the case which need to be mentioned. These have not been incorporated in the order of Hon'ble JM who wrote his order afterwards although he has placed reliance on the same. 2. Once the Hon'ble JM conveyed to me that he would be writing his own order, I sent the proposed draft order on 3-9-2004. The Hon'ble JM also conveyed his intention of writing a dissenting order vide his DO. letter dated 15-9-2004. This position was accepted and that he was promptly replied vide my D.O. letter dated 20-3-2004 that he may send the draft order along with the draft question(s) to be referred to the Hon'ble President under section 255(4) so as to avoid repetitive shuttling of file between Jodhpur (I was then posted at that station)....
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....tion 255(4) of the Act? (iii) Whether, subsequent order passed by the Division Bench on 30-11-2004 is binding on the Member who proposed the initial draft order expressing a contrary view and he is bound to modify the initial proposed order to fall in line with subsequent order which did not exist on the date when Bench heard the appeals and the Member sent the initial draft order?" THIRD MEMBER ORDER PerShri Vimal Gandhi, President. - On account of difference between the learned Members of the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, the following questions have been referred to me under section 255(4) of the Income tax Act:- Questions proposed by the learned Judicial Member:- "Whether penalty under section 271D, in view of facts and circumstances, can be entirely deleted or matter can be restored back on the file of the Assessing Officer for reconsideration?" Questions proposed by the learned Accountant Member- "(i) Whether, in the facts and circumstances of the cases, penalty under section 271D sustained by the CIT(A) deserves to be deleted or the matter is to be restored to the file of Assessing Officer for reconsideration? (ii) Whether, ....
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.... the proviso, hence these are not being reproduced)." 4. It may be relevant to state that both the assessees do not maintain any books of account nor they have ever been assessed under the Income-tax Act. However, from the assessment of one Shri Harbans Lal Prop. M/s. Juneja Traders, Fazilka, it was found that loans in cash were given by that concern to several parties in violation of the terms of sections 269SS and 269T of the Income-tax Act. Accordingly, proceedings under section 269SS were taken against the assessees and show-cause notice was issued to them as to why penalty under section 271D be not imposed in their cases. The matter was ultimately referred to the Joint. C.I.T., Bhatinda Range, Bhatinda, who after considering the unsigned submissions of the assessees, facts and the circumstances of the case imposed penalties of Rs. 82,000 and Rs. 1,00,150 for the assessment years 1995-96 and 1996-97 respectively under section 271D of the Income-tax Act. Similar penalties were imposed by the same Officer in the other case. 5. The assessees impugned the above levy in appeals before the learned CIT(A) and contended that the assessee was a petty sales-man in a cloth shop and ....
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....vied penalty in most of the cases of the loanees of Shri Harbans Lal, Prop. M/s. Juneja Traders, Fazilka under the provisions of section 271D of the Income-tax Act, 1961 as he has held that all the loanees have contravened the provisions of section 269SS of the Income-tax Act, 1961. It is also a factual position that the ITO, Abohar has recorded the statement of most of the loans of M/s. Juneja Traders, Fazilka, Prop. Shri Harbans Lal wherein they have started that they has taken loan from Fazilka party. They have also stated that they have taken loan amounting to Rs. 10,000 and had returned it with interest at a nominal instalment running from Rs. 100 to Rs. 200 per day and once the principal including the interest is returned, they have taken again further loan of Rs. 10,000 on the same terms and conditions. It is also a factual position that most of the loanees have stated that they have taken the loan from Fazilka party 2 to 3 times during their life time. It is also a factual position that in the case of the appellant has been issued receipts by the lender Shri Harbans Lal Juneja, Prop. M/s. Juneja Traders, Fazilka and the amounts of these receipts as indicated supra is amount....
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....ount of M/s. Juneja Traders, Fazilka obtained by the Assessing Officer were not given to the assessees. Copy of statement of Shri Harbans Lal was also not given even during the penalty proceedings. No opportunity to cross-examine Shri Harbans Lal was allowed to these persons. Thus action of the Assessing Officer in relying upon the accounts of a third party without confronting the affected parties and without affording opportunity to cross-examine Shri Harbans Lal violated the principles of natural justice. Above evidence could not form basis of levy of penalty. For above view the learned Accountant Member relied upon the decision of the Hon'ble Supreme Court in the case of Kishanchand Chela Rani v. CIT [1980] 125 ITR 713 and the decisions of the Hon'ble Punjab and Haryana High Court in the cases of CIT v. Radhey Sham Sita Ram [2003] 22 IT Rep. 667, CIT v. Sham Lal [1981] 127 ITR 816 and State Bank of Patiala v. Union of India [1973] 91 ITR 630. (ii) On merits, the learned Accountant Member found that the photocopies of accounts of M/s. Juneja Traders were given to the assessees in the appellate proceedings. In the above account some of the amounts returned to Shri Harbans Lal w....
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....d to be taken by them, no assessments/reassessments were initiated in those cases. The assessees had clearly acted bona fidely. These people were also not aware of statutory provisions. The real culprit was Shri Harbans Lal, who claimed to have advanced cash loans to these persons out of undisclosed income. In the above background, levy of penalty when there was no intention to avoid any tax, was unjustified. No contumacious or dishonest conduct on the part of the assessee has been proved. The matter is duly covered by the often cited judgment of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. (v) In the ultimate para, the learned Accountant Member observed as under:- "In the present cases, the authorities below have failed to establish that these persons acted in conscious disregard of the statutory obligation and they were guilty of contumacious or dishonest conduct. In the light of these facts and circumstances of the cases and the legal position discussed above, we are of the considered opinion that the learned CIT(A) was not justified in sustaining the impugned penalty of the aforesaid amounts in all the cases for the above mentioned assessment years. Accor....
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....opment of law and is healthy but disagreement has to be shown in a graceful manner. It should not lead to any bitterness or disgrace, nor it should damage the image of the institution. 12. In the present case, after the learned Judicial Member had made suggestion to the learned Accountant Member and when he found that the suggestions were not acceptable to the learned Member, the learned Judicial Member should have stopped at that. There was absolutely no need for him to write D.O. letters and repeat his suggestion with a view to force the other Member to agree to his point of view, particularly when the proposed order of the learned Accountant Member was with him for a considerable time. The learned Judicial Member should have written his separate order as conveyed by him in September, 2004 and avoided unnecessary delay in the disposal of the appeal. The Members should also avoid directing questions at each others' action in reference to the President. Proceedings under section 255(4) of the Act are not meant to settle scores between the Members. Even dissent and difference should be reflected in a healthy manner. It should not show clash of egoes. 13. It was not proper for ....
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....g Officer did not find any force in the submissions advanced on behalf of the assessee. He referred to the observations of the Assessing Officer that the assessee was making repayment of loans regularly. He noted the circumstances under which penalty was imposed under section 269SS of the Income-tax Act. 16. The learned Judicial Member thereafter noted the proceedings which took place before the learned CIT(A). He further referred to the statement of Shri Harbans Lal Juneja where he had stated that against advanced cash loan of Rs. 10,000 he was actually advancing Rs. 8,500 which was received back in instalment of Rs. 100 per day. The learned Judicial Member also referred to the observations of the learned CIT(A) holding that entries in the books of account did not confirm with the statement of Shri Harbans Lal made before the Assessing Officer. Reference was also made to the decision of the Hon'ble Supreme Court in Hindustan Steel Ltd.'s case and certain other decisions of the I.T.A.T. 17. The learned Judicial Member further noted in para 7 the submissions advanced on behalf of the assessee. He noted the contention of the assessee that loans shown as per books of M/s. Juneja....
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....e been issued by Shri Harbans Lal without formally applying for admission of such evidence and ld. CIT(A) without adhering to the provisions of Rule 46A of IT Rules, not only admitted such evidence but even considered the same before arriving at the conclusion drawn by him. There is no mention about statement of Shri Habans Lal having been recorded or forming part of penalty proceedings but learned CIT(A) is found to have not only mentioned about such statement, he has also considered the same for arriving at the conclusion drawn. Learned CIT(A) while discussing the case has referred to repayment of loan in instalment of Rs. 100 or Rs. 200 per day but if the photocopies of the receipts filed by the assessee, it would transpire that these receipts do not support such inferences drawn by learned CIT(A) because wherever dates are mentioned those do not indicate either Rs. 100 per day or Rs. 200 per day. For example receipt No. 003934 dated 3-2-1996 indicates receipt of Rs. 1,200 from 3-2-1996 to 6-2-1996 which is for four days which could be Rs. 300 per day and after deducting the same from Rs. 17,800, Rs. 16,600 was the balance shown. Similarly receipt No. 003978 dated 30-3-1996 indi....
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....e proceeding learned CIT(A) should have confronted such material to the Assessing Officer and should have sought his objection which he failed to do so. It is also settled law that necessary opportunity is required to be given by the officer imposing the penalty and if such opportunity is lacking, the proper course is that the matter should be remanded back to the file of the officer for giving adequate opportunity. Hon'ble Supreme Court in the case of Tin Box Co. v. CIT [2001] 249 ITR 216 has opined as under:- 'Held, reversing the decision of the High Court, that once the Tribunal found that the Income tax Officer had not given to the assessee proper opportunity of being heard, that the assessee could have placed the evidence before the appellate authority or before the Tribunal was really of no consequence for it was the assessment order that counted; that order had to be made after the assessee had been given a reasonable opportunity of being heard.' The Hon'ble Supreme Court accordingly set aside the orders of the High Court, the Tribunal and the Commissioner (Appeals) and remanded the matter to the Income-tax Officer, for fresh consideration. From the judgment of the Hon....
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....py of account of the assessee from 1-4-1995 to 31-3-1995 in account books of M/s. Juneja Traders. Total amount received as loan on different dates was Rs. 82,000 against which Rs. 18,200 was paid by the assessee. On the next page, some further amount was received and whole balance was cleared by sixth of January. Nobody stuck day-to-day balance to show that at any stage of loan/deposit exceeded Rs. 20,000. In fact certain return of loans were not recorded in above account and this position was duly accepted by the learned CIT (Appeals) in the impugned order which has been accepted by the revenue. Likewise the learned counsel has referred to account of the assessee on page 8 of the paper book which was allegedly maintained from 1-4-1995 to 31-3-1996. However, the said page contained entries of cash received in the month of December, 1996 also. Here again cash was advanced which was received back from day-to-day in small amounts. No day-to-day balance is struck. These pages were only photocopies of accounts. Original books were not produced by Shri Harbans Lal in spite of direction of the CIT(A). Shri Sudhir Segha further argued that no reliance could be placed on photocopies of acco....
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.... order of CIT (Appeals) and not challenge the same by raising various grounds. They could only argue that no further relief be allowed to the assessee. They had no right to contend that the CIT(A) had erroneously taken additional evidence or had recorded erroneous finding of facts. If the Revenue could not contend and challenge the order of the CIT(A) in the given circumstances, it was much less open to the Hon'ble Tribunal to find fault with the order or with any finding recorded in support of the claim of the assessee. Therefore, observation of the learned Judicial Member relating to admission of the additional evidence in violation of the provisions of Rule 46A of the Income-tax Rules and observation that factually finding recorded by the CIT(A) is erroneous are not only unjustified on the facts of the case. 27. The short question which in the circumstances of the case arose before the Tribunal was whether levy of penalty of Rs. 30,000 sustained by the CIT(A) in this case was justified. The learned CIT(A) on the basis of statement of Shri Harbans Lal as also on the basis of evidence of return of loan supported by receipts but not accounted for in the statement rejected photoc....