RASAL BUILDERS & DEVELOPERS PVT. LTD.,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 287/JP/2017 fu/kZkj.k o"kZ@Assessment Years : 2005-06 cuke M/s Rasal Builders & Developers Pvt. The ITO, Vs. Ltd., Ward-3(1), 114, Joshi Marg, Santi Nagar, Jaipur. Kalwar Road, Jhotwara, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCR 6981 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Dilip Shivpuri (Adv.) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhari (Addl.CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 15/12/2020 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 02/03/2021 vkns'k@ ORDER PER: VIKRAM SINGH YADAV, A.M. The assessee has filed the present appeal against the order of ld. CIT(A), Aligarh ( Camp at Jaipur) dated 28.12.2015 for the assessment year 2005-06 confirming the levy of penalty u/s 271(1)(c) of the Act.

2. This matter was earlier dismissed ex-parte by the Coordinate Bench vide its order dated 09.04.2018 for non-prosecution and thereafter, the Coordinate Bench vide its order dated 04.06.2018 has recalled the earlier ex-parte order and accordingly the matter has now come up for hearing before us. 2 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

1. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in imposing penalty of Rs. 7,73,859 under section 271(1)(c) of Income Tax Act, 1961. 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 been confirmed by the CIT(A) as well as the ITAT and the ITO did not consider the explanation submitted by the assessee in right perspective. It was further submitted that the show-cause notice issued by the AO was vague and didn’t specify 3 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO whether the penalty was proposed on concealment of particulars of income or for furnishing inaccurate particulars of income and in light of various authorities, the same shows non-application of mind by the AO and on this ground as well, the penalty so levied deserve to be set- aside. Further, the ld AR submitted that the contentions so advanced are reiterated in the written submissions which may be considered and the contents thereof read as under:

“The Appellant humbly submits as under: 1. That the present appeal is against the penalty u/s 271(1) (c) of Rs. 7,73,859/- levied by ITO, Ward 3 (1), Jaipur for A.Y. 2005-06 vide his order dated 22.03.2013 on the following undisclosed income: a) cash credits from agriculturists Rs. 2,79,500/- b) Unsecured loans taken through cheque Rs. 8,30,000/- c) Advances received against flat bookings Rs. 10,05,301/- Total 21,14,801/-

4. Unexplained advances received Rs. against flat bookings 10,05,301/- 5. Disallowance u/s 40A(3) of I.T. Rs. 1,33,200/- Act Total Rs. 38,28,001/-

The matter was agitated in appeal before the CIT(A) who confirmed all the additions vide his order dated 12.09.2008. Then, the assessee appealed against the said order to the Hon'ble ITAT who, vide their order dated 24.04. 2009 decided the appeal in the following manner:

S.No. Nature of additions Amounts Deleted/confirmed/set- aside by ITAT 1. Unsecured loans 15,80,000/- Set-aside back to AO received from M/s for re-examination Orbit Polytech P. Ltd.

2. Unsecured loans 2,79,000/- Assessee did not file below Rs. 20,000/- appeal against the said taken in cash appeal before either the CIT(A) or ITAT 3. Unsecured loans 8,30,000/- Set-aside back to AO through cheque for re-examination but genuineness not proved 4. Unexplained 10,05,301/- Addition confirmed by advances against ITAT flat bookings 5. Disallowance u/s 1,33,200/- Addition confirmed by 40A(3) ITAT Total 38,28,001/- 5 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO 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/-(unsecured loans below Rs. 20,000/- taken in cash ) and of Rs. 10,05,301/- (advances against booking of flats ) were confirmed by the Hon'ble ITAT in the first round of appeal, in their order dated 24.04.2009. As per section 275 of the Income-Tax Act, which prescribes the time-limit for levy of penalty, "275. [(1)] No order imposing penalty under this Chapter ,shall be passed - [(a)] in a case where the relevant assessment order or other order is the subject-matter of an appeal to the Commissioner(Appeals) under section 246 [or 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 6 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

or Chief Commissioner or Principal Commissioner or Commissioner, whichever period expires later: [Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of 2003 disposing of such appeal, an 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 end of the financial year in which the order of the Commissioner (Appeals) is received by the ]Principal Chief Commissioner] or Chief Commissioner, or [Principal Commissioner] or Commissioner, whichever is later;] Now since in the first round, the order of the AO was passed on 28.12.2007 and of the Commissioner(Appeals) was passed on 12.09.2008, the penalty order should have been passed, as per the Proviso to section 275(1) on: a)`either on or by 31.03.2008, or b) on or by 31.03.2010, whichever is later. If we consider the main section 275(1), then the relevant dates would be: a) either on or by 31.03.2008, or b) on or by 31.03.2011, whichever is later. Hence, the order of penalty ,as far as addition of Rs. 2,79,000/- and of Rs. 10,05,301/- confirmed by the CIT(A) was concerned, should have been passed, in any case, by 31.03.2011. It was passed on 22.03.2013, hence, as far as the above two additions 7 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO 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.

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) Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (P&H); 2) CIT v. J.K. Synthetics Ltd. [1996] 219 ITR 267 (Del.); 3)Muniappa Gounder (B) v. CIT [1976] 102 ITR 787 (Mad. 4) CIT v. Abdul Bakshi & Bros. (H) [1986] 160 ITR 94 (AP) (FB); 5) CIT v. Doris S. Luiz [1974] 96 ITR 646 (Ker.).

8 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

It has also been held that an assessee is entitled to submit fresh evidence in the course of penalty proceedings. It is because penalty proceedings are independent proceedings. The Tribunal ,in the case of Prasanna Enterprises v. CIT [2000] 244 ITR 188(Ker.) held that since the Tribunal confirmed the penalty u/s 271(1) (c) without considering the fresh evidence, its order was invalid and the matter was remanded. In the light of this proposition of law it is seen that the penalty order deals with the evidence and submissions of the appellant most superficially and without application of mind, in these words: "10. I have considered the reply of the assessee carefully and found not convincing for the reason that during the course of assessment proceedings & re-assessment proceedings, after giving adequate opportunities, the assessee company could not explain the identity and creditworthiness of the transactions as discussed in length in foregoing paras.....................................................The addition made on account of unsecured loan taken through cheque amounting to Rs. 8,30,000/- and on account of......................had been confirmed by the ld. CIT(A) as well as the 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 law 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. 2,79,000/-+ Rs. 8,30,000+Rs. 10,05,301). Thus it is clear that the only basis on which the penalty was levied was that the addition of Rs. 8,30,000/- had been confirmed by the CIT(A) as well as the ITAT. The ITO did not consider the explanation submitted by the assessee which is reproduced at para 9(2) of the order in these words:

9 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

9.2) Unsecured loan taken through cheques amounting to Rs. 8,30,000/-: During the course of assessment proceedings, the AO himself has admitted that the assessee company 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: a)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 obliged to file a return of income. d) all the creditors had admitted that they had given the credit. In view of this fact, if the creditworthiness was in doubt, then addition should have been made in the hands of the creditors, and not the company.

10 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO e) no evidence had been led by the AO to the effect that the credit was the unexplained money of the company, especially when the books of account of the company was not doubted. The initial onus of proving the identity and creditworthiness of the creditor, and the genuineness of the transaction lies with the assessee. But once evidence had been produced on this account by the assessee, the onus or burden of proof shifted to the AO. The AO has been given very wide powers by the Income-Tax Act to make necessary inquiries , but it seems that these powers were not exercised by the AO before levying the penalty. For the proposition that the burden of proof shifts towards the AO once initial burden has been discharged, the following case laws are relied on: 1) CIT v. Binod Company [1980] 122 ITR 832(Pat.); 2) CIT v. Tata Services Ltd.[1980] 122 ITR 594(Bom.); 3) CIT v. Motilal & Co. [1990] 184 ITR 288 (Cal.).

It may also be submitted that the presumption under the Explanation can be displaced by the assessee proving that the failure to return correct income did not arise from any fraud or gross or wilful neglect and the quantum of proof necessary would be that required in a civil case, namely, preponderance of probabilities. This proposition has been laid down in a catena of decisions , some of which are as under: a) CIT v. Nathulal Agarwala & Sons [1985] 153 ITR 292 (Pat.) (FB); b) CIT v. Pawan Kumar Dalmia [1987] 168 ITR 1 (Ker.); c) CIT v. Gurudayalram Mukhlal [1991] 190 ITR 39 (Gau.); d) CIT v. Bimal Kumar Damani [2003] 261 ITR 87 (Cal.).

11 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

As far as the present case is concerned, it is abundantly clear that after the identity of the creditor and the genuineness of the transaction were established, the only issue was the creditworthiness of the creditor. Since the money had come through the banking channel, so the AO could have made necessary inquiries from the bank to establish the creditworthiness. The burden of proof had now shifted to the AO. Unfortunately, the AO did not make any inquiry of his own to try and establish true facts. Penalty proceedings being independent proceedings he 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 from alleged bogus shareholders , whose names are given to the assessing officer, then the department is free to proceed to reopen their individual assessments in accordance with law but this amount of share money cannot be regarded as undisclosed income under section 68 of the assessee company.

12 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

The ratio of this decision of the Hon'ble Supreme Court has now been followed in a number of cases by various High Courts. One such example is the case of CIT v. Awadh Fertilisers (P.) Ltd. [2013] 217 Taxman 27 (Allahabad). Another example is the case of CIT v. Pranav Foundations Ltd. [2014] 229 Taxman 58 (Madras). In view of these authoritative pronouncements of law by the Apex Court and by the other High Courts, the addition, if any, had to be made in the hands of the creditors and not the assessee company. Copies of the decisions cited supra are annexed herewith as Annexures A/1. A/2 and A/3. Still further, no evidence has been produced on record to prove that the money received through creditors was actually the undisclosed income of the company. The books of account of the company have not been held to be unreliable, or incomplete or incorrect. Hence, whatever income is being shown in the hands of the company has been taken to be correct. In this situation, it cannot be held, without any evidence whatsoever, that the credits belonged to the company, and not to the creditors. GROUND NO. 2 OF APPEAL: The second ground of appeal is that the AO has not specifically mentioned in the notice u/s 271(1) (c) whether the penalty is for inaccurate particulars of income or for concealment of particulars of income. A copy of the notice of penalty as received from the AO is enclosed as Annexure A/4. A bare perusal of the said notice makes it clear that the AO has not struck out the inapplicable part of the said notice, and so it is not clear whether the penalty notice has been issued for filing inaccurate particulars of income or for concealment of income. There are now a plethora of decisions on the issue that if the correct limb of the penalty notice is not ticked , or the inapplicable part of the notice is not struck off, the notice becomes invalid, and consequentially, the penalty proceedings become invalid. Attention is drawn towards the following decisions on this issue:

13 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO a) CIT v. Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565(Kar.); b) CIT 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.”

“No. ITO/W-1(1)/JPR/2020-21/391 Dated 10.02.2020 To, The Jt. Commissioner of Income Tax (Sr. DR-III), 14 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

Income Tax Appellate Tribunal, Jaipur. Madam, Sub:- In the matter pending before the Hon’ble ITAT, Jaipur in the case of Rasal Builders, ITAT No. 287/JP/2017 for the A.Y. 2005-06 regarding- Kindly refer to the letter No. Addl. CIT/DR-III/ITAT/JPR/2020- 21/263 dated 15.12.2020 on the subject cited above thereby calling the comments on the following additional ground raised by the assessee.

1. Why penalty was levied on 22.03.2013 on 2,79,000/- can 10,05,301/- when it should have been levied within 6 months of the passing the order of the Hon’ble ITAT on 24.04.2009?

2. The chronology of the event in the case of the assessee for the A.Y. 2005-06 are submitted as under:- Sr. No. Date Event Remarks 1. 28.12.2005 ITR filed declaring income of Rs. Nil. Book profit u/s 115JB show at Rs. 20,443/- 2. 28.12.2007 Assessment completed U/s 143(3) at a total income of Rs. 37,26,110/-. Additions made on account of:- i. Unexplained cash credits of Rs. 15,80,000/- ii. unsecured loans in cash of Rs. 2,79,500/- iii. Unsecured cash credits of Rs. 8,30,000/-. iv. Unexplained credits of Rs. 10,05,301/-. v. Disallowance u/s 40A(3) Rs. 1,33,200/- 3. 12.09.2008 Ld. CIT(A) dismissed the appeal in 4. 24.04.2009 ITA No. 1500/JP/2008 Hon’ble ITAT partly set aside and remand the matter to the file of AO with certain directions 5. 06.12.2010 Assessment order for set aside case completed at a total income of Rs. 37,26,110/- i.e. on the same income which was determined vide order u/s 143(3) dated 28.12.2007 6. 19.09.2011 ITA No. 329/10-11 Ld. CIT(A) deleted the addition of Rs. 15,80,000/- and confirmed the addition of Rs. 8,30,000/- and confirmed other additions.

15 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

7. 22.03.2013 Imposed penalty u/s 271(1)© of Rs. 7,73,859/-

3. From the above chronology of the event of the case it is evident that vide order dated 24.09.2009, the Hon’ble ITAT remand back the matter to the file of AO with certain directions. Therefore, no penalty was imposed consequent upon the order dated 24.09.2009 of the 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).”

“5 शास्ित आदे’ा में वणिर्त तFयाें और अपीलाथीर् के लिखित निवेदन में दिये x;s rdksZa ij fopkj djus ds mijkar vihy ds fofo/k vk/kkjksa dk fuLrkj.k fuEuor fd;k tk jgk gS& 5-1 vihy dk izFke vk/kkj 1 The learned AO has erred in the facts and circumstances of the case by imposing penalty u/s 271(1)(c) read with section 68 of Income Tax Act, 1961 on their grounds, firstly on Unsecured loans taken by the assessee below Rs.20,000/- which were not proved to be false by the learned AO. As such first of all the assessee because of his engagement in various business activities did not have time to produce all these persons to substantiate their identity as well as for the reason that assessee wanted to buy peace with department. It is not the case where the Assessing Officer has proved the unsecured loan to be false. There is a difference between the facts not proved and facts proved false and according to law penalty can be imposed only when the facts are proved false. 16 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO 5-2 fu.kZ; निधार्रण अधिकारी का कहना है कि अपीलाथीर् ने कथित रूप से क`षकाें से :-2]79]500@& ds vlqjf{kr _.k izkIr fd;s Fks] tks fd uxn esa Fks vkSj izR;sd ऋण रू-20]000@& से कम थाA निधार्रण अधिकारी के अनुसार अपीलाथीर् इन vlqjf{kr _.kksa ds laca/k esa _.knkrkvksa dh igpku vkSj +.k nsus dh {kerk dks fl} djus esa vlQy jgk gSA vihykfkhZ dk dguk gS fd og O;Lr gksus ds dkj.k lEcfU/kr O;fDr;ksa dks izLrqr u dj ldk vkSj fu/kkZj.k vf/kdkjh us ;g fl} ugha fd;k gS fd ;g vlqjf{kr _.k QthZ gSA eSaus leLr rF;ksa vkSj lk{;ksa ij fopkj dj fy;k gSA esjk ekuuk gS fd viuh vk; dks fl} djus gsrq vko’;d lk{; izLrqr djus dk mRkjnkf;Ro fu/kkZfjrh dk gksrk gSA :i;s 2]79]950@& ds vlqjf{kr _.k ds laca/k esa vihykFkhZ viuk mrjnkf;Ro fuHkkus esa vlQy jgk gSA bl laca/k esa /kkjk 271¼1½¼c½ ds Li"Vhdj.k&1 ds izko/kku fopkj.kh; gSA mDr Li"Vhdj.k ds vuqlkj tgkWa fdlh O;fDr dh dqy vk; dh lax.kuk djus ds fy, fdUghsa egRoiw.kZ rF;ksa dh ckcr ,slk O;fDr Li"Vhdj.k nsus esa vlQy jgrk gS] ogkWa mlds ifj.kkeLo:i ,sls O;fDr dh dqy vk; dh lax.kuk djus esa tksM+h xbZ jde /kkjk 271¼1½¼c½ ds iz;kstuksa ds fy, ml vk; dks minf’kZr djus okyh le>?h tk;sxh ftlds laca/k esa fof’k"V;kWa dks fNik;k x;k gSA bl izdkj vk; dh fof’kf"V;ksa dks fNikus dk ekeyk fl} gks ;tkrk gSA ,d ckj ;g fl} gks tk;s fd vk; dh fof’kf"V;ksa dks fNik;k x;k gS rks vk;dj vf/kdkjh ds le{k /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir djus ds vfrfjDr vkSj dksbZ fodYi ugha gksrk gSA lkFk gh lkFk ekuuh; mPpre u;k;ky; }kjk UOI & Ors v. Dharmendra Textile Processors & Ors.[2008] 306 ITR 277 (SC) ds dsl esa fn;s x;s fu.kZ; ds vk/kkj ij ;g dgk tk ldrk gS fd 'kkfLr vf/kjksfir djus gsrq vkijkf/kd eu% fLFkfr dks fl} djuk vko’;d ugha gSA mijksDr foospuk ds vk/kkj ij esjk ekuuk gS fd :i;s 2]79]500@& ds dfFkr vlqjf{kr _.k ds laca/k esa /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir djuk U;k;ksfpr gS vkSj eSa ml 'kkfLr dks iq"V djrk gwWaA bl izdkj vihy ds bl vk/kkj dks fujLr fd;k tkrk gSA 5-3 vihy dk f}rh; vk/kkj 2- Secondly on the unsecured loans taken through cheques amounting to Rs.8,30,000/- hence proves the identity of the lenders and genuineness of the transactions since the amounts were received through banking channel, it 17 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO automatically proves the identity of the lenders and genuineness of the transactions. 5-4 fu.kZ; vihykFkhZ us dfFkr :i ls fofo/k O;fDr;ksa ls :i;s 8]30]000@& ds vlqjf{kr _.k izkIr fd;s gSa vkSj fu./kkzj.k vf/kdkjh us ik;k fd ;}fi ;s _.k pSd ls izkIr gq;s gSa rFkkfi lEcfU/kr O;fDr u rks vk; djnkrk gs vkSj u gh mudh _.k nsus dh {kerk ds laca/k esa i;kZIr lk{; gSA bl vk/kkj ij fu/kkZj.k vf/kdkjh us :i;s 8]30]000@& dks vihykFkhZ dh fNikbZ vk; ekudj ml ij /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir dh gSA bl laca/k esa vihykFkhZ dk dguk gS fd pwWafd ;s :i;s cSad pSd ls vk;s gSa blfy, _.k nkrkvksa dh igpku vkSj izekf.kdrk Lor% gh fl} gks tkrh gSA lkFk gh lkFk ;g Hkh dgk x;k gS fd fu/kkZj.k vf/kdkjh viuh 'kfDr;ksa dk iz;ksx dj lEcfU/kr lk{; Lo;a gh izkIr dj ldrs FksA esjs fopkj esa vihykFkhZ ds rdksZa esa i;kZIr cy ugha gS A /kkjk 68 ds varxZr jksdM+ tek ds laca/k esa Li"Vhdj.k nsus dk mRkjknkf;Ro vihykFkhZ dk gksrk gSA ek= ;g dg nsus ls fd ysunsu cSafdax ek/;e ls gqvk gS] vihykFkhZ vius mrjnkf;Ro ls eqDr ugha gks ldrk gSA bl vlqjf{kr _.k ds laca/k esa i;kZIr lk{; izLrqr djus esa gqbZ vlQyrk ls fl} gksrk gS fd vihykFkhZ ds ikl bl vlqjf{kr _.k dh ckcr dksbZ Li"Vhdj.k ugha gSA bl laca/k esa /kkjk 271¼1½¼c½ ds Li"Vhdj.k&1 ds izko/kku fopkj.kh; gSaA mDr Li"Vhdj.k ds vuqlkj tgkWa fdlh O;fDr dh dqy vk; dh lax.kuk djus ds fy, fdUgha egRoiw.kZ rF;ksa dh ckcr ,slk O;fDr Li"Vhdj.k nsus esa vlQy jgrk gS] ogkWa mlds ifj.kkeLo:i ,sls O;fDr dh dqy vk; dh lax.kuk djus esa tksM+h xbZ jde /kkjk 271¼1¼c½ ds iz;kstuksa ds fy, ml vk; dks minf’kZr djus okyh le>h tk;sxh] ftlds laca/k esa fof’kf"V;ksa dks fNik;k x;k gSA pwWafd vihykFkhZ :i;s 8]30]000@& ds vlqjf{kr _.k dh izekf.kdrk fl} djus esa vlQy jgk gS blfy;s mDr Li"Vhdj.k ds vuqlkj ;g ogk vk; gS] ftlds laca/k esa fof’kf"V;ksa dks fNik;k x;k gSA bl izdkj vk; dh fof’kf"V;ksa dks fNik;k x;k gS rks vk;dj vf/kdkjh ds le{k /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir djus ds vfrfjDr vkSj dksbZ fodYi ugah gksrk gSA lkFk gh lkFk ekuuh; mPpre U;k;ky; }kjk UOI & Ors V. Dharmendra Textile Processors & Ors. [2008] 306 ITR 277 (SC) ds dsl esa fn;s x;s fu.kZ; ds vk/kkj ij ;g dgk tk ldrk gS fd 'kkfLr vf/kjksfir djus gsrq vkijkf/kd eu% fLFkfr dks fl} djuk vko’;d ugha gSA mijksDr foospuk ds vk/kkj ij esjk ekuuk gS fd :i;s 8]30]000@& ds dfFkr vlqjf{kr _.k ds laca/k esa /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir 18 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO djuk U;k;ksfpr gS vkSj eSa ml 'kkfLr dks iq"V djrk gwWA bl izdkj vihy ds bl vk/kkj dks fujLr fd;k tkrk gSA 5-5 vihy dk rhljk vk/kkj 3- The last was on unexplained credit in the name of advance against flat booking as the name amount were shown as receipts in the books of the assessee. However, Proper receipts were issued against these payments. Accordingly, the action of the learned AO is illegal, unjustified arbitrary and against the facts of the case. Relief may please be granted by quashing the order being illegal and without authority of law. 5-6 fu.kZ; निधार्रण की कायर्वाही के दाैरान ज्ञात हुआ कि अपीलाथीर् ने फलैट बुंकिग ds rkSj ij 11 O;fDr;ksa ls vfxze ds :i esa :i;s 10]05]301@& dh jkf’k izkir dh gSA ;g leLr jkf’k jksdM+ esa d`"kdksa ls izkIr gqbZ gSA vihykFkhZ bl laca/k esa _.knkrkvksa dh igpku vkSj _.k nsus dh {kerk dks fl} djus esa vlQy jgkA bl vk/kkj ij fu/kkZj.k vf/kdkjh us ekuk fd :i;s 10]05]301@& dh vk; vihykFkhZ dh fNih gqbZ vk; gS vkSj blfy, mUgksusa /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir dhA bl laca/k esa vihykFkhZ dk dguk gS fd mlus :i;s 10]05]301@& esa ls :i;s 7]41]000@& dks fudky dj foRrh; o"kZ 2006&07 esa vius fuekZ.k dh ykxr ls ?kVk fn;k FkkA bl izdkj mlus igys gh bl jkf’k dks viuh vk; esa lfEefyr dj fy;k gSA esjs fopkj esa ,d ckj tc fdlh tksM+ dks vihyh; izkf/kdkjh }kjk iq"V dj fn;k x;k gks rks 'kkfLr dh dk;Zokgh ds nkSjku mlds laca/k esa dksbZ स्प"टीकरण निरथर्क हैA f}तीय दाैर में माननीय आयकर अपीलीय प्राधिकरण }ारा fn;s x;s fu.kZ; ls Li"V gS fd bl jksdM+ tek ds laca/k esa vihykFkhZ _.knkrkvksa dh igpku vkSj _.k nsus dh {kerk dks fl} djus esa vlQy jgk gSA vihykFkhZ dh bl vlQyrk ls fl} gksrk gS fd mlds ikl bl jksdM+ tek ds laca/k esa dksbZ Li"Vhdj.k ugha gSA /kkjk 271¼1½¼c½ ds Li"Vhdj.k&1 ds vuqlkj tgkWa fdlh O;fDr dh dqy vk; dh lax.kuk djus ds fy, fdUgha egRoiw.kz rF;ksa dh ckcr ,slk O;fDr Li"Vhdj.k nsus esa vlQy jgrk gS] ogkWa mlds ifj.kkeLo:i ,ls O;fDr dh dqy vk; dh lax.kuk djus esa tksMh xbZ jde /kkjk 271¼1½¼c½ ds iz;kstuksa ds fy, ml vk; dks minf’kZr djus okyh le>h tk;sxh ftlds laca/k esa fof’kf"V;ksa dks fNik;k x;k gSA pwWafd vihykFkhZ :i;s 10]05]301@& ds dfFkr 19 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO vfxze dh izkekf.kdrk fl} djus esa vlQy jgk gS blfy;s mDr Li"Vhdj.k ds vuqlkj ;g og vk; gS] ftlds laca/k esa fof’kf"V;ksa dks fNik;k x;k gSA bl izdkj vk; dh fof’kf"V;ksa dks fNikus dk ekeyk fl} gks tkrk gSA ,d ckj ;g fl} gks tk;s fd vk; dh fof’kf"V;ksa dks fNIkk;k x;k gS rks vk;dj vf/kdkjh ds le{k /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir djus ds vfrfjDr vkSj dksbZ fodYi ugha gksrk gSA lkFk gh lkFk ekuuh; mPpre U;k;ky; }kjk UOI & Ors V. Dharmendra Textile Processors & Ors. [2008] 306 ITR 277 (SC) ds dsl esa fn;s x;s fu.kZ; ds vk/kkj ij ;g dgk tk ldrk gS fd 'kkfLr vf/kjksfir djus gsrq vkijkf/kd eu% fLFkfr dks fl} djuk vko’;d ugha gSA mijksDr foospuk ds vk/kkj ij esjk ekuuk gS fd :i;s 10]05]301@& ds dfFkr vfxze ds laca/k esa /kkjk 271¼1½¼c½ ds varxZr 'kkfLr vf/kjksfir djuk U;k;ksfpr gS vkSj eSa ml 'kkfLr dks iq"V djrk gwWaA bl izdkj vihy ds bl vk/kkj dks fujLr fd;k tkrk gSA 5-7 vihy dk pkSFkk vk/kkj 4- The appellant may kindly be allowed to add, amend or alter any or any or all of the grounds on or before the hearing. 5-8 fu.kZ; vihy dk ;g vk/kkj lkekU; izd`fr dk gS vkSj bl ij fu.kZ; nsus dh vko’;drk ugha gSA uksV %& vihykFkhZ us vius fyf[kr fuosnu esa 'kkfLr izfØ;k izkjaHk djus gsrq fu/kkZj.k vf/kdkjh viuh larqf"V dks ntZ u djus dk rdZ Hkh fn;k gSA bl fcUnq ij vihy ds vk/kkjksa esa dksbZ vk/kkj ugha gS] fQj Hkh U;k;fgr esa bl vkifr dk निस्तारण करना भी आव’यक हैA अपीलाथीर् का कहना है कि निधार्रण आदे’ा में ek= ;g mYys[k dj nsuk fd 'kkfLr dh izfØ;k vyx ls izkjaHk dh tk jgh gS] fu/kkZj.k vf/kdkjh dh larqf"V dks fl} ugha djrk gSA eSusa vihykFkhZ ds rdksZa ij fopkj dj fy;k gSA /kkjk 271¼1B½ ds izko/kkuksa के अनुसार जहाWं निधार्रण या पुनः निधार्रण के आदे’ा में किसी निधार्रिती की कुल vk; dh lax.kuk djus esa dksbZ jde tksM+h tkrh gS vkSj mDr vkns’k esa /kkjk 271¼1½¼c½ ds rgr dk;Zokgh vkjaHk djus dk funs’k gS] ogkWa fu/kkZj.k ;k iqu% 20 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO निधार्रण के ऐसे आदे’ा के बारे में समझ जायेगा कि उससे धारा 271¼1½¼ब½ के v/khu 'kkfLr dh dk;Zokgh vkjaHk fd;s tkus ds fy;s fu/kkZj.k vf/kdkjh dk lek/kku xfBr gksrk gSA bl izdkj /kkjk 271¼1B½ ds izko/kkuksa ds vuq:i] pwWafd bl dsl esa fu/kkZj.k vf/kdkjh us /kkjk 271¼1½¼c½ ds rgr dk;Zokgh dkjaHk djus dk funs’k fn;k Fkk blfy, ;g ekuk tk ldrk gS fd mUgksusa 'kkfLr dh dk;Zokgh vkjaHk djus ds fy, viuk lek/kku xfBr dj fy;k FkkA bl vk/kkj ij ;g ekuk tk ldrk gS fd larqf"V ntZ u djus ds laca/k esa vihykFkhZ dh vkifr esa dksbZ cy ugha gS vkSj bl dkj.k bl vkifr dks fujLr fd;k tkrk gSA””

7. We have heard the rival contentions and perused the material available on record. In this case, the original assessment order u/s 143(3) was passed on 28.12.2005 during the course of which the penalty proceedings were initiated and thereafter, the matter was carried in appeal before the ld CIT(A) and thereafter, before the Tribunal wherein on certain issues, the matter was set-aside to the file of the AO to decide the same afresh. In the set-aside proceedings, 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 21 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO 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 the Tribunal confirmed the said addition and no further appeal has been preferred by the assessee before the Hon’ble High Court and the matter has thus attained finality with the passing of the Tribunal order dated 24.04.2009.

11. In respect of all the aforesaid three matters, the AO has levied the penalty u/s 271(1)(c) vide his order dated 22.03.2013. The contention which has been advanced by the ld AR is that as far as levy 22 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO of penalty on first two matters is concerned, the same is barred by limitation u/s 275 of the Act as the first matter has attained finality with the passing of the assessment order u/s 143(3) dated 28.12.2007 and second matter has attained finality with the passing of the Tribunal order dated 24.04.2009 and since the penalty order has been passed on 22.03.2013, the same is way beyond the limitation period as provided in section 275 of the Act. Per contra, the contention of the Revenue is that since the assessment order, in the course of which the penalty was initiated in respect of all these three matters, was subject matter of appeal before the Tribunal and the Tribunal has set-aside the matter on certain other issues with certain directions, it was premature to impose penalty on receipt of the order of the Tribunal as the matter was pending with the AO and once, the set-aside order was passed by the AO, the same was again subject matter of appeal before the ld CIT(A), and on receipt of order of the ld CIT(A) dated 19.09.2011, the impugned penalty order has been passed on 22.03.2013 which is well within the limitation period as prescribed u/s 275 of the Act.

“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 prosecution or withdrawal of an appeal (by one party or the other) would be, in the opinion of the Court one such event which leaves the legal position inchoate and unsatisfactory. Instead, an interpretation that permits certainty should be adopted. Viewed as such, the CIT's order provided a fixed date from which to reckon the end of the period of limitation-some time in early July 1994. The absence of an appeal by the assessee (against the CIT(A)'s appellate adjudicatory order) meant that at least with respect to the amount that it had accepted in the adjudicatory order as an addition, the penalty 26 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO proceedings survived. As far as the other issue was concerned, perhaps there was no occasion for a further penalty proceeding given that the issue might have been rendered debatable, even in the eventuality of an order favouring the revenue. In other words, as far as deletion was concerned, the assessee definitely was not aggrieved.

should not be made imposing penalty u/s 271(1)(c) r/w 274 of the Act.”

“ 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 'concealment of particulars of income' or "furnishing of inaccurate particulars of income'. In such circumstances, he may use slash between the two expressions 28 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO at the time of initiation of penalty proceedings. However, during the penalty proceedings, he must get decisive, which should be reflected in the penalty order, as to whether the assessee is guilty of 'concealment of particulars of income' or 'furnishing of inaccurate particulars of such income'. Uncertain charge at the time of initiation of penalty, must necessarily be substituted with a conclusive default at the time of passing the penalty order. If the penalty is initiated with doubt and also concluded with a doubt as to the concealment of particulars of income or furnishing of inaccurate particulars of such income etc., the penalty order is vitiated. If on the other hand, if the penalty is initiated with an uncertain charge of 'concealment of particulars of income/furnishing of inaccurate particulars of income' etc., but the assessee is ultimately found to be guilty of a specific charge of either 'concealment of particulars of income' or 'furnishing of inaccurate particulars of income', then no fault can be found in the penalty order.”

“10. I have considered the reply of the assessee carefully and found not convincing for the reason that during the course of assessment proceedings & re-assessment proceedings, after giving adequate opportunities, the assessee company could not explain the identity and creditworthiness of the transactions as discussed in length in foreging paras. The assessee did not produce agriculturist from whom loans below 20,000/- was received amounting to Rs. 2,79,500/-, hence it is to say by the AR of the assessee that due to 29 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO engagement of the assessee in various business activities does not have any weight. Similarly, the assessee has not preferred further appeal before appellate authority against this issue which also established that the assessee had introduced its unaccounted money in its books of accounts in the shape of cash credits shown in the name of various agriculturist below Rs.20,0000/-. The additions made on account of unsecured loan taken through cheque amounting to Rs. 8,30,000/- and on account of unexplained credit in the name of advance 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.

30 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO

“6. The AO noted that during the year the assessee company had taken unsecured loan of Rs. 75,000/- from Shri Dashrat Singh, Rs. 2,00,000/- from Shri Dinesh Sharma, Rs. 1,65,000/- from Shri Roop Singh Rathore, Rs. 3,00,000/- from Shrawan lal and Rs. 90,000/- from Shri Surendera Singh totaling to Rs. 8,30,000/-. The AO has added this amount under section 68 of the Act on the basis that creditors are not assessed to tax and their creditworthiness has not been proved. The contention of the assessee before the ld. CIT(A) were that the loans were taken by cheque and confirmation of Shri roop Singh Rathore and Shri Shrawan Lal were submitted to the AO hence the Ao was not justified in making addition under section 68 only on the basis of 31 M/s Rasal Builders & Developers Pvt. Ltd. vs. ITO the creditors not being assessed to tax and non submission of their bank statements. The ld. CIT(A) has, however, sustained the addition.

In the result, the appeal of the assessee is partly allowed.