M/S AGGARWAL FINANCERS, LADWA vs. CIT, KARNAL AND ANR.

The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee filed its return of income for the assessment year 1998-99, on 31.10.1998, declaring income of Rs. 6,889/-. The assessing officer, however, made assessment under Section 148 of the Act. Certain short-comings and deficiencies were detected by the assessing officer in the return filed. Accordingly, the assessing officer noticed that the deposits made by the creditors of the assessee as shown in the books of account were not genuine, inasmuch as no confirmation and verification had been furnished by the assessee and, thus, made an addition of Rs. 1,97,000/-. The assessing officer also disallowed 1/4th of the actual expenses of Rs. 67,767/- and further added a sum of Rs. 16,942/-. Pursuant to the same, notice under Section 274 read with Section 271(1)(c) of the Act was issued. The assessing officer, vide order dated 24.12.2004, held that there was concealment of income by the assessee and accordingly imposed a penalty of Rs. 68,949/-.

Appeals against the imposition of penalty carried by the assessee before the Commissioner of Income-tax (Appeals) {in short “the CIT(A)”} and the Tribunal were dismissed.

We have heard learned counsel for the parties and have perused the record.

The Tribunal while upholding the findings of CIT(A) and the assessing officer, imposing penalty had recorded as under: “We are aware that the penalty is not imposable if there is no conscious breach of law as was held by the Hon’ble be conscious. Hon’ble Gujarat High Court in the case of AM Shah & Co. vs. CIT (108 Taxman 137) (Guj.) even went to the extent that the concealment/ inaccuration occurring up to final stage must be considered. Even otherwise, a harmonious construction of Section 106 of the Evidence Act and Section 68 of the Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the credit worthiness of his credit. The burden is on the assessee to prove the genuineness of the transaction. In the present appeal, since in spite of various opportunities provided to the assessee, the creditors could not be produced, therefore, it can be said that the assessee attempted to conceal the particulars by furnishing inaccurate particulars. We are aware that the addition made on this account would not automatically justify the imposition of penalty, under Section 271(1)(c) of the Act, no penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that it does. In the present appeal, since the assessee has not explained cash credits, therefore, we are of the view that the penalty has been rightly levied. The impugned order is upheld. Consequently, this appeal is also dismissed.”

The Tribunal on appreciation of material had affirmed the orders of the authorities below and arrived at the conclusion that Income Tax Appeal No. 65 of 2010 5 there was concealment of income on the part of the assessee. The penalty under Section 271(1)(c) of the Act had, thus, been rightly levied. Nothing could be shown that the findings recorded by the authorities below were perverse or erroneous in any manner.

In view of the above, no substantial question of law arises and the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) April 19, 2011