SMITA BHARGAVA,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,o Jh HkkxpUn] ys[kk lnL; lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 37/JP/2016 fu/kZkj.k o"kZ@Assessment Year: 2005-06 cuke Smt. Smita Bhargava The ITO Vs. B-85, Ganesh Marg Ward- 6(4) Bapur Nagar, Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABFPB 2570 G vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@Assessee by: Shri Rohan Sogani, CA jktLo dh vksj ls@ Revenue by:Smt. Poonam Rai, DCIT - DR lquokbZ dh rkjh[k@ Date of Hearing : 14/03/2018 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 1 /05/2018 vkns'k@ ORDER PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(A)-2, Jaipur dated 27-10-2015 for the Assessment Year 2005-06 raising therein following ground of appeal. ‘’In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in imposing penalty u/s 271(1)(c) of I.T. Act, 1961 amounting to Rs. 2,37,219/-. The action of the AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty of Rs. 2,37,219/- imposed u/s 271(1)(c).’’

ITA No.37/JP/2016 Smt. Smita Bhargava vs ITO, Ward- 6(4) ,Jaipur

2.1 The ld.AR of the assessee vide application dated 11-09-2017 raised

the additional ground of appeal as under:-

‘’In the facts and circumstances of the case and in law the AO has erred in imposing penalty u/s 271(1)( c )without specifically pointing out in the show cause notice whether the penalty was proposed on concealment of particulars of income or furnishing inaccurate particulars of income . The action of the AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the penalty imposed u/s 271(1)( c )’’

2.2 We have heard the rival contentions and perused the materials

available on record. From the records, it is noticed that assessee had not

participated in assessment proceeding. The assessee had not made any

compliances of the notices issued u/s 143(2) and 142(1) of the Act. In the

assessment order, it has been clearly mentioned that assessee had

furnished inaccurate particulars of income. Thus the assessee was

sufficiently noticed about the basis on which penalty was initiated.

Hence, in this factual matrix of the case, this additional ground of appeal

has no merit which is dismissed.

3.1 Apropos solitary ground of the assessee, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’2.3.1 I have perused the facts of the case, the penalty order and the submissions of the appellant. In this case credits of Rs. 7,04,750/- remain unexplained in spite of 2

ITA No.37/JP/2016 Smt. Smita Bhargava vs ITO, Ward- 6(4) ,Jaipur

adequate opportunity provided to the assessee. In the quantum proceedings before the CIT (A), the assessee had been given adequate opportunity to prove the credits yet the amount of Rs. 2,25,000/-belonging to three creditors could not be proved. Further, while the assessee claimed that Rs. 4,76,000/- is not a borrowing but a transfer of funds but not evidence whatsoever was adduced either in earlier proceedings or before me in the present proceedings. The A.R. in the written submissions before me had submitted a chart showing the date of repayment of three loans from Smt. Sudha Singhvi, Raj Kumar Jain & Mohan Lal Sharma but during the proceedings clarified that these are dates of receipts and not the date of repayment.

2.3.2 The A.R. further claimed that the burden in the quantum proceedings is comparatively light and levy of penalty is not automatic. In the present case credits of an amount of Rs. 7,04,050/- could not be proved by the assessee as genuine during penalty proceedings also. In fact the assessee offered no explanation in the proceedings before the Assessing Officer and did not even attend the proceedings. Before me also, no proper explanation has been offered by the A.R. nor any additional material to substantiate the credits. AO has also placed reliance on the case of CIT vs Prathi Hardware Stores – 203 ITR 641 in which no similar facts the levy of penalty was found to be justified. For an example to be accepted, the basic ingredients shave been discussed in 16 Taxman.com 296 Hyderabad in the case of Properties Suryanarayana vs ITO , Ward- 13(1), Hyderabad and are as follows-

‘’When we examine Part B of Explanation 1 carefully then we are of the view that the words ‘not substantiate’ used in that clause does not mean that is not accepted by the concerned authority, but it means that there is no substance in the claim made by the assessee. The word ‘substantiate’ is opposite to theword ‘vague’ or ‘fanciful’ or ‘without any foundation or basis’. The phrase ‘to prove that such explanation is bona fide’ means that the assessee has to show that circumstances existed 3

ITA No.37/JP/2016 Smt. Smita Bhargava vs ITO, Ward- 6(4) ,Jaipur

whereby it has made the claim, or that, as in the present case, it had in fact received the money from the creditors but their credentials cannot be established. It has to be proved that failure of the assessee to furnish evidence in support of the claim was beyond his control. Assessee has to prove or furnish evidence that circumstances existed which disabled him to furnish the evidence in support of his claim. The third condition is that all the facts relating to the claim and material to the computation of its total income has been disclosed by him. It means that all the material facts which are relevant for computation of income of the assessee have been disclosed to the department not merely during the assessment proceeding but in the return of income.’’

Seen against the above, no explanation has been offered by the assessee much less explanation which could be substantiated. In view of the above, the assessee has furnished inaccurate particulars of income resulting in concealment of income hence the penalty imposed by the Assessing Officer is confirmed.’’

3.2 During the course of hearing, the ld.AR of the assessee prayed that

the ld. CIT(A) has erred in confirming the penalty of the Rs. 2,37,219/-

u/s 271(1)(c ) made by the AO for which the ld.AR of the assessee filed

the written submission. The same has been taken into consideration for

adjudication of the solitary ground raised by the assessee.

3.3 On the other hand, the ld. DR supported the order of the ld.

CIT(A).

3.4 We have heard the rival contentions and perused the materials

available on record. Brief facts of the case are that the assessee filed the

ITA No.37/JP/2016 Smt. Smita Bhargava vs ITO, Ward- 6(4) ,Jaipur

return of income on 01-08-2005 declaring total income of Rs. 1,54,010/-

which was assessed at Rs. 29,14,220/- u/s 144 on 19-11-2007. During the

year under consideration, the assessee had shown her income from

business and profession of trading in optical instruments and interest

only. The AO during the course of assessment proceeding found that

fresh unsecured loans of Rs. 12,66,000/- were shown in the individual

balance sheet and Rs. 9,75,000/- were shown in the balance sheet of her

proprietary concern M/s. Nath Contact Lenses and Hearing Aid Centre by

the assessee. Further the assessee had claimed interest of Rs. 1,57,300/-

on these loans in her proprietary concern. The AO made the addition of

Rs. 23,98,300/- as the assessee failed to prove the identity, genuineness

and creditworthiness of the depositor of unsecured loan. In addition to the

above, the AO made the following additions as the assessee had not

furnished the required details. 1. Estimation of trading results Rs. 2,68,400/- 2. Disallowance of various expenses Rs. 11,245/- 3. Estimation of Consultancy Receipts Rs. 82,468/-

The penalty proceedings u/s 271(1)( c ) were initiated for filing inaccurate

particulars of income in this case. The assessee went in appeal before the

ITA No.37/JP/2016 Smt. Smita Bhargava vs ITO, Ward- 6(4) ,Jaipur

ld. CIT(A) who vide his order dated 13-11-2009 confirmed the following

additions made by the AO.

The assessee was show caused on 14-03-2011 & 23-03-2011 as to why

penalty u/s 271(1)( c) of the Act should not be imposed but no reply was

filed by the assessee. The AO levied penalty u/s 271(1)( c) of the Act for

furnishing of inaccurate particulars of income to the extent of

Rs. 7,04,750/- on account of unexplained cash credit and disallowance of

interest. The AO thus imposed the penalty of Rs. 2,37,219/- u/s 271(1)(c )

of the Act vide order dated 31-03-2011 being 100% tax sought to be

evaded. In first appeal the ld. CIT(A) has confirmed the penalty by

observing as under:-

‘’….Seen against the above, no explanation has been offered by the assessee much less explanation which could be substantiated. In view of the above, the assessee has furnished inaccurate particulars of income resulting in concealment of income, hence the penalty imposed by the Assessing Officer is confirmed.’’

In this case, we have gone through the orders of the lower authorities. We

have also taken into consideration the written submissions of the assessee,

ITA No.37/JP/2016 Smt. Smita Bhargava vs ITO, Ward- 6(4) ,Jaipur

including the case laws mentioned therein. It is noted that the ld.AR of the assessee could not controvert the findings of the ld. CIT(A). Hence, in the present factual matrix of the case, we concur with the findings of the ld. CIT(A). Thus the appeal of the assessee is dismissed. 4.0 In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 01-05-2018. Sd/- Sd/- ¼ fot; iky jko ½ ¼HkkxpUn½ (Vijay Pal Rao) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 01 /05/ 2018 *Mishra आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Smt. Smita Bhargava, Jaipur 1. 2. izR;FkhZ@ The Respondent- The ITO, Ward- 6(4), Jaipur vk;dj vk;qDr¼vihy½@ CIT(A). 3. 4. vk;dj vk;qDr@ CIT, विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA No.37/JP/2016) vkns'kkuqlkj@ By order, सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत