SHRI C. SANTHOSH,VILLUPURAM vs. ACIT, VILLUPURAM CIRCLE, VILLUPURAM

Brief facts of the case are that the assessee filed his return of income for the assessment year 2015-16 on 02.09.2016 admitting total income of ₹.43,91,690/-. The income of the assessee was assessed at ₹.70,55,940/- vide assessment order under section 143(3) of the Act dated 19.12.2017 by making addition towards sundry credits alleged to be outstanding in two cases viz., Shri Gopi, M/s. Dhanalakshmi Blue Metals – ₹.12,53,000/- and Shri Ayyappan, M/s. Prithyangara Devi Blue Metals – ₹.14,11,250/- totalling to ₹.26,64,250/-. In respect of the above addition, the Assessing Officer levied penalty under section 271(1)(c) of the Act. On appeal against levy of penalty, the ld. CIT(A) partly allowed by deleting the penalty levied on the addition of ₹.14,11,250/- and confirmed the penalty levied on the addition of ₹.12,53,000/- [wrongly mentioned as ₹.12,34,880/-].

On being aggrieved, the assessee is in appeal before the Tribunal. By referring to the grounds of appeal, the ld. Counsel for the assessee has submitted that the provisions of section 271(1)(c) of the Act with reference to the sundry credit appearing in the name of Shri Gopi of M/s. Dhanalakshmi Blue Metals amounting to ₹.12,53,000/- has no application to the facts of the case and prayed for deleting the penalty levied under section 271(1)(c) of the Act. On the other hand, the ld. DR strongly supported the orders of authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, since the assessee could not produce confirmation from the creditors Shri Gopi of M/s. Dhanalakshmi Blue Metals amounting to ₹.12,53,000/- and Shri Ayyappan of M/s. Prithyangara Devi Blue Metals – ₹.14,11,250/-, the Assessing Officer brought to tax the above sundry credits totalling to ₹.26,64,250/-. The Assessing Officer has also levied penalty under section 271(1)(c) of the Act. During the course of appellate proceedings, the assessee has contended that the confirmation from Shri Ayyappan of M/s. Prithyangara Devi Blue Metals was already produced. After verification of the assessment records, the ld. CIT(A) has found that the creditor has given confirmation in writing and accordingly, the penalty relating to the above sundry credit was deleted. However, since the assessee could not produce confirmation from the creditor Shri Gopi of M/s. Dhanalakshmi Blue Metals, the ld. CIT(A) confirmed the penalty levied under section 271(1)(c) of the Act. Even before the Tribunal, the assessee could not produce confirmation from the creditor Shri Gopi that the creditor has to receive the above credit of ₹.12,53,000/- from the assessee warranting levy of penalty under section 271(1)(c) of the Act. In fact, the said creditors became hostile and refuses to give the confirmation of the transactions and to purchase peace and to avoid vexed litigation, the assessee had offered the said amount as income under section 41 of the Act as cessation of liability. Thus, we find no infirmity in the order passed by the ld. CIT(A). Accordingly, the ground raised by the assessee is dismissed.

In the result, the appeal filed by the assessee is dismissed. Order pronounced on the 16th September, 2021 in Chennai.