M/S. SURJA RAM & SONS,MALOUT vs. THE DEPUTY COMMISSIONER OF INCOME TAX, BATHINDA

The assessee has raised the following grounds of appeal. 1. The Ld. CIT(A) erred on fact and law in upholding the penalty amounting to Rs.3,14,270/- imposed u/s 271(1)(c) of the Income Tax Act,1961.

The brief facts of the case are that during the course of assessment proceeding, it was noticed that the assessee had accepted credits in the accounts of the partners viz. Sh. Parhlad Kumar to the tune of Rs.9,30,833/- and Sh. Amar Kumar to the tune of Rs.33,98,377/- on which the assessee was asked to produce the evidence of credits with source thereof so as to establish the genuineness of the loans. However, the assessee could furnish evidence in respect of credit of Sh. Amar Kumar only but no evidence in the form of confirmation or the source of credits in respect of Sh. Parhlad Kumar was produced, despite availing various opportunities, later on one of the partners of the assessee stated that Sh. Parhlad Kumar is not in good terms of other partners i.e., Sh. Amar Kumar, therefore, it is not possible to provide his records at that stage. Although, the notice U/s 131 of the I.T. Act was issued on 20.11.2007 to Sh. Parhlad Kumar but not yielded any result, thereafter, the addition to the tune of Rs.9,30,833/- as well as Rs.2,814/- and disallowance to the tune of Rs.97,792/- have been added in the income of the assessee and penalty proceeding have also been

On felling aggrieved against the order passed by the Assessing Officer, the assessee preferred the first appeal before the Ld. CIT(A), who upheld the penalty imposed by the Assessing Officer on the ground of furnishing inaccurate particulars of income with the reason that no evidence regarding the genuineness of the credits of Rs.9,30,833/- in the capital account of Sh. Parhlad Kumar partner has been furnished even before him and similarly the difference in the receipts to the tune of Rs.2,814/- also could not be reconciled. The assessee firm preferred the instant appeal.

At the outset, our attention was drawn by the Ld. AR that addition of Rs.9,30,833/- made by invoking provisions of Sec.69 has already been deleted by the Ld. CIT(A) vide its order dated 27th April, 2017 which has attended finality as the Department has not preferred any appeal against the said order, therefore, the penalty could not survive. Further, as per the addition of Rs.2,814/- is concerned, this difference is on account of receipts shown by the assessee viz-a-viz as per TDS certificate, therefore, there was only clerical, genuine and honest mistake on which no penalty should have been levied as the difference was very small.

On the other hand, the Ld. DR has not submitted contrary to the claim of the assessee.

We have gone through with the facts and circumstances of the case and also order dated 27.04.2017 passed by the Ld. CIT(A), Bathinda by which the addition to the tune of Rs.9,30,833/- is directed to be deleted, and which has since attained finality. Hence, considering the said order as well as submissions of the Ld. AR for addition of Rs.2,814/- the difference on account of receipts shown by the assessee as par TDS certificate occurred due to clerical and inadvertent mistake and even otherwise the difference is very small, hence, the penalty levied by the Assessing Officer to the tune of Rs.3,14,270/- and confirmed by the Ld. CIT(A) stand deleted.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 16 .03.2018.