RAKESH AGARWAL,KOLKATA vs. THE ITO, WARD-45(1), KOLKATA, KOLKATA

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ITA 1543/KOL/2016Status: DisposedITAT Kolkata24 August 2018AY 2007-083 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had discharged the initial onus by providing documentary evidence for the unsecured loan creditors. The Assessing Officer's failure to elicit further response from the creditors meant the penalty under Section 271(1)(c) was not attracted.

What were the facts?

The assessee's appeal concerns a penalty imposed under Section 271(1)(c) for the assessment year 2007-08. The penalty arose from the failure to prove the genuineness of three unsecured loans totaling ₹49.50 lakhs shown in the books of the assessee's proprietorship concerns and HUF.

What were the issues?

Whether the failure to conclusively prove the genuineness of unsecured loans, despite providing initial documentation, attracts penalty under Section 271(1)(c) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA

Before: Shri S.S.Godara & Dr. A.L. Saini

O R D E R

PER S.S.Godara, Judicial Member:

1.

- This assessee’s appeal for assessment year 2007-08 arises from Commissioner of Income Tax (Appeals)-13, Kolkata’s order dated 23.03.2016, passed in case No.521/CIT(A)-13/Kol/W-45(1)/2014-15, upholding Assessing Officer’s action imposing penalty of ₹16,64,242/- in his order dated 29.08.11, involving proceedings u/s. 271(1)(c) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

2.

We notice at the outset that instant appeal suffers from a day’s delay in filing. The assessee has filed condonation affidavit dated 24.08.2016 pleading illness of the in-charge person, Shri A.KJ. Banerjee to have been undergoing treatment of haematologist. Learned Departmental Representative is very fair Rakesh Agarwal Vs. ITO Wd-45(1) Kol. Page 2 in not opposing correctness thereof. We therefore condone the impugned delay of a day’s delay in filing of instant appeal.

3.

We now advert to merits of the issue. There is no dispute that impugned the penalty arises from assessee’s failure in proving three unsecure loans totaling ₹49.50lakh shown by his proprietorship concern M/s Bansidhar Mahavir Prasad & M/s BMP Metals as well as eponymous HUF being managed as a karta; amounting to ₹23,35,000/-, 23,15,000/- and ₹ 3,00,000/-; respectively. The Assessing Officer had framed his regular assessment on 31.12.2009 quoting assessee’s failure in filing the necessary confirmation as well as producing the loan creditors in question during the course of scrutiny. The said addition was confirmed in CIT’s order dated 22.02.2011 involving proceeding u/s 264 of the Act. We do not see any change in the said factual position. It is therefore clear that the above quantum proceedings attained finality.

4.

The Assessing Officer quoted all the above facts in his penalty order dated 29.08.2011 to conclude that assessee’s act and conduct in allegedly failing to disclose the concerned loan amounts as his income invites section 271(1)(c) Explanation-1 of the Act. He thus imposed the penalty in question amounting to ₹16,64,242/- as upheld during the course of lower appellate proceedings with a very detailed reasoning.

5.

We have given our thoughtful consideration to rival contentions against and in support of impugned penalty. Case file reveals that the assessee /his above two proprietory concerns and HUF had shown the said unsecured loans in their respective books of account. The sole question that arises for our apt adjudication is as to whether same could be taken as concealment of income or furnishing of inaccurate particulars thereof or not. We do not see any reason to subscribe to the lower authorities stand in invoking section 271(1)(c) of the Act. We first of all quote hon'ble apex court’s decision in CIT vs. Reliance Petro Products 32 ITR 158 (SC) that quantum and penalty are parallel proceedings wherein each and every disallowance / addition made in course of the former does not ipso facto invite the latter penal provision. We

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