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Income Tax Appellate Tribunal, ‘ D’ BENCH : CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI G.PAVAN KUMAR
आदेश / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER
This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-I, Coimbatore dated 19.09.2013 pertaining to assessment year 2006-07.
The grievance of the assessee in this appeal is levy of penalty under section 271(1)(c) of the Act at `2,13,792/-.
ITA No.1911/Mds./2013 :- 2 -:
The facts of the case are that the assessee is an individual, engaged in the business of executing civil contact woks and for assessment year 2006-07, assessee filed the return of income on 11.09.2006 showing a total income of `1,97,415/-.The said return was originally processed u/s.143(1) of the Act. Later, the assessment was framed u/s.143(3) of the Act on 31.12.2008 and the total income was computed at `33,21,420/-. While completing the assessment, the AO made the following additions.
a) Disallowance of Sundry Creditors 14,00,000/- b) Disallowance of Loan Creditors 10,00,000/- c) Excess claim of depreciation 99,000/- d) Agricultural income 1,25,000/- e) Consultancy charges 5,00,000/- Aggrieved, the assessee carried the appeal before the Ld.CIT(A). On appeal, the Ld.CIT(A) On appeal, Ld.CIT(A) had partly granted relief resulting in the process following additions were sustained. a) Sundry creditor-M/s.Sabari Cottage Ind. 1,67,001/- b) Loan Creditor – Mrs.Malliga 1,00,000/- c) Loan Creditor – Mrs.Radhamani 2,00,000/- d) Loan Creditor – Mr.Velumani 1,65,000/- e) Agricultural income 1,25,000/- The Ld.CIT(A) confirmed addition to the extent of `1,67,001/- on account of sundry creditors, by holding that the party viz. M/s.Sabari Cottage Industry failed to respond to the summons issued which puts a doubt on the genuineness of the transaction. After the First Appellate
ITA No.1911/Mds./2013 :- 3 -: order, the ITO initiated the penalty proceedings u/s.271(1)(c) of the Act and the penalty was imposed for want of explanation resulting in AO’s decision to conclude concealment of income or furnishing of inaccurate particulars of income within the scope of sec.271(1)(c) of the Act. On appeal, the CIT(A) confirmed the levy of penalty u/s.271(1)(c) of the Act. Against this, the assessee is in appeal before us.
We have heard both the parties and perused the material on record. In this case, admittedly the addition was sustained by First Appellate Authority in respect of following: a) Sundry creditor-M/s.Sabari Cottage Ind. 1,67,001/- b) Loan Creditor – Mrs.Malliga 1,00,000/- c) Loan Creditor – Mrs.Radhamani 2,00,000/- d) Loan Creditor – Mr.Velumani 1,65,000/- e) Agricultural income 1,25,000/- Total 7,57,001/- The CIT(A) confirmed each of the above addition by observing as follows:- i) M/s.Sabari Cottage Industries – `1,67,001/-:
M/s.Sabari Cottage Industry failed to respond to the summons issued. The genuineness of the transaction was doubted by the AO. ii) Mrs.Malliga - `1,00,000/-:
Summons issued, return was un-served. The party has given a confirmation letter stating that out of balance of `3,06,666/-,
ITA No.1911/Mds./2013 :- 4 -: outstanding is at `2,06,666/- represents the amount due from the assessee and `1 lakh adjusted towards advance given to the assessee for repairing the house. iii) Mrs.Radhamani-`2,00,000/-: In respect of summons, her husband Velumani appeared and confirmed the trade credit of `2,25,946/- and denying having given any advance towards construction. Hence, the addition was confirmed, though the assessee made a plea that `1 lakh towards house advance, which was not repaid by assessee as on date. iv) Mr.Velumani - `1,65,000/-:
The ld.A.R submitted before the lower authorities that it represents advance towards plot and it was wrongly stated by that party that `1,65,000/- has been wrongly stated as advance adjusted in December, 2005. According to lower authorities, since it was adjusted in December, 2005, no balance was outstanding as on 31.03.2006 and the explanation given by the ld.A.R was not supported with the facts.
Therefore, addition was made. v) Agricultural income -`1,25,000/-:
The assessee stated that assessee owns no agricultural land.
4.1 In this case, that land belongs to assessee’s father-in-law and this agricultural income was earned from agricultural operations from ITA No.1911/Mds./2013 :- 5 -: the said land and it cannot be treated as income from other sources.
Going by the above facts of the case, we are of the opinion that the assessee had given a bona fide explanation and the Department has not brought any material to show that the explanation was bogus or false.
4.2 Regarding addition u/s.68 of the Act, which was confirmed by the Tribunal because of unsatisfactory explanation given by the assessee in support of such credit, but it is not a good case for imposition of penalty, since it relates to lack of tendering explanation to the satisfaction of the ld. Assessing Officer and not disproving the contention of the assessee with regard to the genuineness of the receipts. As held by the Calcutta High Court in the case of Durga Kamal Rice Mills Vs. CIT reported in [2004] 265 ITR 025 relying on M/s.National Textiles reported in [2001]249 ITR 125(Guj.), there is a difference in “facts not proved” and “facts disproved”. It is further held that penalty can be levied only for the latter. Similar view has been taken in CIT v. Vidyagauri Natverlal & Ors., reported in [1999] 153 CTR 546 (Guj). Being so, in the present case, the explanation given by the assessee not disproved by the ld. Assessing Officer, as such there is no conclusive evidence to show that assessee has concealed particulars of income or furnished inaccurate particulars of income.
ITA No.1911/Mds./2013 :- 6 -:
4.3 Further regarding agricultural income, the assessee made an honest plea that assessee does not own any agricultural land. It has earned from the agricultural land owned by assessee’s father-in-law. There is no material brought on record to show that it is bogus or false. Being so, we find no reason to levy of penalty u/s.271(1)(c) of the Act, even on this discrepancy. We are inclined to delete the penalty in this case.
In the result, the appeal of the assessee is allowed.