SH. KRISHNA RICE & GENERAL MILLS,RUDRAPUR vs. ITO, RUDRAPUR

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘G’: NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER and SHRI A.T. VARKEY, JUDICIAL MEMBER ITA No.664/Del./2009 (ASSESSMENT YEAR : 2005-06) ITA No.1412/Del./2011 (ASSESSMENT YEAR : 2005-06) Shree Krishna Rice & General Mills, vs. Income Tax Officer, C/o M/s. Satnam Singh Chawla & Associates, Rudrapur (Uttarakhand) L – 2A, Rampur Gardens, Bareilly (UP).

(PAN : AAPFS9444P) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/Shri Salil Kapoor, Sanat Kapoor and Shubham Rastogi, Advocates REVENUE BY : Shri Sunit Kumar, Senior DR

O R D E R PER A.T. VARKEY, JUDICIAL MEMBER :

The appeal in ITA No.664/Del/2009, at the instance of the assessee, is directed against the order of the Commissioner of Income-tax (Appeals)-II, Meerut dated 10.12.2008 for the assessment year 2005-06 and the appeal in ITA No.1412/Del/2011 is filed, in the penalty proceedings, against the order of the Commissioner of Income-tax (Appeals)-II, Meerut dated 16.04.2010 for the assessment year 2005-06.

2 ITA No.664/Del/2009 ITA No.1412/Del/2011

ITA No.664/Del/2009

rice. The return of income was filed by the assessee on 31.10.2005 declaring

total income of Rs.10,284/-. The case was processed u/s 143(1) of the Income

Tax Act, 1961 (hereinafter ‘the Act’). Later, the case was selected for scrutiny

and notice u/s 143 (2) was issued on 08.09.2006. Notices u/s 142 (1) were

issued. The AO completed the assessment by making certain additions and

completed the assessment u/s 143 (3) of the Act on total income of

Rs.13,00,814/-. In appeal, the order of the AO was partly confirmed by the ld.

CIT (A). Now, the assessee, being aggrieved, is in appeal before us.

assessee and the grounds read as under :-

“1. The Learned Commissioner of Income Tax (Appeal) has erred in upholding an addition of Rs.3,50,000.00 received from Shri Neota Ram as advance by the assessee firm for which necessary evidences were produced before the Learned Assessing Officer and Learned Commissioner of Income Tax (Appeal). 2. The Learned Assessing Officer and Commissioner of Income Tax (Appeal) has erred in upholding an addition of Rs.75,000.00 received as petty loans from Shri Neota Ram when complete evidences as to the source of such loans were produced before the Learned Assessing Officer and Learned Commissioner of Income Tax (Appeal). 3. The Learned Commissioner of Income Tax (Appeal) has erred in upholding an addition of Rs.3,50,000.00 received from Smt. Urmila Rani as advance by the assessee firm for which necessary evidences were produced before the Learned Assessing Officer and Learned Commissioner of Income Tax (Appeal).

3 ITA No.664/Del/2009 ITA No.1412/Del/2011

petty loans each from the two persons, viz., Shri Neota Ram and Smt. Urmila

Rani.

4.1 First we discuss the advances and petty loan received from Shri Neota

Ram. The AO observed that the assessee had shown to have taken advance

against sale of land from Shri Neota Ram amounting to Rs.3,50,000/-. The AO

found that Shri Neota Ram had given an advance of Rs.3,50,000/- on

08.10.2004 and on the same date, before making withdrawal of the said loan, a

cash of Rs.3,50,000/- was deposited in the said bank account. The AO observed

that the family of Shri Neota Ram comprises of himself, wife, one daughter, two

dependent sons and oneself dependent son. The AO had estimated the actual

expenses of the family including the school and college fees of the sons and

daughter at Rs.1,95,000/-. He further observed that Shri Neota Ram in his

statement had admitted that his income was Rs.l,50,000/- to Rs.2,00,000/- per

annum. The AO had computed the net agricultural income of the assessee at

Rs.1,68,000/- per annum by taking such net income @ Rs.14,000/- per acre.

The AO further noticed that a sum of Rs.1,10,000/- had been given as margin

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money for purchase of car and such investment must had been made out of past

savings because Shri Neota Ram had no other source of income. He further

observed from the statement of Shri Neota Ram that the impugned advance had

been given out of agricultural income, loans taken from friends and relatives

and out of past savings but Shri Neota Ram could not furnish the names of the

persons and the amounts of loans taken from friends and relatives in order to

substantiate his contention regarding his capacity to advance the loan. Further,

on examination of the bank account with Nainital Bank Ltd., Rudrapur, the AO

found that the assessee had made repayment of advance of Rs.2,00,000/-

through bearer cheque and also the said payment had been received by a person

other than Shri Neota Ram and the remaining advance amount of Rs.1 ,50,000/-

had been shown to be repaid in cash on various dates. Therefore, the AO held

that the genuineness of advance had not been proved and the capacity of Shri

Neota Ram to make the advance also did not stand established and, accordingly,

the AO treated the entire amount of Rs.3,50,000/- as unexplained cash credit

and the same had been added to the total income of the assessee. The ld. CIT

(A) confirmed the addition by observing as under :-

“6.4 I have considered the above submissions of the counsel of the appellant, the facts mentioned in the assessment order and the remand report by the AO and the comments of the counsel of the appellant in respect of the remand report. It is observed that the appellant has claimed to have received advance against sale of property from Shri Neota Ram to the tune of Rs.3,50,000/-. The appellant has led the primary evidence like affidavit of the person making the advance, his bank account and

5 ITA No.664/Del/2009 ITA No.1412/Del/2011

other details regarding the source of income and his personal expenses. The A.O. has examined all these evidence and has finally concluded that the main income of the person concerned i.e. Shri Neota Ram, is agricultural income out of the land owned by him of 12 acres. The total expenses including the education expenses of the dependent children have been computed at Rs.1,95,000/- and since the appellant's income by way of agriculture was less than the said expenses, the A.O. has not accepted the creditworthiness of the person making such advance to the tune of Rs.3,50,000/-. Even though the person making such advance has taken the plea that advances were out of agricultural income and loans taken from friends and relatives and out of past savings, further details regarding the names of the persons and the loans taken from such third parties could not be furnished before the A.O. and therefore, in my 'view, the capacity of the person to make such advance of Rs.3,50,000/- remains unproved and therefore I uphold the action of the AO in treating such advance of Rs.3,50,000/- as unexplained and accordingly confirm the addition of Rs.3,50,000/- in the hand of the appellant as unexplained cash credit and no interference is called for in this respect. Hence ground No. (ii) is rejected.”

As regards petty loan of Rs.75,000/- taken by the assessee from Shri

Neota Ram, the AO observed that the assessee had shown to have taken loans in

small amounts from Shri Neota Ram on various dates aggregating to

Rs.75,000/-, which had been recorded in the assessment order at page 6. Out of

these loans received to the tune of Rs.75,000/-, the assessee had stated that it has

repaid Rs.68,000/- during the year in cash. The AO observed from the

statement recorded from Shri Neota Ram that no loans had been given to the

assessee apart from the advance of Rs.3,50,000/-. Further, the A.O. while

rejecting the genuineness of advance of Rs.3,50,000/- had already held that Shri

Neota Ram did not have the capacity to advance such monies out of his actual

income and the same rational applies here also because Shri Neota Ram had

6 ITA No.664/Del/2009 ITA No.1412/Del/2011

failed to establish his creditworthiness to advance further loans and accordingly,

the loan of Rs.75,000/- had been treated as unexplained cash credit and added to

the income of the assessee. The ld. CIT (A) confirmed the addition by

observing as under :-

“7.4 I have considered the above submissions of the counsel of the appellant, the facts mentioned in the assessment order and the remand report by the AO and the comments of the counsel of the appellant in respect of the remand report. While adjudicating on ground of appeal No. (ii), it has been held that as regards the advance of Rs.3,50,000/- received from Shri Neota Ram, the said person did not have the capacity and creditworthiness to make such advance on the basis of evidence collected by the A.O. during the course of assessment proceedings. As far as the petty loans claimed to have received from Shri Neota Ram, the appellant has not been able to discharge its onus as regards the genuineness of such loans received in cash and repayment there of subsequently. Further, even though Shri Neota Ram has accepted about advancing the sum of Rs.3,50,000/- to the appellant he has refused to have given any loans to the appellant. Keeping, in view these facts and for the lack of creditworthiness in the hand of Shri Neota Ram, I am in agreement with AO's action in treating the purported loan of Rs.75,000/- as unexplained cash credit in the hand of the appellant and no interference is called for in this respect. Hence, ground No.(iii) is rejected.”

CIT (A) and submitted that the assessee had during the relevant year received an

advance of Rs.3,50,000/- from Shri Neota Ram against sale of land and an

agreement in this regard was also executed amongst the said party. However

since the deal could not materialize, the said amount was also later refunded to

the said parties. Ld. AR submitted that Shri Neota Ram is a farmer and earned

income from farming and sale of agricultural produce. He submitted that during

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the course of assessment proceedings, the statement on oath of Shri Neota Ram

was recorded and he also confirmed having made the said advance to the

assessee and having received it back during the year. He further submitted that

apart from his own agricultural land holdings, Neota Ram had also taken on

consideration / rent land of other parties for agricultural use for which necessary

confirmation of other land owners were filed parties and the proof of their (land

owners who have given land to Shri Neota Ram for cultivation) were also

furnished before the AO. He submitted that the AO misunderstood the answers

of Shri Neota Ram, and treated the advance as bogus. He drew our attention to

Question 8 to the statement of Shri Neota ram on oath and confirmed that his

net income after meeting out all his expenses came to around Rs.1.5 lakhs to

Rs.2.00 lakhs, however, it was assumed by the AO to be the income before

meeting the expenses. Ld. AR submitted that the income of Neota Ram was

calculated at Rs.14,000 per acre for 12 acres at Rs.1,68,000/-. He submitted

that while doing so, the AO conveniently ignored the fact that Shri Neota Ram

was cultivating 24.50 acres of land and other land taken by Shri Neota Ram on

Batai (kind of rent / consideration) from Shyam Lal and Ramesh Lal, who had

furnished their confirmations and proof of agricultural holding and no further

enquiries were conducted by the AO in this regard to disprove the said claim of

assessee. He, therefore, submitted that the creditworthiness and availability of

cash in hand was proved by the details furnished and also the assumptions of the

8 ITA No.664/Del/2009 ITA No.1412/Del/2011

authorities regarding the household expenses suffered from infirmities. Ld. AR

pleaded that the addition be deleted.

5.1 As regards petty loans, the ld. AR submitted that the Neota Ram had also

given petty loans to the assessee, which was confirmed by him by way of a

clarification submitted during the course of the assessment proceedings. He

submitted that the said loans were advanced to the assessee out of petty

borrowings made by Neota Ram from his friends and necessary evidences in

this regard were also furnished during the course of the assessment proceedings.

He pointed out that since no specific query was raised by the AO in the

statement of Neota Ram, Neota Ram did not reply to have given the petty loans

to the assessee. He emphasized that loans were given several times and it was

repaid in short intervals and on given period, the petty loan never crossed

Rs.15,000/- and so if telescoped the loan cannot exceed Rs.15,000/- and not

Rs.75,000/- which is the aggregate amount which cannot be the addition

anyway. He submitted that as the creditworthiness of the assessee was not in

doubt and the necessary evidences were filed, he pleaded to delete this addition.

find that the assessee in order to discharge the onus on it in respect to advance

on sale of property from Shri Neota Ram has produced the creditor and the

statement on oath has been recorded by the AO. He has also confirmed about

9 ITA No.664/Del/2009 ITA No.1412/Del/2011

the said transaction and has also stated before the AO that since the transactions

could not be materialized, Rs.3,50,000/- has already been repaid. The Bank

statement of Neota Ram has also been filed and the amount has been transacted

to the assessee through banking channel only. In order to prove the

creditworthiness, Neota Ram has stated that he is the owner of 12 acres of land

and also he was cultivating another 24.50 acres of land which he has taken on

rent/consideration from Shayam Lal and Ramesh Lal who in turn have

confirmed the said fact. The AO has estimated that from one acre of land, the

assessee might got Rs.14,000/- and so, he will be having Rs.1,68,000/- as his

income whereas the assertion of Neota Ram that he was cultivating another

24.50 acres of land which has not been discussed by the AO and the CIT (A)

also is silent on this aspect. We are of the opinion that since the assessee has

been able to produce the person who has advanced the amount for sale of land

and by submitting before AO that he was cultivating 36.50 acres of land (24.50

acres + 12 acres), so the averment of Neota Ram cannot be brushed aside

without pointing out any infirmity in the statement given by him to prove his

creditworthiness. Therefore, we are inclined to accept the transaction by

assessee from Neota Ram. So, the addition on account of Neota Ram to the tune

of Rs.3,50,000/- is hereby directed to be deleted.

7.1 As regards petty loans of Rs.75,000/- given by Neota Ram, we find from

the order of the ld. CIT (A) that even though Shri Neota Ram has accepted about

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advancing the sum of Rs.3,50,000/- to the assessee but he has refused to have

given any loans i.e. Rs.75,000/- to the assessee, which is evident from his

statement reflected on page 18 of the CIT (A)’s order. Before us also, the

assessee could not controvert this finding. However, we take note that Rs

75000/- was the aggregate amount of petty loan which has been received and

repaid according to assessee, and the petty loan at a given point of time never

exceeded Rs 15000/- is taken into account, so we are of the opinion that an

amount of Rs 15000/- is to be disallowed. The assessee partly succeeds.

Rani. The AO observed that the assessee had shown to have taken advance

against sale of land from Smt. Urmila Rani amounting to Rs.3,50,000/-. The AO

observed that in this regard, the assessee had filed affidavit and copy of bank

account of the concerned person. On examination of the same, the AO found that

Smt. Urmila Devi has given an advance of Rs.3,50,000/- on 08.10.2004 and on

the same date, before making withdrawal of the aforesaid advance, an amount in

cash of Rs.3,50,000/- had been deposited in her bank account. The AO asked the

assessee to produce Urmila Devi for examination, but she could not be produced

on the ground that she was not in a position to appear because of her illness. The

AO mentioned in his order that Smt. Urmila Devi was holding about 12 acres of

land and the assessee could file evidence of sale of agricultural produce for a

sum of Rs.70,560/- only. After considering the expenses on carrying out

11 ITA No.664/Del/2009 ITA No.1412/Del/2011

agricultural activities, the AO considered 50% of the receipts to be the net

agricultural income. Even otherwise, by adopting Rs.14,000/- per acre, as net

agricultural income annually, the AO estimated the net annual income at

Rs.1,68,000/-. After incurring household expenses, since the balance amount

left was not sufficient to make the impugned advance, the AO had not accepted

the receipt of such advance as genuine and accordingly, he treated the amount of

Rs.3,50,000/- as unexplained cash credit and added to the total income of the

assessee. The ld. CIT (A) confirmed the addition by observing as under :-

“8.4 I have considered the above submissions of the counsel of the appellant, the facts mentioned in the assessment order and the remand report by the AO and the comments of the counsel of the appellant in respect of the remand report. It is observed that during the year under consideration, the appellant has shown to have taken advance of Rs.3,50,000/- against sale of land to Smt. Urmila Devi and the same has been repaid during the year under consideration. The appellant has led the primary evidence of affidavit of Smt. Urmila Devi, accepting the fact that she has advanced Rs.3,50,000/- to the appellant. Further the bank account of Smt. Urmila Devi has been produced which indicates that the said advance was given on 08.10.2004 and on the same date before making withdrawal of the aforesaid advance amount, cash of Rs.3,50,000/- was deposited in her bank account. The AO has mentioned that Smt. Urmila Devi is holding about 12 acres of land and the evidence of sale of agricultural produce has been furnished to the tune of Rs.70,560/- only. After meeting the expenses on agricultural activities, the net receipt from agricultural income is 50% of the gross receipts only. Even otherwise by adopting the net agricultural income of Rs.14,000/- per acre per annum, such annual income from 12 acres of land has been indicated at Rs.1,68,000/-. After incurring household expenses, it has been observed that Smt. Urmila Devi, the person making the advance will be hardly left with sufficient balance to make the impugned advance and accordingly the creditworthiness of the person making the advance has not been established and accordingly the A.O. has treated the impugned advance as unexplained cash credit in the hand of the appellant. In my considered view, even though the identity of the person making the advance has been proved, the creditworthiness

12 ITA No.664/Del/2009 ITA No.1412/Del/2011

to make such advance has not been established and accordingly the action of the AO in treating such advance as unexplained cash credit is hereby upheld and no interference is called for in this respect. Hence, ground No. (iv) is rejected.”

8.1 With regard to petty loans received from Smt. Urmila Rani, the AO

observed that the assessee had claimed to have taken loans in small amounts

from Smt. Urmila Devi on various dates to the tune of Rs.75,000/- . The AO

observed that these loans had been shown to be repaid during the year under

consideration itself. The AO had asked the assessee to produce Smt. Urmila

Devi, but because of her illness she could not be produced to lead evidence as

regards the purported loans given by her to the assessee. While making addition

of Rs.3,50,000/- being the advance received from Smt. Urmila Devi, the AO

held that she did not have the capacity to advance such monies or loans out of

her known source of income. Due to these reasons, the AO held that Smt.

Urmila Devi did not have the creditworthiness to advance such loan and

accordingly, loan amounting to Rs.75,000/- had been added to the income of the

assessee. Ld. CIT (A) confirmed the addition by observing as under :-

“9.4 I have considered the above submissions of the counsel of the appellant, the facts mentioned in the assessment order and the remand report by the AO and further comments of the counsel of the appellant in respect of the remand report. It is observed that the appellant has shown to have accepted several loans from Smt. Urmila Devi aggregating to Rs.75,000/-. As per the clear cut finding of the A.O, as discussed while adjudicating on ground of appeal No. (iv), Smt. Urmila Devi did not have the capacity to advance the sum of Rs.3,50,000/- to the appellant. Similarly, the said person was not in a position to advance such loans from declared source of income as has been rightly

13 ITA No.664/Del/2009 ITA No.1412/Del/2011

pointed out by the 1\.0. Therefore, I am agreeable to the contention of the A.O. that such petty loans claimed to have been received by the appellant from Smt. Urmila Devi have not been substantiated and accordingly the action of the A.O. in treating such loan amount of Rs.75,000/- as unexplained cash credit is quite justified and no interference is called for in this respect and the addition of Rs.75,000/- is hereby confirmed. Hence, ground No. (v) is rejected.”

submitted that Smt. Urmila Rani was not keeping well, therefore, she could not

appear before the authorities below. He submitted that the affidavits of Smt.

Urmila Rani regarding the transactions undertaken by her were infact furnished.

He submitted that during assessment proceedings, AO assured that the statement

of Smt. Urmila Rani would be taken by deputing an Inspector but the AO neither

appointed any ITI nor any other person to take the statement of Smt. Urmila

Rani. He submitted that the confirmations from Smt. Urmila Rani and proof of

her land holdings in her name were also furnished. He submitted that Smt.

Urmila Rani is infact the sister-in-law of Shri Neota Ram and the farming of her

land was done by Neota Ram, who would make the earnings on her behalf and

hand it over to Urmila Rani. Accordingly, the ld. AR pleaded to delete this

addition.

9.1 As regards loans aggregating to Rs.75,000/-, ld. AR reiterated the

submissions made above in paragraph 9 and submitted that all the documents

were furnished before the lower authorities and pleaded to delete the addition.

14 ITA No.664/Del/2009 ITA No.1412/Del/2011

below.

find that the assessee had stated that one Smt. Urmila Rani who is the sister-in-

law of Neota Ram has advanced Rs.3,50,000/- as advance for the property. She

was also the owner of 12 acres of land which was being cultivated by Neota

Ram and going by the AO’s estimation of income from 12 acres comes to

Rs.1,68,000/-. When Urmila Rani has confirmed and filed affidavit and copy of

the bank account details, we do not find any exercise being done by the AO to

discredit Urmila Rani. Without having any material to state that Urmila Rani

cannot have Rs.3,50,000/- with her is simply based on assumptions and

presumptions. In any way, Smt. Urmila Rani has confirmed that the amount has

been repaid back to her, so, therefore, in the facts and circumstances of the case,

we direct the AO to delete the addition of Rs.3,50,000/- on this account.

11.1 As regards petty loans of Rs.75,000/- given by Smt. Urmila Devi, we find

from the order of the ld. CIT (A) that even though Smt. Urmila Devi has

accepted about advancing the sum of Rs.3,50,000/- to the assessee but she has

refused to have given any loans i.e. Rs.75,000/- to the assessee, which is evident

from her statement reproduced on page 25 of the CIT (A)’s order. Before us

also, the assessee could not controvert this finding. However, we take note that

Rs 75000/- was the aggregate amount of petty loan which has been received and

15 ITA No.664/Del/2009 ITA No.1412/Del/2011

repaid according to assessee, and the petty loan at a given point of time never

exceeded Rs 15000/- is taken into account, so we are of the opinion that an

amount of Rs 15000/- is to be disallowed. The assessee partly succeeds.

are partly allowed.

account of disallowance of interest on advance paid to sister concerns. At the

time of hearing, the ld. Counsel for the assessee did not press this ground,

hence, the same is dismissed as not pressed.

account of disallowance of claim of depreciation on car with total disregard to

the facts and circumstances of the case.

Rs.1,05,190/-. According to the AO, per the figures emerging from the P & L

Account the assessee had not debited vehicle running, repair and maintenance

expenses, therefore, he was of the opinion that it was quite evident that the

assets, namely, cars were not put to business use. Accordingly, the AO observed

that the depreciation was not allowable in the case of such asset. The AO

confronted the assessee with this issue and the assessee submitted that during

the year under consideration, the assessee had crushed only 1243.78 qtls of

paddy and as a result, the profits were low. The assessee further submitted that

16 ITA No.664/Del/2009 ITA No.1412/Del/2011

since the profit was low, it was decided by the management that the vehicle

running and maintenance expenses would be met out of drawings made by the

partners and accordingly the same would be debited to their capital accounts so

that the profits would not be further lowered. However, the AO was not been

convinced with the above explanation of the assessee because the claim of the

assessee that the profit was low, had been found to be incorrect. Further, the

AO observed that there was no sufficient withdrawal in the hand of the partner

to meet out expense on the vehicle running and maintenance expenses. In this

regard, the AO notes that Shri Shyam Sunder, partner had made total drawing of

Rs.1,05,190/- and out of the same, a sum of Rs.50,000/- related to cash

withdrawal and the remaining amount had been invested in LIC and income tax

payments. In this manner, the AO observed that out of Rs.50,000/-, no amount

could have been spared for vehicle running and maintenance expenses.

Similarly, out of the drawing of Rs.1,41,206/- made by Shri Jagdish Lal Anand,

a sum of Rs.55,200/-, related to cash withdrawals and the remaining amount had

been invested in LIC and income tax payment and accordingly, out of

Rs.55,200/-, no amount could have been spared for vehicle running and

maintenance expenses. In view of the above, the AO held that the cars were

used by the partners for personal use and they were never put to use in the

business because no expenses towards fuel, insurance, repair and maintenance

had been debited in the account of the firm, therefore, he disallowed the claim

17 ITA No.664/Del/2009 ITA No.1412/Del/2011

of depreciation on car of Rs.1,05,190/-. Ld. CIT (A) confirmed the addition

made by the AO.

submitted that that the lower authorities rejected the version of the assessee as

well as the statutory auditor of the firm with the contention that the cash

withdrawals made by both the partners at Rs.1,05,200/- were not sufficient to

meet the car expenses and household expenses of the partners. He submitted

that however, the AO had not been able to controvert the explanation of the

assessee and the statutory auditor who had finalized the Balance sheet and

conducted the audit of the firm. He submitted that there was no logical

explanation offered by the AO to reject the contention of the assessee and the

explanation given by the auditor and further submitted that the AO had not been

able to conclusively prove that the vehicle had not been used for the purpose of

business as alleged by him and the addition is based on surmises and

conjectures. Accordingly, he pleaded that the addition be deleted.

below.

claim of the assessee for the depreciation on the car to the tune of Rs.1,05,190/-

was not allowed on the ground that the assessee had not debited vehicle

running, repair and maintenance expenses in the profit and loss account. The

18 ITA No.664/Del/2009 ITA No.1412/Del/2011

assessee had pointed out that since the profit during the year under

consideration has been low, they had taken a decision to bear the car

maintenance expenses out of the withdrawals made by the partners in their

capital account. The fact that the assessee is running a business of production of

hulling of paddy to rice has not been found to be untrue and when the assessee

is doing business and when it has claimed that the car is being put to use for

business purposes, the depreciation should have been granted. The explanation

of the assessee is plausible explanation and, therefore, we find that the

assessee’s claim must be allowed. Therefore, the assessee succeeds on this

ground.

allowed.

ITA NO.1412/Del/2011

penalty u/s 271(1)(c) of the Act was confirmed by the ld. CIT (A)-II, Dehradun

vide order dated 26.10.2010.

the penalty levied by the AO. We note that penalty has been levied by the AO

on an addition of Rs.8,50,000/- and levied penalty of Rs.3,12,000/-, which was

19 ITA No.664/Del/2009 ITA No.1412/Del/2011

confirmed by the CIT (A). Since in the quantum appeal aforesaid we have

confirmed the addition of Rs.30,000/-, the penalty to that extent is sustained. We order accordingly. The AO shall recalculate the penalty for Rs.30,000/- and

give relief to the assessee accordingly.

above terms.

Order pronounced in the Open Court on this 5th day of February, 2016.

Sd/- sd/- (N.K. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: the 5th day of February, 2016 TS Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A)-II, Dehradun. 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi