SMT. ARTI SHADIJA,INDORE vs. ACIT-4(1), INDORE

आदेश/O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by appeal-order dated 18.05.2023 passed by learned Commissioner of Income-tax (Appeal), NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of penalty-order dated 29.03.2018 passed by learned ACIT, Circle 4(1), Indore [“Ld. AO”] u/s 271(1)(c) of Income-tax Act, 1961 [“the Act”] for assessment-year [“AY”] 2010-11, the assessee has filed this appeal on following grounds:

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Smt. Arti Shadija,Indore. Vs. ACIT, Cir.4(1), Indore. ITA No.261/Ind/2023 Assessment year 2010-11 3. The levy of penalty is unjust and bad-in-law and hence be deleted.” 2. Thus, the assessee has challenged the penalty of Rs. 1,30,000/-

imposed by AO u/s 271(1)(c). Ld. AR for assessee carried us to the relevant

orders of lower-authorities and demonstrated that the assessee is having

income from salary and other sources. The AO initially passed assessment-

order dated 25.03.2013 after making an addition of Rs. 27,00,000/- u/s 68

on account of bogus loans alongwith disallowance of Rs. 2,39,700/- being

interest deduction claimed by assessee on those loans. The assessee carried

matter in first-appeal whereupon the CIT(A), vide order dated 03.10.2016,

granted part-relief by deleting addition of Rs. 23,00,000/- out of Rs.

27,00,000/- and also by deleting the disallowance of Rs. 2,39,700/-

relatable to interest. Thus, after first-appeal, there survived an addition of

Rs. 4,00,000/- only on account of bogus loan u/s 68. Thereafter, the AO

passed penalty-order dated 29.03.2018 imposing a penalty of Rs. 1,23,600/-

qua the sustained addition of Rs. 4,00,000/-, treating the same as

representing income in respect of which inaccurate particulars had been

filed by assessee. Against penalty-order, the assessee went in first-appeal

but the CIT(A) has, vide order dated 18.05.2023, which is impugned order in

present-appeal, upheld the action of AO and dismissed assessee’s appeal.

Now, the assessee has come in next appeal assailing the impugned order.

original assessment-order dated 25.03.2013, copy filed in Paper-Book at

Page No. 7 to 15, and demonstrated the facts borne out from Para No. 3(i) of

assessment-order qua the impugned loan of Rs. 4,00,000/-. Ld. AR

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Smt. Arti Shadija,Indore. Vs. ACIT, Cir.4(1), Indore. ITA No.261/Ind/2023 Assessment year 2010-11 demonstrated that the assessee took this loan from one Shri Laxmi Chand

Ramchandani [“Shri Laxmi”]. The AO issued a summon u/s 131 to Shri

Laxmi and recorded statement. His statements are re-produced by AO

wherein while replying to Q.No. 5 raised by AO, Shri Laxmi clearly

acknowledged and admitted to have given a loan of Rs. 2,50,000/- and Rs.

1,50,000/- on 09.10.2019 and 12.10.2019, aggregating to Rs. 4,00,000/-, to

assessee. Further, Shri Laxmi’s Bank statement was also before AO which is

re-produced by AO himself in the very same para of assessment-order. The

bank statement clearly reveals the two transactions on 09.10.2019 and

12.10.2019 as stated by Shri Laxmi. Thus, there is no doubt about the loan

having been given by Shri Laxmi to assessee and in fact the AO has also not

expressed any doubt. However, the AO has simply noted that Shri Laxmi

failed to explain the source of cash deposits in his bank a/c before giving

loan to assessee. Ld. AR drew our attention to the Bank Statement and

showed that the said Bank A/c was in fact an Over-draft A/c of Shri Laxmi

in which Bank has granted overdraft facility. Further, the deposits made by

Shri Laxmi in that A/c, before giving loan to assessee, were sourced from

clearings except a sum of Rs. 1,00,000/- deposited on 09.10.2019 in cash.

Therefore, the outright conclusion taken by AO that Shri Laxmi could not

explain the sources of ‘cash-deposit’ in his bank a/c is factually wrong and

baseless. Ld. AR submitted that although the CIT(A) has upheld the addition

and the assessee also did not contend CIT(A)’s order in further appeal in

order to end litigation, yet the fact remains that in the statements of Shri

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Smt. Arti Shadija,Indore. Vs. ACIT, Cir.4(1), Indore. ITA No.261/Ind/2023 Assessment year 2010-11 Laxmi recorded by AO himself u/s 131, Shri Laxmi has categorically

admitted having given loan of Rs. 4,00,000/- to assessee. Further, the

sources of giving loans to assessee from Over-draft A/c of Shri Laxmi are

also explained. Therefore, had the assessee properly contested issue in first-

appeal before CIT(A) or by filing next appeal to ITAT, the addition of Rs.

4,00,000/- itself would have been deleted. Although that has not been done

yet the case of assessee does not warrant imposition of penalty u/s 271(1)(c)

since it is very clear that the assessee has not furnished any inaccurate

particulars. Relying upon decision in CIT Vs. Agro Chemicals (India)

(2007) 288 ITR 149 (P&H), Ld. AR submitted that penalty proceedings are

independent and merely because an addition is upheld, penalty cannot be

automatically upheld. Finally, Ld. AR submitted that in the present case,

there is no justification to impose penalty; the same ought to be deleted.

submitted that once the quantum addition made by AO u/s 68 has been

upheld by CIT(A) and the assessee has not gone in next appeal against

CIT(A)’s order, the penalty is certainly attracted. Ld. DR heavily relied upon

orders of lower-authorities and urged to uphold the penalty.

orders of lower-authorities. After a careful consideration, we find much

weightage in the arguments of Ld. AR for assessee. We find that in the

assessment-order itself, the AO has re-produced the statements of Shri

Laxmi recorded by him and from Q.No. 5 of the statements, it is clearly

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Smt. Arti Shadija,Indore. Vs. ACIT, Cir.4(1), Indore. ITA No.261/Ind/2023 Assessment year 2010-11 ascertainable that Shri Laxmi accepted having given a loan of Rs.

4,00,000/- to assessee on two dates. That apart, the bank statement of Shri

Laxmi is also re-produced by AO in assessment-order which corroborates

the amounts and dates of loans acknowledged by Shri Laxmi in statements

u/s 131. It is further noticeable that the said bank a/c is actually an a/c in

which Shri Laxmi has taken over-draft facility from bank and there are

deposit entries through clearings except one cash-deposit of Rs. 1,00,000/-.

Therefore, the sources available to Shri Laxmi for making loans are suitably

explainable. Even otherwise, it is an accepted law that the assessee is not

obliged to explain ‘source of source’. It is sufficient for assessee to prove the

source only. In the present case, by a clear statement in the independent

summon u/s 131 invoked by AO, Shri Laxmi has admitted having given loan

to assessee. Therefore, the assessee has explained the source of loan. In the

circumstances, there is nothing like furnishing of inaccurate particulars by

assessee. It is also accepted in judicial rulings including that of Agro

Chemicals (India) relied upon by Ld. AR that penalty proceeding are

independent proceeding and additions made in assessment-proceeding

cannot automatically lead to penalty. We believe that the case of assessee

gets support from this decision. Therefore, in the situation, we are of the

considered view that no penalty was imposable upon assessee.

Consequently, we delete the penalty imposed by AO. The assessee succeeds

in this appeal.

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Smt. Arti Shadija,Indore. Vs. ACIT, Cir.4(1), Indore. ITA No.261/Ind/2023 Assessment year 2010-11

Order pronounced in the open court on 20.12.2023.

Sd/- Sd/- VIJAY PAL RAO B. M. BIYANI JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore िदनांक /Dated : 20.12.2023 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

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