AMARJEET BEETON HUF,DHURI vs. ACIT, C-4, LUDHIANA

In the present appeal Assessee has raised following grounds of appeal:

Brief facts of the case are that while framing the assessment u/s143(3) vide order dated 19.11.2015 the Assessing Officer made addition of Rs. 200000/- on account of unsecured loan from Smt. Anita Sharma during the year under consideration u/s 68 of the Income Tax Act. Smt. Anita Sharma was an existing Income Tax Assessee and during assessment proceedings copy of her Income Tax Return, Computation of Income, Bank Account Statement and Affidavit confirming that the loan was advanced to the assessee was produced before the Ld. AO. The Assessing Officer called for the information u/s 133(6) from Smt Anita Sharma which according to the AO was not replied The assessee surrendered Rs. 200000/- as income to avoid litigation with the department. The Ld. Assessing Officer made an addition of Rs. 200000/- on account of this surrender and initiated penalty proceedings u/s 271(l)(c) and subsequently levied penalty of Rs.66,939/-.

It was argued before us that the Assessing Officer has made the addition on the ground that Smt. Anita Sharma has failed to respond to the office notice and from the copy of her income tax return, her credit worthiness/capacity to lend is doubtful.

The assessee has furnished all the documents like income tax return, computation of income, bank statement and even Affidavit from her confirming that she has advanced the amount to the assessee.

The Ld. AR argued that the Assessing Officer had doubt about the credit worthiness/capacity to lend of Smt. Anita Sharma, but, the Ld. AO did not mention in the order that how her credit worthiness/capacity to lend is doubtful. The addition in the hands of assessee and the penalty thereon cannot be made merely on suspicion.

The Ld. AR placed reliance on the judgment of the Hon'ble Apex Court in the case of CIT Vs Reliance Petro products Pvt. Ltd, 322ITR 158 (SC) and also the ratio laid down in the case of CIT Vs Suresh Chandra Mittal 251 ITR 9 (SC).

The Ld. DR argued that the assessee HUF has certainly furnished inaccurate particulars of its income to the extent of Rs.2,16,635/- by introducing cash credit in the name of Smt. Anita Sharma, the genuineness of which could not be established during assessment proceedings. The assessee HUF came forward to

Ld. DR further argued that the Assessing Officer has brought sufficient material on record which will suggest that the assessee HUF has concealed income and furnished inaccurate particulars of income.

We have heard both the parties and perused the material available on record.

The assessee HUF has submitted that Smt. Anita Sharma from whom unsecured loan of Rs.2,00,000/- was raised is an existing assessee and her copy of income tax return, computation of income, her bank statement and Affidavit confirming that the amount was advanced to the assessee HUF was furnished before the Assessing Officer during assessment proceedings. It has also been submitted that the assessee HUF has discharged its onus by proving the genuineness of transaction in respect of loan of Rs.2,00,000/-. It has further been submitted that amount was surrendered only to avoid litigation with the Department and to purchase piece of mind subject to no penal action. In support of his contentions, the learned AR of the assessee HUF has also relied upon various judicial pronouncements which finds mention in the written submissions as reproduced above. On careful consideration of the rival contentions, we find that the Assessing Officer has not brought anything on record during the penalty proceedings to prove that the assessee has either concealed particulars of income or furnished inaccurate particulars of income. The assessee having filed the primary details and owing to the non reply of the lender has surrendered the amount which does not necessarily conduct in automatic levy of penalty in the absence of any other material brought by the Assessing Officer by the way of investigation or by recording of statement of the lender. There was no addition on account of detection or on the basis of any other information in possession of the department except the amount surrendered by the assessee.

Hence, keeping in view the entire facts and circumstances of the case we are of the opinion that the present case is not of concealment of income or furnishing inaccurate particulars of income on the part of the assessee so as to attract the provisions of section 271C of the Act and therefore the penalty levied is ordered to be deleted.

As a result, appeal of the Assessee is allowed.