M/S. KRUPANIDHI CONSTRUCTION,,AHMEDABAD vs. THE DY.CIT, CIRCLE-5,, BARODA

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH AHMEDABAD

BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA No.2332/Ahd/2014 (Assessment Year:2007-08) M/s. Krupanidhi Construction, 7, Kalyan Nagar Society, Near Vithalnagar Wadi, Karelibaug, Baroda – 390018 Appellant Vs. Dy. Comm. of Income Tax, Cricele-5, Baroda Respondent PAN: AAGFK7000E

आवेदक क� ओर से/By Assessee : Mr. Anil Shah with Kinjal Shah, A.R. राज�व क� ओर से/By Revenue : Mr. James Kurian, Sr. D.R. सुनवाई क� तार�ख/Date of Hearing : 23.05.2017 घोषणा क� तार�ख/Date of Pronouncement : 24.05.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER

This assessee’s appeal for assessment year 2007-08 arises from the CIT(A)-V, Baroda’s order dated 16.06.2014, passed in case no. CAB(A)- V/02/12-13, upholding Assessing Officer’s action imposing penalty of Rs.1,26,460/- , in proceedings u/s. 271(1)(c) of the Income Tax Act, 1961; in short “the Act”.

ITA No. 2332/Ahd/2014 (M/s. Krupanidhi Construction vs. DC IT) A.Y. 2007-08 - 2 - 2. Relevant facts are in a very narrow compass. This assessee is a firm engaged in civil construction business. The Assessing Officer completed a regular assessment in its case on 23.12.2009. He came across assessee’s books of accounts stating unsecured loan of Rs. 3.45lacs obtained from one Shri Rajendra C Shah. The assessee had produced the said creditor’s confirmation alongwith bank’s statement and copy of return. The Assessing Officer found his salary in the relevant previous year to be of Rs.81,760/- as against the huge loan in question compared to the said salary figure. He further noticed Shri Rajendra C Shah to have deposited cash by six entries from 30.05.2006 to 26.06.2006 followed by a cheque of Rs.2lacs given to assessee. He further deposited two cash figures of Rs.45,000/- each on 14 & 15.07.2006 and issued a cheque of Rs.1lac on said latter date to the assessee. The Assessing Officer observed in these facts that all this explanation failed to clear creditworthiness test u/s.68 of the Act. He thus invoked the quantum addition qua the above principal amount as well as interest of Rs.30,695/- in assessment order dated 23.12.2009. The Assessing Officer further initiated the impugned penalty proceedings u/s.271(1)(c) of the Act. The assessee preferred quantum appeal. The CIT(A) upheld the abovestated quantum addition in his order dated 08.06.2010. The assessee filed ITA No.2526/Ahd/2010 before this tribunal. A co-ordinate bench again upheld the impugned addition. Quantum proceedings accordingly attained finality.

ITA No. 2332/Ahd/2014 (M/s. Krupanidhi Construction vs. DC IT) A.Y. 2007-08 - 3 - 4. We have heard rival submissions. Case file perused. There is no dispute that right from Assessing Officer up to this tribunal, none of the quantum proceedings has raised any question about identity of the abovestated creditor Shri Rajendra C Shah. It is evident that the abovestated quantum addition has been made u/s.68 of the Act for the sole reason that the assessee’s explanation supported by all due evidence lacks creditworthiness as the creditor in question had a very meager salary amount as compared to the loan in question in the relevant previous year. It is therefore clear that the assessee’s explanation cleared the first test of identity followed by the second criteria of genuineness. We reiterate hon’ble apex court’s decision in CIT vs. Reliance Petro Products 322 ITR 158 (SC) holding that quantum and penalty proceedings are separate and each and every addition made in course of former does not attract latter penal proceedings to conclude that the assessee’s act and conduct in showing the unsecured loans in question in his books followed by relevant supportive evidence could not be held as a case of furnishing of inaccurate particulars of income or concealment of income. We therefore delete the impugned penalty of Rs.1,26,460/- imposed by the Assessing Officer and upheld in the course of lower appellate proceedings.

[Pronounced in the open Court on this the 24th day of May, 2017.]

Sd/- Sd/- (PRAMOD KUMAR) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 24/05/2017 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee

ITA No. 2332/Ahd/2014 (M/s. Krupanidhi Construction vs. DC IT) A.Y. 2007-08 - 4 -

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।