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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D BATTULL
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals), Bilaspur, dated 30.08.2016, which in turn arises from the order passed by the A.O under Sec. 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Act’), dated 27.03.2014 for assessment year 2006-07. Before us the assessee has assailed the impugned order on the following grounds of appeal : “1. That on the facts and circumstancdes of the case, the Ld. CIT(A) was highly unjustified erred by confirming the imposition of the alleged peanlty, imposed mechanicalluy without exercising the discretion vested by the statue judiciously is unsustainable on facts in law, submissions made, hence, the same be cancelled and justice rendered.
2. That the penalty order is bad in law deserves to be cancelled.
3. That the appellant humbly craves leave to add, urge, after modify the grounds before or at the time of hearing.”
2. Succinctly stated, survey u/s 133A of the Act was conducted at the premises of the assessee on 06.03.2006. During the course of survey proceedings excess cash and stock of Rs.3,02,935/- and 3 Raju Lal Makhija Vs. ACIT ITA No. 136/RPR/2017 Rs.5,96,399/-, respectively, was found, which was offered by the assessee as his income in the profit and loss account for the year under consideration. Return of income for the assessment year 2006- 07 was thereafter filed by the assessee on 30.03.2007, declaring an income of Rs.9,11,060/- Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act. Assessment was thereafter framed by the Assessing Officer vide his order passed u/s. 143(3) of the Act, dated 21.11.2008, wherein the income of the assessee was determined at Rs. 10,84,650/- after, inter alia, making an addition of Rs. 1,17,000/- u/s 68 of the Act towards cash credits of Rs. 19,500/- each figuring in the names of six parties in the books of accounts of the assessee. The Assessing Officer while culminating the assessment also initiated penalty proceedings u/s 271(1)(c) of the Act.
3. After culmination of the assessment proceedings, the Assessing Officer called upon the assessee to show cause as to why penalty may not be imposed on him qua the addition of Rs.1,17,000/- u/s.68 of the Act. As the assessee failed to come forth with any explanation,
4 Raju Lal Makhija Vs. ACIT ITA No. 136/RPR/2017 therefore, the Assessing Officer vide his order passed u/s 271(1)(c) of the Act, dated 27.03.2014 imposed a penalty of Rs. 81,210/-.
Aggrieved, the assessee carried the matter in appeal before the CIT (Appeals) but without any success.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As the assessee/appellant despite having been intimated about the hearing of appeal had failed to put up an appearance before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963, i.e, after hearing the respondent revenue and perusing the orders of the lower authorities.
As is discernible from the assessment order, the Assessing Officer had dubbed the loans of Rs. 1,17,000/- (supra) that was claimed by the assessee to have been raised from six persons as unexplained cash credits u/s.68 of the Act, for the reason that the authenticity of the same could not be substantiated to his satisfaction by the assessee. On a perusal of the assessment order, we find that the assessee in order
5 Raju Lal Makhija Vs. ACIT ITA No. 136/RPR/2017 to support the genuineness of his claim of having raised loans from aforementioned six lenders, had though placed on record copies of the acknowledgements of their Income tax returns, but had failed to comply with the directions of the Assessing Officer wherein he was specifically called upon to produce the said respective persons so that their statements could be recorded on oath. Backed by his aforesaid observation, the Assessing Officer holding a conviction that the assessee had failed to satisfactorily substantiate the genuineness and creditworthiness of the parties from whom loans were claimed to have been raised, thus, being of the view that a mere production of the copies of their income-tax returns would not suffice to discharge the onus that was cast upon the assessee, therein held the amount of loans that were claimed by the assessee to have been raised from them as unexplained cash credits u/s.68 of the Act.
Admittedly, as observed by the Assessing Officer, and rightly so, the assessee remained under a heavy onus to produce supporting material/documentary evidences to substantiate to the satisfaction of the A.O the genuineness and veracity of the loans that were claimed
6 Raju Lal Makhija Vs. ACIT ITA No. 136/RPR/2017 by him to have been raised from the aforementioned six persons, which we find he had failed to do. Although, we concur with the view taken by the Assessing Officer, that now when the assessee had failed to substantiate to the hilt the authenticity of the loan transactions in question, therefore, the same were justifiably to be held as unexplained cash credits u/s 68 of the Act, but at the same time, we cannot also remain oblivious of the fact that the assessee in order to support the veracity of the aforesaid loan transactions had placed on record the copies of the returns of income of the said respective lenders. Admittedly, it was for the assessee to produce the aforementioned parties, or, place on record their respective confirmations, specifically when he was directed to do so by the Assessing Officer. However, a mere lapse on the part of the assessee to substantiate to the hilt the genuineness of the loan transaction under consideration, or, in other words, failure on his part to place on record clinching documentary evidences substantiating the authenticity of the loan transactions in question to the satisfaction of the Assessing Officer, though would justifiably lead to addition of the said amounts
7 Raju Lal Makhija Vs. ACIT ITA No. 136/RPR/2017 as unexplained cash credits in his hand, but on such standalone basis would not justify levy of penalty u/s.271(1)(c) of the Act. Our aforesaid conviction is fortified by the judgment of the Hon’ble Bombay High Court in the case of Upendra V. Mithani [ITA (L) No. 1860 of 2009, dated 05.08.2009], wherein the Hon’ble High Court while upholding the order of the Tribunal, had observed, that no penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. Approving the view taken by the Tribunal, it was observed by the Hon’ble High Court that if the assessee gives an explanation which is unproved but not disproved, i.e, it is not accepted but the circumstances do not lead to the reasonable and positive inference that the assessee’s case is false, then, no penalty u/s 271(1)(c) could justifiably be imposed. Our aforesaid conviction that no penalty u/s 271(1)(c) was called for in the case of the assessee is further fortified by fact, that in case the Assessing Officer had any doubts as regards the authenticity of the loan transaction in question, then, being in possession of the complete
8 Raju Lal Makhija Vs. ACIT ITA No. 136/RPR/2017 income-tax credentials of the aforementioned lenders he could have carried out the necessary verifications on his own, which we find had not been done by him. Be that as it may, we are of the considered view, that though the failure of the assessee to substantiate the authenticity of the loan transactions justified the dubbing of the same as unexplained cash credits u/s.68 of the Act, but the same on such standalone basis and nothing else would not suffice for saddling the assessee with penalty u/s 271(1)(c) of the Act.
Also, we may herein observe, that the Assessing Officer had neither in the course of assessment proceedings specified the default for which the impugned penalty proceedings had been initiated in the hands of the assessee nor had clearly pointed out the same while imposing the penalty vide his order passed u/s 271(1)(c) of the Act, dated 27.03.2014. In so far the assessment order passed u/s.143(3) of the Act dated 21.11.2008 is concerned, we find that the A.O had merely stated that penalty proceedings u/s.271(1)(c) of the Act are separately initiated. Coming to the order passed by the Assessing Officer u/s 271(1)(c) of the Act, we find that while imposing the 9 Raju Lal Makhija Vs. ACIT ITA No. 136/RPR/2017 impugned penalty he had stated that the assessee had concealed his income and furnished inaccurate particulars of income. In our considered view, there is a clear absence of mentioning of the specific default for which impugned penalty proceedings was initiated and also, the basis for imposition of the same.
We, thus, in the backdrop of our aforesaid observations not being able to persuade ourselves to subscribe to the imposition of penalty u/s 271(1)(c) by the A.O, therefore, set-aside the order of the CIT(A) who had upheld the same. Accordingly, the penalty of Rs.81,210/- imposed by the A.O under Sec 271(1)(c) is quashed in terms of our aforesaid observations.
In the result, appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in Open Court on 30th day of March 2022.