INCOME TAX OFFICER, BHIWADI V. SHRI PRATAP SINGH TANWAR, Jaipur

ITA 1027/JPR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5393 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rejection of books of accounts; Gift; Business income; Source of fund; Difference of opinion; Reassessment proceedings
• Section: 271(1)(c); 143(3); 133(6); 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1027/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2009-10 INCOME TAX OFFICER, WARD- BHIWADI CUKE VS. SH. PRATAP SINGH TANWAR S/O SH. BHAGWAN SINGH TANWAR, 132, KAV SUB STATION, NEELAM CHOWK, BHIWADI, DISTT.- ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ADAPT0047M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI ANUP SINGH (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 31/10/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 29/01/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 06.10.2017 FOR A.Y. 2009-10 WHE REIN THE REVENUE HAS TAKEN FOLLOWING GROUND OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 30,00,000/- IMPOSED BY THE AO U/S 271(1)(C) OF THE I.T. ACT 1961 WITHOUT APPRECIATING THE MATERIAL FACTS OF THE CASE. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN LIQUOR. HE FI LED HIS RETURN DECLARING INCOME OF RS.10,55,233/- WHICH WAS ASSESS ED U/S 143(3) AT TOTAL INCOME OF RS.2,26,55,672/- BY MAKING TRADING ADDITION OF RS.23,49,472/- AND ADDITION ON ACCOUNT OF UNEXPLAIN ED CASH CREDIT U/S 68 AMOUNTING TO RS.2,03,06,200/-. THE AO HELD THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS AND CONCEALED THE TRUE PARTICULARS OF HIS INCOME AND PENALTY PROCEEDINGS U/S 271(1)(C) WERE I NITIATED SEPARATELY. 3. IN APPEAL, LD. CIT(A) VIDE ORDER DT. 14.03.2014 RESTRICTED THE TRADING ADDITION TO RS.2,85,181/- AND ADDITION ON A CCOUNT OF UNEXPLAINED CASH CREDIT TO RS.85,49,700/-. AGAINST THE ORDER OF LD. CIT(A), BOTH ASSESSEE AND THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL WHO VIDE ITS ORDER DT. 11.08.2017 IN ITA NO.371/JP/ 14 & 423/JP/14 CONFIRMED THE TRADING ADDITION OF RS.2,85,181/- BUT RESTRICTED THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT TO R S.65,24,700/-. 4. IN PENALTY PROCEEDINGS, THE AO VIDE HIS ORDER DT . 18.03.2016 HELD THAT AFTER THE RECEIPT OF THE ORDER OF LD. CIT(A), AMOUNT OF RS.2,85,181/- ON ACCOUNT OF TRADING ADDITION AND AMOUNT OF RS.85, 39,700/- U/S 68 OF THE ACT REMAINS CONFIRMED. THIS PROVES THAT ASSESSE E HAS CONCEALED PARTICULARS OF HIS INCOME AND FILED INACCURATE PART ICULARS OF HIS INCOME. NO REPLY OF SHOW CAUSE NOTICE HAS BEEN FILED BY ASS ESSEE TILL DATE. THEREFORE, IN ABSENCE OF ANY REPLY OF THESE NOTICES , IT IS PRESUMED THAT ASSESSEE HAS NOTHING TO SAY IN HIS FAVOR. ACCORDING LY, HE IMPOSED THE PENALTY OF RS.30 LACS. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 3 5. IN APPEAL, THE LD. CIT(A) AFTER RELYING ON THE D ECISION OF HONBLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS PVT . LTD. HELD THAT THERE IS LITTLE JUSTIFICATION IN LEVYING PENALTY ON THE ESTIMATED GP ADDITION MERELY ON ACCOUNT OF NON-PRODUCTION OF SOM E OF THE BILLS/ VOUCHERS. WITH REGARD TO LEVY OF PENALTY ON THE ADD ITION MADE U/S 68, HE HELD THAT ASSESSEE HAD DISCLOSED ALL THE FACTS I N THE BOOKS OF ACCOUNTS AND ALSO DETAILS WITH REGARD TO SUCH CREDI TORS. THE ADDITIONS IN SOME OF THE CASES WERE SUSTAINED BY THE TRIBUNAL MA INLY ON THE REASON OF CREDITWORTHINESS. ACCORDINGLY, AFTER RELYING ON THE DECISION OF HONBLE SUPREME COURT (SUPRA) AND OTHER DECISIONS RELIED UP ON BY THE ASSESSEE, HE DELETED PENALTY OF RS.30 LACS. AGAINST THE SAID FINDINGS OF THE LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. DURING THE COURSE OF HEARING, THE LD DR TOOK US THROUGH THE FINDINGS OF THE LD CIT(A) AND SUBMITTED THAT THE SA ID FINDINGS ARE NOT ACCEPTABLE TO THE REVENUE AS THE LD CIT(A) HAS DELE TED THE LEVY OF PENALTY ESPECIALLY IN CONTEXT OF ADDITIONS UNDER SE CTION 68 WHICH HAVE BEEN SUSTAINED BY THE TRIBUNAL IN THE QUANTUM PROCE EDINGS AND THE SAME HAVE ATTAINED FINALITY IN ABSENCE OF ANY FURTH ER APPEAL BY THE ASSESSEE AGAINST THE SAID ORDER. IT WAS FURTHER SU BMITTED THAT WHEN THE EXPLANATION OF THE ASSESSEE IN CONTEXT OF SECTI ON 68 OF THE ACT HAS NOT BEEN FOUND SATISFACTORY BY THE AO AND WHICH HAS ALSO BEEN CONFIRMED BY THE TRIBUNAL, THEN IT WAS INCUMBENT UP ON THE LD CIT(A) TO EXAMINE AND GIVE HIS FINDINGS AS TO HOW THE SAID EX PLANATION OF THE ASSESSEE, WHICH HAS BEEN REITERATED IN THE CONTEXT OF PRESENT PENALTY PROCEEDINGS, ARE CONSIDERED AS NOT FALSE OR BONAFID E IN TERMS OF EXPLANATION TO SECTION 271(1)(C) OF THE ACT. IT WAS ACCORDINGLY ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 4 SUBMITTED THAT IN ABSENCE OF SUCH A FINDINGS BY THE LD CIT(A) AND MERELY RELYING ON VARIOUS DECISIONS, THE DELETION O F PENALTY BY THE LD CIT(A) IS NOT JUSTIFIED. 7. PER CONTRA, THE LD. AR SUPPORTED THE ORDER OF TH E LD CIT(A) AND SUBMITTED THAT PENALTY LEVIED U/S 271(1)(C) BY THE AO IS UNLAWFUL AND UNJUSTIFIED FOR THE FOLLOWING REASONS:- (I) TRADING ADDITION OF RS.2,85,181/- (A) THE ASSESSEE MAINTAINS REGULAR BOOKS OF ACCOUNTS WH ICH IS SUBJECT TO AUDIT. DURING THE YEAR, HE DECLARED GROS S PROFIT OF RS.18,02,976/- ON TURNOVER OF RS.2,98,30,810/- GIVI NG GROSS PROFIT RATE OF 6.04% AS AGAINST GROSS PROFIT OF RS.5,56,678/- O N TURNOVER OF RS.76,27,050/- GIVING GROSS PROFIT RATE OF 7.29% IN THE IMMEDIATELY PRECEDING YEAR. IN COURSE OF REMAND PROCEEDINGS, AS SESSEE PRODUCED COMPUTERISED CASH BOOK, LEDGER, PURCHASE BILLS AND SALES SUMMARY. ALL THE PURCHASES ARE MADE FROM THE GOVERNMENT DEPARTME NT I.E. RSBCL. THE PURCHASES HAVE BEEN ACCEPTED BY THE LOWER AUTHO RITIES. IN RESPECT OF SALES, ASSESSEE HAS FURNISHED THE SALES SUMMARY. SALE BILLS WERE NOT MAINTAINED AS SALES WERE MADE TO THE CONSUMERS ON R ETAIL BASIS HAVING PETTY VALUE. THERE WAS NO OPENING OR CLOSING STOCK. THUS, ALL THE PURCHASES MADE DURING THE YEAR WERE SOLD. BILLS FOR EXPENSES CLAIMED IN THE PROFIT & LOSS WERE NOT MAINTAINED AS SOME ARE P ETTY IN NATURE AND SOME ARE FIXED IN NATURE. (B) THE AO OBSERVED THAT THERE IS A DECLINE IN GROSS PR OFIT RATE AS COMPARED TO THE PRECEDING YEAR. ASSESSEE HAS NOT PR ODUCED THE BOOKS ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 5 OF ACCOUNTS AND PURCHASE/SALE BILLS TO VERIFY THE C ORRECTNESS OF THE TRADING RESULTS DECLARED. ACCORDINGLY, HE REJECTED THE BOOKS OF ACCOUNTS BY APPLYING PROVISIONS OF SECTION 145(3) AND MADE T RADING ADDITION OF RS.23,49,473/- BY APPLYING GROSS PROFIT RATE OF 13. 92% ON DECLARED TURNOVER. FOR APPLYING GROSS PROFIT RATE OF 13.92%, HE RELIED UPON THE CASE OF SH. PRAHALAD SINGH (WINE CONTRACTOR), BHIWA DI WHO HAS DECLARED THIS GROSS PROFIT RATE ON TURNOVER OF RS. 85,53,932 /-. (C) THE LD. CIT(A) CONFIRMED THE ACTION OF AO IN INVOKI NG THE PROVISIONS OF SEC. 145(3) OF THE IT ACT. HOWEVER, H E RESTRICTED THE TRADING ADDITION TO RS.2,85,181/- BY HOLDING THAT T HE BEST GUIDE FOR MAKING THE BEST JUDGMENT ASSESSMENT WOULD BE THE HI STORY OF THE APPELLANT AND THEREFORE IT WOULD BE JUST AND FAIR T O ADOPT GROSS PROFIT RATE OF 7% ON THE DECLARED TURNOVER. (D) THE TRIBUNAL CONFIRMED THE ADDITION SUSTAINED BY LD . CIT(A) BY HOLDING THAT HIS APPROACH IS REASONABLE WHERE HE HA S FOLLOWED THE PAST HISTORY OF THE ASSESSEE. (E) IT IS SUBMITTED THAT THOUGH THE G.P. RATE FOR THE Y EAR IS 6.04% AS COMPARED TO 7.30% IN AY 2008-09 BUT TURNOVER HAS IN CREASED BY 3.91 TIMES FROM RS.76.27 LACS TO RS.298.31 LACS. IN AY 2 010-11, THE G.P. RATE OF 3.61% ON TURNOVER OF RS.638.41 LACS HAS BEEN ACC EPTED AFTER MAKING TRADING ADDITION OF RS.1 LACS, THEREBY DETERMINING G.P. RATE AT 3.77%. THEREFORE, G.P. RATE DECLARED DURING THE YEAR CONSI DERING THE TURNOVER IS COMPARABLE TO PAST YEAR AND THE SUBSEQUENT YEAR. IN ANY CASE, THE ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 6 TRADING ADDITION MADE IS ONLY ON ESTIMATE. ON SUCH ESTIMATED TRADING ADDITION, PENALTY IS NOT LEVIABLE AS HELD IN THE FO LLOWING CASES:- CIT VS. MAHENDRA SINGH KHEDLA 71 DTR 189 (RAJ.) SHIV LAL TAK VS. CIT 251 ITR 373 (RAJ.) HARIGOPAL SINGH VS. CIT 258 ITR 85 (P&H) CIT VS. VIJAY KUMAR JAIN 38 DTR 345 (CHATTISGARH) CIT VS. SURESH KUMAR BANSAL 254 ITR 130 (P&H) (II) UNEXPLAINED CASH CREDIT OF RS.85,39,700/-:- (A) AT THE OUTSET, IT IS TO SUBMIT THAT AFTER THE ORDER OF TRIBUNAL, THE ADDITION ON ACCOUNT ON UNEXPLAINED CASH CREDIT HAS BEEN REDUCED TO RS.65,24,700/-. THEREFORE, NO PENALTY ON ADDITION O F RS.20,15,000/- (85,39,700- 65,24,700) CAN BE LEVIED. (B) IN RESPECT OF REMAINING CASH CREDITORS OF RS.65,24, 700/-, THE NAME OF CASH CREDITORS, AMOUNT OF ADDITION MADE BY AO, DOCUMENTS FURNISHED BY ASSESSEE, FINDINGS OF CIT(A) AND HONB LE ITAT IS TABULATED AS UNDER:- S. NO. NAME OF CREDITOR & AMOUNT DOCUMENTS FURNISHED BY ASSESSEE OBSERVATION OF LD. CIT(A) OBSERVATION OF HONBLE ITAT 1. RAVI KANT RS.1 LAKHS - PAN IS AAIPC2761N - AMOUNT RECEIVED ON 28.03.09 THROUGH DEMAND DRAFT - COMPLETE ADDRESS GIVEN AS RAVI KANT S/O RAM CHANDER, CHANDNA BUS STAND, NEAR NATRAJ - ASSESSEE HAS MERELY FILED A CONFIRMATION ALONG WITH PAN OF THE CREDITOR - ASSESSEE FAILED TO PRODUCE THE CREDITOR - NO REPLY RECEIVED FROM CREDITOR IN RESPONSE TO NOTICE U/S 133(6) THE ASSESSEE HAS FAILED TO SATISFY THE INITIAL ONUS CAST ON HIM IN TERMS OF IDENTITY & CREDITWORTHINESS OF CREDITOR, GENUINENESS OF ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 7 HOTEL, REWARI, HARYANA - CONFIRMATION FILED ON 26.12.13 - THE AMOUNT IS SUBSEQUENTLY REPAID ON 16.06.2012 - NOTICE ISSUED U/S 131 CAME BACK WITH THE REMARK REFUSED SERVICE - COPY OF BANK STATEMENT NOT FILED - COPY OF ITR NOT FILED - DETAILS REGARDING SOURCE OF INCOME NOT FILED THE TRANSACTION. 2. BHISHAN SINGH/ASHOK KUMAR RS.28,10,000/- - COMPLETE ADDRESS GIVEN AS VPO SANTHL AKA, 278 VASAI-401202 -AMT. OF RS.28.10 LAKHS HAS BEEN RECEIVED BY A/C PAYEE CHEQUE NO. 55682 OF BANK OF BARODA FROM JOINT A/C WITH SON ASHOK KUMAR. SINCE BHISHAN SINGH IS THE 1 ST HOLDER OF THE A/C, ASSESSEE CREDITED THE MONEY IN HIS NAME WHILE HIS SON ASHOK KUMAR HAS CONFIRMED THE LOAN GIVEN BY HIM BY FILING AFFIDAVIT, CONFIRMATION OF ACCOUNT AND LETTER IN RESPONSE TO NOTICE U/S 131. -THE NAME AND THE AMT. ADVANCED BY THE CREDITOR HAS ALSO BEEN CONFIRMED BY A - APPELLANT HAS FILED CONFIRMATION, A CERTIFICATE FROM BANK AND AFFIDAVIT OF THE CREDITOR. -APPELLANT FAILED TO PRODUCE THE CREDITOR AND ALSO FAILED TO FURNISH ANY EVIDENCE REGARDING SOURCES OF CREDITS AND INCOME OF CREDITOR -NO REPLY RECEIVED IN RESPONSE TO NOTICE ISSUED BY AO U/S 133(6) -INITIALLY APPELLANT HAD STATED THAT LOAN HAS BEEN GIVEN BY BHISHAN SINGH BUT IN REMAND PROCEEDINGS THE NAME OF THE CREDITOR HAS BEEN CHANGED TO SH. ASHOK KUMAR -CASH DEPOSITS WERE FOUND BY AO IN ACCOUNT BEFORE THE ISSUE OF CHEQUE/DD IN FAVOUR OF THE AO HAS GIVEN A FINDING THAT CASH WAS DEPOSITED IN THE CREDITORS BANK ACCOUNT AND ON THE SAME DATE DEMAND DRAFT WAS ISSUED. NOTHING HAS BEEN SUBMITTED TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS. IT IS NOT A QUESTION OF DETERMINING SOURCE OF SOURCE RATHER IT IS A QUESTION OF SATISFYING THE TEST OF CREDITWORTHINESS. THE ASSESSEE HAS THUS FAILED TO SATISFY THE INITIAL ONUS PLACED ON HIM ESPECIALLY IN TERMS OF CREDITWORTHINESS OF THE CREDITOR. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 8 LETTER OR CERTIFICATE ISSUED BY BANK OF BARODA DT. 09.12.13. APPELLANT -APPELLANT HAS FAILED TO FURNISH ANY DETAILS REGARDING THE SOURCES OF INCOME OF CREDITOR SO AS TO ESTABLISH CREDITWORTHINESS -COPY OF ITR FILED BY THE CREDITOR WAS NOT PRODUCED BEFORE THE AO 3. MANGAL SINGH RS.7,20,000/- - SH. MANGAL SINGH IS AN INCOME TAX ASSESSEE HOLDING PAN ADYPT7676E, RESIDING AT MAIN VILLAGE GALI, NEELAM CHOWK, BHIWADI. -ASSESSEE RECEIVED RS.5,20,000 BY DDS AND RS.2,00,000/- BY A/C PAYEE CHEQUES. -CONFIRMATION, ITR AND PASSBOOK. -SH. MANGAL SINGH ADMITTED IN HIS STATEMENT THAT HE RECEIVED RS.4.50 LAKHS ON MATURITY OF FDR AFTER DEATH OF HIS UNCLE. -PROCEEDINGS U/S - THE APPELLANT HAS FILED CONFIRMATION, COPY OF ITR, PAN, COPY OF BANK A/C ETC. BEFORE THE AO. -CASH CREDITOR WAS ALSO PRODUCED BEFORE THE AO AND STATEMENT WAS RECORDED. -THUS, APPELLANT HAS DISCHARGED THE ONUS U/S 68 OF THE IT ACT AND ADDITION MADE BY THE AO ON THIS ACCOUNT IS DELETED. ASSESSEE HAS FAILED TO DISCHARGE THE ONUS PLACED ON HIM UNDER SECTION 68 IN TERMS OF SATISFYING THE TEST OF CREDITWORTHINESS OF SHRI MANGAL SINGH. REGARDING ASSESSEES CONTENTION THAT AN AMOUNT OF RS.8,82,240/- HAS ALREADY BEEN BROUGHT TO TAX IN THE HANDS OF SHRI MANGAL SINGH AND THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AGAIN, WE ARE UNABLE TO ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 9 148 HAS BEEN INITIATED BY AO VIDE ORDER DT. 22.02.2016 WHEREIN ADDITION OF RS. 8,82,240/-, BEING THE AMOUNT OF CASH DEPOSIT IN HIS BANK ACCOUNT HAS BEEN ADDED. ACCEPT THE SAME. THE REASON FOR THE SAME IS THAT IT IS UNCLEAR AT THIS STAGE WHETHER THE PROCEEDINGS IN CASE OF SHRI MANGAL SINGH HAS ATTAINED FINALITY OR NOT. THEREFORE, IT CANNOT BE SAID THAT THE SAME AMOUNT HAS BEEN SUBJECTED TO TAX TWICE. WE FURTHER DO NOT AGREE WITH THE FINDINGS OF THE LD. CIT(A) AS THE TEST OF CREDITWORTHINESS HAS NOT BEEN SATISFIED IN THE INSTANT CASE AND THUS, THE INITIAL ONUS PLACED ON THE ASSESSEE REMAIN UNSATISFIED. 4. SH. RAJU RS.16,74,700/- - SH. RAJU, S/O BUDHA SINGH IS RESIDING AT GRAM BHIWADI, TIJARA, ALWAR - PAN IS ADRPT3356L - LETTER FILED BY RAJU ADDRESSED TO THE AO IN REPLY TO NOTICE U/S 131 - TWO CONFIRMATIONS HAVE BEEN FILED FOR THE SAME AMOUNT. ONE IN THE NAME OF RAJU AND ANOTHER IN THE NAME OF SATPAL TANWAR -THERE IS CASH DEPOSIT OF RS. 16.50 LAKHS IN THE LD. CIT(A) HAS GIVEN A FINDING THAT CASH WAS DEPOSITED IN THE CREDITORS BANK ACCOUNT AND ON THE NEXT DATE CHEQUE WAS ISSUED. NOTHING ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 10 - CONFIRMATION OF ACCOUNT - BANK STATEMENT - SATPAL TANWAR IS BROTHER OF RAJU TANWAR AND HE HAS CONFIRMED IN HIS OWN SIGNATURE THE TRANSACTION OF HIS BROTHER RAJU TANWAR - AO HAS OVERLOOKED THE ITR OF THE CREDITOR FOR A.Y. 08-09 AND 09-10 EVEN WHEN THE SAME IS FILED IN HIS JURISDICTION WARD ONLY THE A/C OF RAJU TANWAR ON 22.07.2008, A DAY BEFORE THE CHEQUE IS ISSUED TO THE APPELLANT -THE APPELLANT HAS FAILED TO PRODUCE THE CREDITOR BEFORE AO -IN REMAND PROCEEDINGS, THE APPELLANT STATED THAT SH. RAJU TANWAR AND SATPAL TANWAR ARE BROTHERS AND THEREFORE THE CONFIRMATION WAS SIGNED EARLIER BY SATPAL TANWAR. NONE THE LESS, THE EXPLANATION GIVEN BY THE APPELLANT REMAINS UNSUBSTANTIATED AS IT WAS STATED EARLIER THAT RAJU IS THE NICK NAME OF SATPAL TANWAR. THERFORE, WHAT ARE THE REAL FACTS STILL REMAINS UNCLEAR. -APPELLANT HAS FAILED TO FURNISH ANY DETAILS REGARDING THE SOURCES OF INCOME OF THE CREDITOR SO AS TO ESTABLISH THE CREDITWORTHINESS HAS BEEN SUBMITTED TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS. IT IS NOT A QUESTION OF DETERMINING SOURCE OF SOURCE RATHER IT IS A QUESTION OF SATISFYING THE TEST OF CREDITWORTHINESS. THE ITR FILED OF THE CASH CREDITOR DOESNT INSPIRE ANY CONFIDENCE IN OUR MIND. THERE IS NOTHING FURTHER ON RECORD TO SATISFY THE TEST OF CREDITWORTHINESS OF THE CREDITOR. THE FINDING OF THE LD. CIT(A) REMAIN UNREBUTTED BEFORE US. THE ASSESSEE HAS THUS FAILED TO SATISFY THE INITIAL ONUS PLACED ON HIM ESPECIALLY IN TERMS OF CREDITWORTHINESS OF THE CREDITOR. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 11 5. RAKESH CHIWA/BHUKAR RS.5,00,000/- - AMT. HAS BEEN RECEIVED BY A/C PAYEE CHEQUE -PAN CARD -DRIVING LICENSE - ADDRESS AS PER DRIVING LICENSE IS WN-19, CHIRAWA, JHUNJHUNU. - APPELLANT HAS MERELY FILED A CONFIRMATION ALONG WITH PAN OF THE CREDITOR -THE APPELLANT FAILED TO PRODUCE THE CREDITOR BEFORE THE AO. -NOTICE ISSUED U/S 133(6) RECEIVED BACK WITH REMARK INCOMPLETE ADDRESS. FURTHER, NOTICE U/S 131 WAS ISSUED BY THE AO AT THE OTHER ADDRESS PROVIDED BY THE AR WHICH WAS SERVED BUT NO COMPLIANCE WAS MADE BY THE CREDITOR. -COPY OF BANK STATEMENT OF THE CREDITOR NOT FILED -DETAILS REGARDING SOURCES OF INCOME SO AS TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITOR NOT FILED -COPY OF ITR FILED BY THE CREDITOR NOT PRODUCED BEFORE THE AO -THE NAME OF THE CREDITOR AND ADDRESS HAS BEEN CHANGED THRICE IN THE COURSE THE APPELLANT HAS NOT BEEN ABLE TO DISCHARGE THE INITIAL ONUS PLACED ON HIM U/S 68 OF THE IT ACT. THE IDENTITY, CREDITWORTHINESS OF CREDITOR, AND GENUINENESS OF THE TRANSACTION HAVE NOT BEEN PROVED THE FINDINGS OF THE LD CIT(A) REMAIN UNREBUTTED BEFORE US AND THE SAME ARE HEREBY CONFIRMED. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 12 OF REMAND PROCEEDINGS. FIRST THE NAME OF THE CREDITOR WAS GIVEN AS RAKESH CHIWA, THEN CHANGED TO RAKESH THANKAR AND FINALLY TO RAKESH BHUKAR 6. BHAGIRATH SINGH SHEKHAWAT RS.7.20 LAKHS - PAN IS ASVPS3578E -ADDRESS IS VIJAY DEEP HOUSE, TRANSPORT NAGAR, JAIPUR ROAD, SIKAR 332001 -THE ASSESSEE RECEIVED THE AMOUNT THROUGH A/C PAYEE CHEQUES -BANK STATEMENT -ITR -IN RESPONSE TO NOTICE ISSUED U/S 133(6) OF THE IT ACT , CONFIRMATION OF A/C OF THE CREDITOR, COPY OF ITR, COMPUTATION OF TOTAL INCOME FOR A.Y. 09-10 AND BANK STATEMENT WAS FILED. -THE ACCOUNTS OF THE CREDITOR ARE AUDITED U/S 44AB OF THE IT ACT, 1961 - APPELLANT HAS FILED CONFIRMATION, COPY OF ITR, PAN, COPY OF BANK A/C ETC. BEFORE THE AO IN COURSE OF REMAND PROCEEDINGS. FURTHER, THE CASH CREDITOR HAS ALSO FURNISHED THESE DOCUMENTS BEFORE THE AO IN RESPONSE TO NOTICE ISSUED U/S 133(6) OF THE IT ACT IN COURSE OF REMAND PROCEEDINGS. -BOOKS OF A/C OF THE CREDITOR ARE AUDITED U/S 44AB OF THE IT ACT AND THE CREDITOR IS REGULARLY ASSESSED TO TAX -LOAN HAS BEEN RETURNED BACK BY A/C PAYEE CHEQUE IN MARCH 2012 -THE APPELLANT HAS THUS DISCHARGED THE ONUS U/S 68 OF THE IT ACT AND ADDITION MADE BY AO ON THIS THE AO HAS GIVEN A FINDING THAT CASH WAS DEPOSITED IN THE CREDITORS BANK ACCOUNT BEFORE ADVANCEMENT OF LOAN TO THE ASSESSEE. NOTHING HAS BEEN SUBMITTED TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS. THE ITR FILED OF THE CASH CREDITOR DOESNT INSPIRE ANY CONFIDENCE IN OUR MIND TO SATISFY THE TEST OF CREDITWORTHINESS OF THE CREDITOR. THE ASSESSEE HAS THUS FAILED TO SATISFY THE INITIAL ONUS PLACED ON HIM ESPECIALLY IN TERMS OF CREDITWORTHINESS OF THE CREDITOR. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 13 - THE LOAN HAS BEEN RETURNED BACK TO THE CASH CREDITOR THROUGH A/C PAYEE CHEQUE IN MARCH 2012. THE SAME HAS BEEN CONFIRMED BY THE CASH CREDITOR IN LETTER DT. 05.03.2013 FILED IN RESPONSE TO NOTICE ISSUED U/S 133(6) OF THE IT ACT A/C IS DELETED. THE FACT THAT THE LOAN AMOUNT HAS SUBSEQUENTLY BEEN RETURNED TO THE CASH CREDITOR IS AN EVENT WHICH AT BEST, SATISFY THE LINKAGE BETWEEN LENDING AND REPAYMENT. BUT THE SAME IS NOT A BASIS TO HOLD THAT THE MONEY INITIALLY BELONGS TO THE CASH CREDITOR WHEN THERE ARE FACTS ON RECORD TO SUGGEST THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT IMMEDIATELY BEFORE THE EVENT OF LENDING. THE QUESTION THAT REMAINS IS WHATS THE SOURCE OF SUCH CASH DEPOSITS AND WHETHER CASH BELONGS TO CASH CREDITOR OR TO THE ASSESSEE. (C) IT IS SUBMITTED THAT IN CASE OF MANGAL SINGH, T HE LD. CIT(A) HAS DELETED THE ADDITION BUT THE SAME IS RESTORED BACK BY THE HONBLE ITAT. THE AO IN THIS CASE HAS MADE AN ADDITION OF RS.8,82 ,240/- IN RESPECT OF ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 14 CASH DEPOSIT IN HIS BANK ACCOUNT VIDE ORDER DT. 22. 02.2016 (REFER PG 23, PARA 11.5 OF ITAT ORDER). HOWEVER, THE HONBLE ITAT HAS RESTORED THE ADDITION ONLY FOR THE REASON THAT IT IS UNCLEAR WHE THER THE PROCEEDINGS IN CASE OF SH. MANGAL SINGH HAS ATTAINED FINALITY O R NOT. IN THE PENALTY PROCEEDINGS, AO HAS NOT GIVEN ANY FINDING AS TO WHE THER THE REASSESSMENT PROCEEDINGS OF SH. MANGAL SINGH HAS AT TAINED FINALITY OR NOT BUT IN ANY CASE WHERE MANGAL SINGH HAS BEEN ASS ESSED BY AO BY TREATING THE CASH DEPOSIT IN HIS BANK ACCOUNT AS UN EXPLAINED WHICH IS THE SOURCE OF AMOUNT GIVEN BY HIM TO THE ASSESSEE, THE SAME IS THE HANDS OF ASSESSEE CANNOT BE CONSIDERED AS UNEXPLAIN ED. HENCE, ON THIS AMOUNT, PENALTY CANNOT BE LEVIED. SIMILARLY IN CASE OF BHAGIRATH SINGH SHEKHAWAT, THE ADDITION WAS RESTORED BY HONBLE ITA T ON THE GROUND THAT ITR FILED BY HIM DOES NOT INSPIRE ANY CONFIDEN CE IN OUR MIND TO SATISFY THE TEST OF CREDITWORTHINESS OF CREDITOR AN D THE FACT THAT THE LOAN IS SUBSEQUENTLY RETURNED CANNOT BE A BASIS TO HOLD THAT THE MONEY INITIALLY BELONG TO THE CASH CREDITOR. HOWEVER, IN THE PENALTY PROCEEDINGS, NO MATERIAL IS BROUGHT ON RECORD THAT THE AMOUNT RECEIVED FROM BHAGIRATH SINGH SHEKHAWAT IS THE UNDISCLOSED I NCOME OF THE ASSESSEE. THEREFORE, ON BOTH THESE AMOUNTS, EVEN IF ADDITION IS RESTORED BY HONBLE ITAT, NO PENALTY IS LEVIABLE AS PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT PROCEEDINGS AND THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD THAT ASSESSEE HAS CHANNELIZE D HIS OWN UNDISCLOSED INCOME THROUGH THESE CREDITORS. IN ANY CASE, WHEN THERE IS DIFFERENCE OF OPINION IN RESPECT OF THE ADDITION BE TWEEN THE LD. CIT(A) AND THE HONBLE ITAT, THEN ON SUCH AMOUNT PENALTY U /S 271(1)(C) IS NOT LEVIABLE AS HELD IN THE FOLLOWING CASES:- CIT VS. CALCUTTA CREDIT CORPORATION 166 ITR 29 (CAL ) ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 15 IN THIS CASE CASH CREDIT WAS ADDED AS INCOME FROM O THER SOURCES AND INTEREST PAID THEREON WAS DISALLOWED. AAC DELETED T HE ADDITION BUT TRIBUNAL PARTLY RESTORED THE ADDITION. IT WAS HELD THAT TWO OPINIONS ON THE FACTS OF THE CASE WERE POSSIBLE, CONCEALMENT IS NOT ESTABLISHED AND THEREFORE PENALTY CANNOT BE LEVIED. CIT VS. JAGBANDHU PRASANNA KUMAR RUPLAL SEN PODDAR 133 ITR 156 (CAL) IN THIS CASE CASH DEPOSITED IN ASSESSEES BOOKS WER E ADDED BUT DELETED BY AAC. THE TRIBUNAL RESTORED THE ADDITION IN QUANT UM APPEAL. THE PENALTY ON THESE FACTS WAS DELETED BY HOLDING THAT TWO OPINIONS ARE POSSIBLE IN RESPECT OF THE DEPOSITS AND THERE IS NO MATERIAL TO SHOW THAT THESE DEPOSITS WERE ASSESSEES INCOME CIT VS. SOOD HARVESTAR 304 ITR 279 (P&H) IT WAS HELD THAT A CASE OF DIFFERENCE OF OPINION IS NOT CONCEALMENT OF INCOME AND NOT CHARGEABLE TO TAX. (D) IN RESPECT OF ALL THE ABOVE CREDITORS, ASSESSEE HAS PROVED THE IDENTITY OF CREDITOR, GENUINENESS OF THE TRANSACTIO N AND THE CREDITWORTHINESS OF CREDITOR BY FURNISHING VARIOUS DOCUMENTS. HE HAS SUBMITTED EXPLANATION REGARDING EACH OF THESE CASH CREDITORS. THE ASSESSEE HAS FILED THE EXPLANATION IN RESPECT OF EA CH OF THE CREDITORS BY SUBSTANTIATING IT WITH THE VARIOUS DOCUMENTS. THE E XPLANATION IS NEITHER FOUND TO BE MALAFIDE NOR FALSE. THUS, WHEN ASSESSEE HAS FURNISHED ALL THE DETAILS & SUCH DETAILS WERE NOT FOUND TO BE FAL SE OR BOGUS, ONLY BECAUSE THE EXPLANATION OF THE ASSESSEE IS NOT ACCE PTED, WOULD NOT MEAN THAT ASSESSEE HAS CONCEALED HIS INCOME OR FURN ISHED INACCURATE ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 16 PARTICULARS OF INCOME. FOR THIS PURPOSE, RELIANCE I S PLACED ON THE FOLLOWING CASES:- VIKRAM BHATIA VS. ITO (2014) 32 ITR 206 (LUCKNOW) ( TRIB.) ONLY ADDITION MADE BY AO FOR WHICH PENALTY IS IMPOS ED IS ADDITION ON ACCOUNT OF TWO UNSECURED LOANS WHICH WAS MADE U/S 6 8. BOTH PERSONS HAVE GIVEN CONFIRMATION, WHICH IS AVAILABLE IN PAPE R BOOK. IT IS TRUE THAT UNSECURED LOAN, CLAIMED TO HAVE BEEN RECEIVED BY AS SESSEE, WAS NOT ACCEPTED BY REVENUE. ASSESSEE COULD NOT PROVE INGRE DIENTS OF SECTION 68 IN RESPECT OF THESE TWO LOANS BUT EXPLANATION OF ASSESSEE COULD NOT BE DISPROVED BY REVENUE. ALTHOUGH ADDITION WAS FINA LIZED BUT PENALTY WAS NOT JUSTIFIED BECAUSE ASSESSEE HAS SUBMITTED EX PLANATION REGARDING THESE CASH CREDITS AND SAME COULD NOT BE ESTABLISHE D TO BE NON BONAFIDE AND PENALTY WAS NOT JUSTIFIED. MITER SAIN (HUF) VS. ITO (2012) 34 CCH 227 (DEL.) ( TRIB.) AO NOTED THAT ASSESSEE FAILED TO ESTABLISH GENUINEN ESS OF GIFTS DURING COURSE OF ASSESSMENT PROCEEDINGS, APPELLATE PROCEED INGS AND PENALTY PROCEEDINGS HENCE, LEVIED PENALTY AT 150 PERCENT FO R WILLFUL AND INTENTIONAL TAX EVASION. CIT(A) CONFIRMED PENALTY O RDER U/S 271(1)(C) PASSED BY AO. IT WAS HELD THAT ASSESSEE HAD DULY DI SCLOSED GIFTS AND THERE WAS NO CONCEALMENT. HOWEVER, ASSESSEE FAILED TO PRODUCE ALLEGED DONOR. ASSESSEE'S CONDUCT WAS NOT CONTUMACIOUS TO W ARRANT LEVY OF PENALTY U/S 271(1)(C). CIT VS. M.M. GUJAMGADI (2007) 290 ITR 168 (KAR.) (H C) ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 17 A READING OF SS. 271 AND 271(1)(C) AND THE EXPLANAT ION APPENDED THERETO MANIFESTLY MAKES IT CLEAR THAT EVERY ADDITI ON OF INCOME BY THE ITO WILL NOT AUTOMATICALLY ATTRACT LEVY OF PENALTY. IT IS CLEAR FROM EXPLN. 1(B) TO SEC. 271(1)(C) THAT WHILE COMPUTING THE TOT AL INCOME OF AN ASSESSEE, IF THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE THEN THERE WILL BE A DEEMED CONCEALMENT BY THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE MADE ATTEMPTS TO SECURE THOSE CREDITORS TO BE EXAMINED BEFORE THE ITO. DESPITE THE BEST EFFORT S OF THE ASSESSEE, HE COULD NOT SECURE THE CREDITORS AS WITNESSES TO S UBSTANTIATE HIS CLAIM BEFORE THE ITO. HAVING NO OTHER ALTERNATIVE, THE AS SESSEE VOLUNTARILY AGREED FOR ADDITION TO HIS INCOME AS CASH CREDIT. U NDER THESE CIRCUMSTANCES IT CANNOT BE SAID THAT THE EXPLANATIO N OF THE ASSESSEE FOR NON-INCLUSION OF AN INCOME IN HIS RETURN OF INCOME IS NOT BONA FIDE. THE EXPLANATION OFFERED BY THE ASSESSEE IS AVAILABLE ON RECORD. BONA FIDE FAILURE ON THE PART OF ASSESSEE IN NOT SUBSTANTIATI NG HIS CLAIM IS ALSO AVAILABLE ON RECORD. THE ITO, WHILE PASSING THE ORD ER OF PENALTY UNDER S. 271(1)(C), HAS NOT CONSIDERED THE AVAILABLE EXPL ANATION OF THE ASSESSEE AND WHETHER THE EXPLANATION SO OFFERED IS BONA FIDE OR NOT. THE ORDER OF THE TRIBUNAL IN SETTING ASIDE THE PENA LTY PROCEEDINGS ON THE BASIS OF THE MATERIAL ON RECORD IS JUST AND PRO PER. CIT VS. JALARAM OIL MILLS (2001) 253 ITR 192 (GUJ.) (HC) IF AN ADDITION IS NOT WARRANTED IN EACH AND EVERY C ASE, THERE CANNOT BE A SITUATION WHERE, MERELY BECAUSE AN ADDITION HAS B EEN MADE BY INVOKING PROVISIONS OF S. 68, PENALTY UNDER S. 271( 1)(C) WOULD FOLLOW AS A NATURAL COROLLARY. THE SETTLED LEGAL POSITION IS THAT THE EXPLANATION TO S. 271(1)(C) RAISES A REBUTTABLE PRESUMPTION AND TH E BURDEN WHICH IS ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 18 CAST ON AN ASSESSEE IS AKIN TO A CIVIL BURDEN WHICH MAY BE DISCHARGED ON A PREPONDERANCE OF PROBABILITIES. KEEPING THIS L EGAL POSITION IN MIND, IT IS NOT POSSIBLE TO STATE WITH CERTAINTY THAT THE ASSESSEE FAILED TO RETURN THE CORRECT INCOME DUE TO ANY FRAUD OR ANY G ROSS OR WILLFUL NEGLECT ON ITS PART. CERTAIN ENTRIES WERE FOUND CRE DITED IN THE BOOKS OF THE ASSESSEE MAINTAINED FOR THE PREVIOUS YEAR AND T HE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF SUCH ENTRIES WAS NOT SATISFACTORY IN THE OPINION OF THE ITO AND ACCORDINGLY, IN THE ASSESSMENT PROCEEDINGS, THE SAID SUMS WERE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IT IS A CASE WHERE THE ASSESSEE HAS CONCEDED THAT THE ENTRIES IN QUESTION MAY BE TREATED AS HIS INCOME AN D ADDED BY VIRTUE OF PROVISIONS OF S. 68 FOR THE PURPOSES OF ASSESSING T HE TOTAL INCOME OF THE ASSESSMENT YEAR. FROM THIS CONCESSION, IT IS AN ENT IRELY DIFFERENT MATTER, WHETHER THE SAID SUM COULD BE TREATED CONCEALED INC OME OF THE YEAR UNDER CONSIDERATION. ON THE BASIS OF THE ASSESSEE A GREEING TO HAVE CREDIT ENTRIES IN ITS BOOKS OF ACCOUNTS TREATED AS ITS INCOME, BY VIRTUE OF PROVISIONS OF S. 68, THE SAID SUMS SHALL BE DEEMED TO BE INCOME OF THE YEAR UNDER CONSIDERATION. HOWEVER, DE HORS THE SAID PROVISION, IT IS NOT POSSIBLE TO STATE WITH CERTAINTY THAT THE SAID SUMS WOULD BE 'CONCEALED INCOME' OF THE ASSESSEE FOR THE YEAR UNDER CONSIDER ATION. THE TRIBUNAL HAS TESTED THE LEVY OF PENALTY BY APPLYING PROVISIO NS OF THE EXPLANATION AND RECORDED A FINDING OF FACT TO THE EFFECT THAT T HERE IS NO PAST HISTORY OF THE ASSESSEE TO SHOW THAT THE ASSESSEE HAD BEEN EARNING BUSINESS INCOME OUTSIDE THE BOOKS, NOR IS THERE IN THE BOOKS RELATING TO THE YEAR UNDER CONSIDERATION ANY INSTANCE POINTED OUT INDICA TING ANY TRANSACTION OUTSIDE THE BOOKS. IN LIGHT OF THE AFORESAID FINDIN GS OF FACT, IT IS NOT ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 19 POSSIBLE TO TAKE ANY OTHER VIEW OF THE MATTER IN TH E LIGHT OF THE SETTLED LEGAL POSITION. THEREFORE, THE TRIBUNAL WAS JUSTIFI ED IN LAW, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, IN HOLDING TH AT THE PENALTY IMPOSED BY THE IAC UNDER S. 271(1)(C) COULD NOT BE SUSTAINED. NATIONAL TEXTILES VS. CIT (2000) 249 ITR 125 (GUJ.) (HC) PROVISIONS OF S. 68 ARE ENABLING PROVISIONS FOR MAK ING ADDITIONS WHERE THE ASSESSEE FAILS TO GIVE AN EXPLANATION REGARDING CASH CREDIT OR WHERE THE EXPLANATION IS NOT TO THE SATISFACTION OF THE A O. SUCH ADDITION WOULD NOT AUTOMATICALLY JUSTIFY IMPOSITION OF PENALTY UND ER S. 271(1)(C) R/W EXPLN. 1 THERETO. IN ORDER TO JUSTIFY LEVY OF PENAL TY THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO REASONABLE CON CLUSION THAT THE AMOUNT DOES REPRESENT ASSESSEES INCOME AND THE CIR CUMSTANCES MUST SHOW THAT THERE WAS CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS. EXPLN. 1 DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE. ASSESSEE DID NOT SATISFACTORILY EXPLA IN THE CASH CREDITS BY PRODUCING EVIDENCE AND DOCUMENTS. NEITHER THE PARTI ES WHO ARE SAID TO HAVE ADVANCED TEMPORARY LOANS NOR THE ACCOUNTANT WH O HAD ALLEGEDLY ARRANGED THE LOANS WAS PRODUCED. THOUGH THE DEPARTM ENT WAS JUSTIFIED IN TREATING THE CASH CREDITS AS INCOME OF ASSESSEE THERE WAS NOTHING TO LEAD TO A REASONABLE AND POSITIVE INFERENCE THAT TH E ASSESSEES EXPLANATION WAS FALSE. CIRCUMSTANCES DO NOT JUSTIFY IMPOSITION OF PENALTY EVEN BY TAKING RECOURSE TO EXPLN. 1 TO SEC. 271(1)(C). IN VIEW OF ABOVE, IT WAS SUBMITTED THAT THE ORDER O F LD. CIT(A) BE UPHELD. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 20 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PENALTY HAS BEEN LEVIED B Y THE AO IN RESPECT OF TRADING ADDITION AND ADDITION U/S 68 ON ACCOUNT OF UNEXPLAINED CASH CREDITS. FIRSTLY, IT IS NOTED THAT THE AO HAS LEVI ED THE PENALTY WITHOUT TAKING INTO ACCOUNT THE FINDINGS OF THE COORDINATE BENCH IN QUANTUM PROCEEDINGS WHERE THE ADDITION ON ACCOUNT OF UNEXPL AINED CASH CREDIT U/S 68 HAS BEEN SUSTAINED TO AN EXTENT OF RS 65,24, 700 OUT OF TOTAL ADDITION OF RS 85,39,700. THEREFORE, WHERE THE VER Y BASIS OF ADDITION HAS BEEN REDUCED IN THE QUANTUM PROCEEDINGS, THE PE NALTY TO THAT EXTENT CANNOT SURVIVE AND WITHOUT GOING INTO MERIT, PENALTY TO THAT EXTENT CANNOT BE SUSTAINED AND IS HEREBY DELETED. 9. REGARDING THE LEVY OF PENALTY ON THE TRADING ADD ITION OF RS 2,85,181, WE FIND THAT THE ASSESSEE HAS DECLARED GROSS PROFIT RATE OF 6.04% WHICH HAS BEEN INCREASED TO 7% BY THE LD CIT( A) AND CONFIRMED BY THE TRIBUNAL ON THE BASIS OF PAST HISTORY OF THE ASSESSEE. THEREFORE, IT IS A CASE OF ESTIMATION OF GROSS PROFIT RATE ON THE DECLARED TURNOVER BY THE ASSESSEE AND THE SAME CANNOT BE BASIS FOR HOLDI NG THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME OR HAS CONCEALED HIS PARTICULARS OF INCOME. VARIOUS DECISI ONS RELIED UPON BY THE LD AR SUPPORTS THE CASE OF THE ASSESSEE. HENCE , LEVY OF PENALTY ON SUCH TRADING ADDITION IS HEREBY DELETED. 10. REGARDING LEVY OF PENALTY IN RESPECT OF ADDITI ON MADE U/S 68 OF THE ACT, WHAT IS RELEVANT TO EXAMINE IS THE EXPLANA TION SO FURNISHED BY THE ASSESSEE. WHETHER SUCH EXPLANATION IS FOUND TO BE FALSE, IT COULD BE A CASE FOR LEVY OF PENALTY. FURTHER, WHERE THE ASSESSEE HAS FAILED TO ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 21 SUBSTANTIATE SUCH EXPLANATION AND FAILS TO PROVE TH AT SUCH EXPLANATION IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL HAVE BEEN DISCLOSED, IT COULD BE A CASE OF LEVY OF PENALTY. HOWEVER, MERELY BECAUSE THE ADDITION HAS BEEN MADE IN THE QUANTUM P ROCEEDINGS U/S 68 AND THE SAME HAS BEEN CONFIRMED IN APPEAL, THE S AME BY ITSELF IS NOT SUFFICIENT ENOUGH TO HOLD THAT THE CASE IS FIT FOR LEVY OF PENALTY U/S 271(1)(C). IN THE PRESENT CASE, THE AO HAS LEVIED THE PENALTY HOLDING THAT NO EXPLANATION HAS BEEN SUBMITTED BY THE ASSES SEE DURING THE PENALTY PROCEEDINGS AND THE ADDITION HAS BEEN CONFI RMED BY THE LD CIT(A) IN THE QUANTUM PROCEEDINGS, THEREFORE, HE PR OCEEDED AHEAD AND LEVIED THE PENALTY. THE LD CIT(A) HAS CONSIDERED T HE EXPLANATION OF THE ASSESSEE AND ALSO THE DECISION OF THE CO-ORDINATE B ENCH WHILE DELETING THE PENALTY. IT WOULD THEREFORE, BE RELEVANT TO RE FER TO THE FINDINGS OF THE CO-ORDINATE BENCH IN THIS REGARD WHICH ARE REPR ODUCED AS UNDER: CASH CREDITOR: RAVI KANT RS 1,00,000 8.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURUSE D THE MATERIAL AVAILABLE ON RECORD. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A). THE ASSESSEE HAS FAILED TO SATISFY THE INI TIAL ONUS CAST ON HIM IN TERMS OF IDENTITY & CREDITWORTHINESS OF CREDITOR, G ENUINENESS OF THE TRANSACTION. HENCE, THE ADDITION OF RS 1 LACS IS C ONFIRMED AND TO THIS EXTENT, THE GROUND OF APPEALS ASSESSEE IS DISMISSE D. CASH CREDITOR: BHISHAN SINGH/ASHOK KUMAR RS 28,10 ,000 10.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSU ED THE MATERIAL AVAILABLE ON RECORD. THE AO HAS GIVEN A FINDING TH AT CASH WAS DEPOSITED IN THE CREDITORS BANK ACCOUNT AND ON THE SAME DATE, DEMAND ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 22 DRAFT WAS ISSUED. NOTHING HAS BEEN SUBMITTED TO EX PLAIN THE SOURCE OF SUCH CASH DEPOSITS. IT IS NOT A QUESTION OF DETER MINING SOURCE OF SOURCE RATHER IT IS A QUESTION OF SATISFYING THE TE ST OF CREDITWORTHINESS. THE SAID FINDING OF THE AO WHICH HAS BEEN CONFIRMED BY THE LD CIT(A) REMAIN UNREBUTTED BEFORE US. THE ASSESSEE HAS THUS FAILED TO SATISFY THE INITIAL ONUS PLACED ON HIM ESPECIALLY IN TERMS OF CREDITWORTHINESS OF THE CREDITOR. IN THE RESULT, WE CONFIRM THE FINDING S OF THE LD CIT(A) AND THE ADDITION OF RS 28,10,000 IS HEREBY CONFIRMED. T HE GROUND OF ASSESSEES APPEAL TO THIS EXTENT IS THUS DISMISSED. CASH CREDITOR: MANGAL SINGH RS 7,20,000 11.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PUR SUED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSE SSEE HAS FAILED TO DISCHARGE THE ONUS PLACED ON HIM UNDER SECTION 68 I N TERMS OF SATISFYING THE TEST OF CREDITWORTHINESS OF SHRI MAN GAL SINGH. REGARDING ASSESSEES CONTENTION THAT AN AMOUNT OF RS 8,82,240 HAS ALREADY BEEN BROUGHT TO TAX IN THE HANDS OF SHRI MANGAL SINGH AN D THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AGAI N, WE ARE UNABLE TO ACCEPT THE SAME. THE REASON FOR THE SAME IS THAT I T IS UNCLEAR AT THIS STAGE WHETHER THE PROCEEDINGS IN CASE OF SHRI MANGA L SINGH HAS ATTAINED FINALITY OR NOT. THEREFORE, IT CANNOT BE S AID THAT THE SAME AMOUNT HAS BEEN SUBJECTED TO TAX TWICE. WE FURTHER DONOT AGREE WITH THE FINDINGS OF THE LD CIT(A) AS THE TEST OF CREDIT WORTHINESS HAS NOT BEEN SATISFIED IN THE INSTANT CASE AND THUS, THE IN ITIAL ONUS PLACED ON THE ASSESSEE REMAIN UNSATISFIED. WE CONFIRM THE AD DITION OF RS 7,20,000 U/S 68 OF THE ACT. THE GROUND OF REVENUE S APPEAL TO THIS EXTENT IS HEREBY CONFIRMED. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 23 CASH CREDITOR: RAJU RS 16,74,700 12.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PUR SUED THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) HAS GIVEN A FIN DING THAT CASH WAS DEPOSITED IN THE CREDITORS BANK ACCOUNT AND ON THE NEXT DATE, CHEQUE WAS ISSUED. NOTHING HAS BEEN SUBMITTED TO EXPLAIN THE SOURCE OF SUCH CASH DEPOSITS. IT IS NOT A QUESTION OF DETERMINING SOURCE OF SOURCE RATHER IT IS A QUESTION OF SATISFYING THE TEST OF C REDITWORTHINESS. IN OTHER WORDS, WHETHER THE CASH CREDITOR HAS THE NECESSARY FINANCIAL STANDING OF HIS OWN TO LEND TO THE ASSESSEE AND WHAT ARE THE SOURCES THEREOF. THE ITR FILED OF THE CASH CREDITOR DOESNT INSPIRE ANY CONFIDENCE IN OUR MIND. THERE IS NOTHING FURTHER ON RECORD TO SATISF Y THE TEST OF CREDITWORTHINESS OF THE CREDITOR. THE FINDING OF T HE LD CIT(A), REMAIN UNREBUTTED BEFORE US. THE ASSESSEE HAS THUS FAILED TO SATISFY THE INITIAL ONUS PLACED ON HIM ESPECIALLY IN TERMS OF CREDITWOR THINESS OF THE CREDITOR. IN THE RESULT, WE CONFIRM THE FINDINGS OF THE LD CIT(A) AND THE ADDITION OF RS 16,74,700 IS HEREBY CONFIRMED. THE G ROUND OF ASSESSEES APPEAL TO THIS EXTENT IS THUS DISMISSED. CASH CREDITOR: RAKESH CHIWA/BHUKAR RS 5,00,000 13.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PUR SUED THE MATERIAL AVAILABLE ON RECORD. THE APPELLANT HAS NOT BEEN ABL E TO DISCHARGE THE INITIAL ONUS PLACED ON HIM U/S 68 OF THE IT ACT. TH E IDENTITY, CREDITWORTHINESS OF CREDITOR, AND GENUINENESS OF TH E TRANSACTION HAVE NOT BEEN PROVED THE FINDINGS OF THE LD CIT(A) REMAI N UNREBUTTED BEFORE US AND THE SAME ARE HEREBY CONFIRMED. IN THE RESUL T, THE ADDITION OF RS 5,00,000 IS CONFIRMED AND APPEAL OF THE ASSESSEE TO THIS EXTENT IS DISMISSED. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 24 CASH CREDITOR: BHAGIRATH SINGH RS 7,20,000 14.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PUR SUED THE MATERIAL AVAILABLE ON RECORD. THE AO HAS GIVEN A FINDING TH AT CASH WAS DEPOSITED IN THE CREDITORS BANK ACCOUNT BEFORE ADV ANCEMENT OF LOAN TO THE ASSESSEE. NOTHING HAS BEEN SUBMITTED TO EXPLAI N THE SOURCE OF SUCH CASH DEPOSITS. IT IS NOT A QUESTION OF DETERMI NING SOURCE OF SOURCE RATHER IT IS A QUESTION OF SATISFYING THE TEST OF C REDITWORTHINESS. IN OTHER WORDS, WHETHER THE CASH CREDITOR HAS THE NECESSARY FINANCIAL STANDING OF HIS OWN TO LEND TO THE ASSESSEE AND WHAT ARE THE SOURCES THEREOF. THE ITR FILED OF THE CASH CREDITOR DOESNT INSPIRE ANY CONFIDENCE IN OUR MIND TO SATISFY THE TEST OF CREDITWORTHINESS OF THE CREDITOR. THE ASSESSEE HAS THUS FAILED TO SATISFY THE INITIAL ONU S PLACED ON HIM ESPECIALLY IN TERMS OF CREDITWORTHINESS OF THE CRED ITOR. THE FACT THAT THE LOAN AMOUNT HAS SUBSEQUENTLY BEEN RETURNED TO THE C ASH CREDITOR IS AN EVENT WHICH AT BEST, SATISFY THE LINKAGE BETWEEN LE NDING AND REPAYMENT. BUT THE SAME IS NOT A BASIS TO HOLD THA T THE MONEY INITIALLY BELONGS TO THE CASH CREDITOR WHEN THERE ARE FACTS O N RECORD TO SUGGEST THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT IMMEDIA TELY BEFORE THE EVENT OF LENDING. THE QUESTION THAT REMAINS IS WHA TS THE SOURCE OF SUCH CASH DEPOSITS AND WHETHER CASH BELONGS TO CASH CREDITOR OR TO THE ASSESSEE. AS WE HAVE HELD ABOVE, IT IS NOT A QUEST ION OF DETERMINING THE SOURCE OF SOURCE RATHER IT IS A FUNDAMENTAL TES T TO BE SATISFIED TO ESTABLISH THE CREDITWORTHINESS OF THE CASH CREDITOR . IN THE RESULT, WE REVERSE THE FINDINGS OF THE LD CIT(A) AND THE ADDIT ION OF RS 7,20,000 IS HEREBY CONFIRMED. THE GROUND OF DEPARTMENTS APPEAL TO THIS EXTENT IS THUS UPHELD. ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 25 11. WE FIND THAT THE EXPLANATION OF THE ASSESSEE HA S NOT BEEN ACCEPTED TO THE EXTENT OF SATISFYING THE INITIAL ON US CAST ON HIM IN TERMS OF SATISFYING THE TEST OF CREDITWORTHINESS OF CASH CREDITORS. IN SOME CASES, IT HAS BEEN FOUND THAT CASH HAS BEEN DEPOSIT ED IN CREDITORS BANK ACCOUNT AND EITHER ON THE SAME DATE OR NEXT DATE, D EMAND DRAFT HAS BEEN ISSUED IN FAVOUR OF THE ASSESSEE. THE SAID FAC T DEFINITELY RAISES A SUSPICION THAT CASH SO DEPOSITED MIGHT BELONG TO TH E ASSESSEE AND IN ABSENCE OF NECESSARY EXPLANATION REGARDING CREDITWO RTHINESS OF THE CREDITOR, IT HAS RIGHTLY BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT UNDER DEEMING FICTION OF SECTION 68 OF THE ACT. HOWEVER, BEFORE LEVY OF PENALTY, IT HAS TO BE DEMONSTRATED THROUGH A CLEAR LINKAGE THAT THE MONEY ACTUALLY BEL ONGS TO THE ASSSESSEE AND UNLESS AND UNTIL THE SAID FACT IS NOT ESTABLISHED THROUGH SOME DEMONSTRABLE EVIDENCE, IT CANNOT BE SAID THAT THE ASSESSEE HAS ACCOUNTED FOR HIS UNDISCLOSED INCOME BY WAY OF CASH CREDIT IN HIS BOOKS OF ACCOUNTS AND THUS, IT CANNOT BE CASE OF CONCEALM ENT OF INCOME. FURTHER, WE FIND THAT THE TRANSACTIONS OF CASH CRED ITS HAVE NOT BEEN DISPUTED BY THE REVENUE IN THE INSTANT CASE AND ALL RELEVANT PARTICULARS IN RESPECT OF CASH CREDITORS AND THEIR CONFIRMATION S HAVE BEEN FURNISHED BY THE ASSESSEE AND THE EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE. IN LIGHT OF THE SAME AND IN VIEW OF THE VARIOUS DECISIONS RELIED UPON BY THE LD AR, WE ARE OF THE V IEW THAT NON ACCEPTANCE OF THE EXPLANATION COULD BE A BASIS FOR MAKING THE ADDITION IN THE QUANTUM PROCEEDINGS, HOWEVER, THE SAME CANNO T FORM THE BASIS FOR HOLDING THAT THE ASSESSEE HAS FURNISHED ANY INA CCURATE PARTICULARS OF INCOME OR CONCEALED HIS PARTICULARS OF INCOME. THU S, THE LEVY OF ITA NO. 1027/JP/2017 ITO, BHIWADI VS. SH. PRATAP SINGH TANWAR, ALWAR 26 PENALTY U/S 271(1)(C) OF THE ACT IS NOT JUSTIFIED I N THE INSTANT CASE AND THE SAME IS DIRECTED TO BE DELETED. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. PRONOUNCED IN THE OPEN COURT ON 29/01/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/01/2019. * GANESH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ITO, BHIWADI 2. IZR;FKHZ@ THE RESPONDENT- SH. PRATAP SINGH TANWAR, ALWAR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1027/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR