ITO, Wd 2(2), Aurangabad, Aurangabad V. Shri Pandit Bhika Jadav, Aurangabad

ITA 133/PUN/2012

• Counselvise Citation: 13324514 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 24-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S KOTHARI
• Keywords: Unexplained cash credit; Unexplained investment; Business expenditure; Cost of acquisition; Assessment record
• Section: 142(1); 68; 148; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO S . 132 & 133 / P N/ 20 12 ASSESSMENT YEAR S : 1005 - 06 & 2006 - 07 THE INCOME TAX OFFI CER, WARD - 2(2), JEEVAN SUMAN 2 ND FLOOR, LIC BUILDING, N - 5, CIDCO, AURANGABAD VS. SHRI PANDIT BHIKA JADHAV, BANJARA COLONY, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AHPPJ3116N APPELLANT BY: SHRI D.S. KOTHARI RESPONDENT BY: SHRI M.K. KULKARNI DATE OF HEARING : 29 - 08 - 2013 DATE OF PRONOUNCEMENT : 27 - 09 - 2013 ORDER P ER R.S. PADVEKAR , JM : - THIS TWO APPEALS ARE FILED BY THE REVENUE CHALLENGING THE RESPECTIVE IMPUGNED ORDERS OF THE LD. CIT(A), AURANGABAD DATED 30 - 11 - 2011 FOR A.YS. 2005 - 06 AND 2006 - 07 IN WHICH THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) HAS BEEN DELETED. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: ITA NO. 132/PN/2012 (A.Y. 2005 - 06) 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)S ACTION DELETING THE PENALTY IS JUSTIFIED. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS JUSTIFIED ON ADOPTING THE INVESTMENTS TOWARDS DEPOSITS AT RS.50 LAKHS AS AGAINST RS.70,11,375/ - AS PER THE BALANCE SHEET FILED WITH T HE RETURN OF INCOME AS IS OBSERVED BY THE LD. CIT(A) IN THE APPELLATE ORDER, AND ALSO THE ISSUE BEING EXAMINED BY THE CIT U/S. 264 OF THE ACT. ITA NO. 133/PN/2012 (A.Y. 2006 - 07) 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IN DELETI NG THE PENALTY IS JUSTIFIED. 2 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS JUSTIFIED IN (I) A DOPTING THE INVESTMENTS TOWARDS DEPOSITS AT RS.50 LAKHS AS AGAINST RS.80,11,375/ - AS PER THE BALANCE SHEET AND ALSO AS PER THE RECEIPTS FILED WITH THE RETURN OF INCOME AS IS OBSERVED BY THE LD. CIT(A) VIDE PARA 5.2 OF THE APPELLATE ORDER. (II) I N DRAWING THE CONCLUSION, THE LENDERS FOR UNSECURED LOANS HAVE NOT BEEN EXAMINED OR VERIFIED BY THE A.O. EVEN THOUGH, AS PER PARAS 5 TO 5.3 OF THE ASSESSMEN T ORDER, THE A.O. HAS GIVEN SUFFICIENT OPPORTUNITIES WHICH HAVE NOT BEEN AVAILED OFF BY THE ASSESSEE ESPECIALLY WHEN THE TOOL OF LENDERS FOR UNSECURED LOANS HAS BEEN USED BY THE ASSESSEE TO EXPLAIN THE INVESTMENTS IN DEPOSITS AT RS.80,11,375/ - . 2. THE ASS ESSEE IS AN INDIVIDUAL AND ENGAGED IN THE SAND EXTRACTING AS PER CONTRACTS AND SELLING THE SAME AND ALSO AGRICULTURE OPERATIONS. THE ASSESSING OFFICER ISSUED THE NOTICE TO THE ASSESSEE U/S. 148 OF THE INCOME - TAX ACT FOR THE A.Y. 2005 - 06 AND THE ASSESSEE H AS NOT FILED RETURN OF INCOME. THE ASSESSEE FILED THE RETURN OF INCOME IN RESPECT OF THE SAID NOTICE DECLARING TOTAL INCOME FROM THE BUSINESS AT RS.1,60,361/ - AND AGRICULTURAL INCOME OF RS.2,10,000/ - . THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED EX - PARTE U/S. 144 R.W.S. 147 OF THE ACT FOR THE A.Y. 2005 - 06 DETERMINING TOTAL INCOME AT RS.68,89,736/ - . THE ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS: (1). UNEXPLAINED CASH CREDITS U/S. 68 : RS.22,00,000/ - (2). UNEXPLAINED AMOUNT DEPOSITED WITH GOVT . IN RESPECT OF SAND CONTRACTS : RS.40,11,375/ - (3). UNEXPLAINED INVESTMENT FOR PURCHASE OF TRUCK : RS.3,08,000/ - (4). UNPROVED AGRICULTURAL INCOME DECLARED IN RETURN : RS.2,10,000/ - TOTAL RS.67,29,375/ - 3 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD 3. THE ASSESSEE PREFERRE D TO FILE REVISION PETITION U/S. 264 OF THE INCOME - TAX ACT BEFORE CIT, AURANGABAD. THE ASSESSEE GOT THE SUBSTANTIAL RELIEF IN THE ORDER PASSED BY THE CIT, AURANGABAD U/S. 264 OF THE INCOME - TAX ACT DATED 07 - 04 - 2010. THE CIT, AURANGABAD DELETED THE FOLLOWI NG ADDITIONS: (1). UNEXPLAINED CASH CREDITS U/S. 68 : RS.22,00,000/ - (2). UNEXPLAINED AMOUNT DEPOSITED WITH GOVT. IN RESPECT OF SAND CONTRACTS : RS.27,50,000/ - (3). UNEXPLAINED INVESTMENT FOR PURCHASE OF TRUCK : RS.3,08,000/ - (4). UNPR OVED AGRICULTURAL INCOME DECLARED IN RETURN : RS.2,10,000/ - TOTAL RS. 54,68,000/ - 4. IN SUM AND SUBSTANCE TO THE EXTENT OF RS.54,68,000/ - THE ASSESSEE WAS GIVEN THE RELIEF AFTER GIVING EFFECT TO THE ORDER OF THE CIT, AURANGABAD PASSED U/S. 264 OF THE ACT. THE REVISE TAXABLE INCOME OF THE ASSESSE WAS DETERMINED AT RS.14,21,740/ - THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) ON THE ADDITION SUSTAINED TO THE EXTENT OF RS.12,61,375/ - AND LEVIED THE PENALTY OF RS.4,27,957/ - . THE ASSESSEE CHALLENGED THE PENALTY ORDER FOR THE A.Y. 2005 - 06 BEFORE THE LD. CIT(A) BY TAKING THE FOLLOWING CONTENTIONS: 5. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS RAISED FOLLOWING CONTENTIONS AGAINST THE PENALTY OF RS.4,27,957/ - LEVIED U/S 271(L)(C) OF THE ACT. (1) THE ASSESSMENT RESULTED INTO EX - PARTE ASSESSMENT AS VIDE LETTER DATED 29/04/2009, THE APPELLANT HAS AUTHORIZED SHRI DILIP GOVIND RATHOD TO LOOK AFTER THE INCOME TAX MATTERS. IT CAN BE NOTICED FROM THE ASSESSMENT ORDER AND RELEVANT RECORD THAT THE SAID AUTHORIZED REPRESENTATIVE HAS NEVER ATTENDED BEFORE THE A.O. THE APPELLANT IS BASICALLY AN AGRICULTURIST AND LOOKING AFTER THE SAND BUSINESS AND AGRICULTURE SINGLE HANDEDLY AND DO NOT HAVE ANY KNOWLEDGE OF ACCOUNTING AND INCOME TAX, HENCE, FULLY RELIED ON THE SAID AR. 4 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD (2) ON PERUSAL OF THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET IT CAN BE NOTICED THAT THE A.R. DOES NOT HAVE KNOWLEDGE OF ACCOUNTING AND FINAL STATEMENTS OF ACCOUNTS AND THE SAID FINAL STATEMENTS OF ACCOUNTS A RE APPARENTLY INCORRECT. IT CAN BE NOTICED THAT IN THE BALANCE SHEET, THE AR HAS SHOWN PAYMENT DEPOSITED WITH GOVERNMENT FOR SAND CONTRACTS AT RS.62,62,000/ - WHEREAS AS PER RECEIPTS ENCLOSED WITH THE RETURN FILED WITH THE A.O. ARE RS.70,11,375/ - . (3) THE A MOUNT DEPOSITED WITH THE COLLECTOR/GOVERNMENT OF MAHARASHTRA FOR EXTRACTING SAND IS BUSINESS EXPENDITURE OF THE APPELLANT AND IS SIMILAR TO THE PURCHASE OF COST OF MATERIAL I.E. SAND. THE AR OF THE APPELLANT HAS NOT DEBITED THE PROPORTIONATE COST OF EXTRAC TING SAND DURING THE PERIOD OF 15/12/2004 TO 31/03/2005 ON PROPORTIONATE BASIS. THEREFORE, THE AR OF THE APPELLANT, THE A.O. AND THE LD.CIT, AURANGABAD HAVE ERRED IN NOT CONSIDERING THE FACT THAT THE INVESTMENT IN DEPOSIT FOR EXTRACTING SAND AS ON 31/03/20 05 CONSIDERED BY THEM AT RS.70,11,375/ - SHOULD HAVE BEEN CONSIDERED AT THE MOST AT RS.50,00,000/ - CONSIDERING THE TOTAL PERIOD OF CONTRACT OF SAND EXTRACTION AND THE PERIOD COVERED BY F.Y.2004 - 05. IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THERE IS NO U NEXPLAINED INVESTMENT IN AMOUNT DEPOSITED WITH THE GOVERNMENT FOR EXTRACTING SAND. IN SUPPORT OF THE ABOVE CLAIM, THE APPELLANT HAS FILED COPY OF CONTRACT/TENDER/EVIDENCE SHOWING THAT THE APPELLANT WAS AUTHORIZED TO EXTRACT SAND FROM 15/12/2004 TO 31/07/20 05. (4) IT IS SETTLED LAW THAT THE APPELLANT SHOULD NOT BE PUNISHED FOR THE DEFAULT OF THE AUTHORIZED REPRESENTATIVE/TAX CONSULTANT. THE APPELLANT HAS ALREADY BEEN PUNISHED IN THE ASSESSMENT PROCEEDINGS IN VIEW OF THE ABOVE STATED MISTAKE POINTED OUT IN PR ECEDING PARAGRAPH AND HENCE HE SHOULD NOT AGAIN BE PUNISHED BY WAY OF PENALTY ON THE SAID INCORRECT ADDITION. (5) IT IS SETTLED LAW THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TOTALLY DIFFERENT AND EVERY ADDITION MADE IN THE ASSESSMENT PROC EEDINGS DOES NOT RESULT INTO LEVY OF PENALTY U/S 271(L)(C) IN THE CASES WHERE THE EXPLANATION FILED BY THE APPELLANT IS PLAUSIBLE AND BONAFIDE. IN SUCH CASES, IN VIEW OF EXPLANATION - 1 B TO SECTION 271(L)(C) PENALTY U/S 271(L)(C) IS NOT LEVIABLE. (6) THE PEN ALTY IS NOT LEVIABLE IN VIEW OF VARIOUS DECISIONS LIKE CIT VS. D.N. DOSANI (2006) 280 ITR 275 (GUJ), HINDUSTAN AERONAUTICS LTD. VS CIT (2000) 243 ITR 808 (SC), CIT VS. BIMLA DEVI SHARMA (1991) 192 ITR 5 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD 282 (PATNA), RAM COMMERCIAL ENTERPRISES LTD. VS. ACIT ( 1995) 52 ITD 147 (DEL) (AT). 5. THE LD. CIT(A) FORWARDED THE ABOVE CONTENTIONS OF THE ASSESSEE TO THE ASSESSING OFFICER FOR HIS COMMENTS AND THE ASSESSING OFFICER SUBMITTED HIS COMMENTS VIDE LETTER DATED 23 - 11 - 2011. THE ASSESSING OFFICER REITERATED THE S TAND IN ASSESSMENT AND PENALTY ORDER BUT HAS NOT MADE ANY COMMENTS IN RESPECT OF ABOVE CONTENTION OF THE ASSESSEE. THE LD. CIT(A) DELETED THE PENALTY FOR THE A.Y. 2005 - 06 BY GIVING THE FOLLOWING REASONS: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A ND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED THAT THE A.O. HAS LEVIED PENALTY ON ACCOUNT OF UNEXPLAINED DEPOSIT WITH GOVERNMENT AS ON 31/03/2005 TO THE EXTENT OF RS.12,61,375/ - AFTER CONSIDERING THE TOTAL INVESTMENT IN BALANCE SHEET TOW ARDS DEPOSIT FOR EXTRACTING SAND AT RS.70,11,375/ - . IN FACT, CONSIDERING THE SAND EXTRACTED BY THE APPELLANT DURING 15/12/2004 TO 31/03/2005, THE AMOUNT OF SAID DEPOSIT APPEARING IN THE BALANCE SHEET SHOULD HAVE BEEN REDUCED. THE COST OF SAND EXTRACTED INC LUDES THE DEPOSIT GIVEN TO THE GOVERNMENT FOR EXTRACTING SAND WHICH IS NOT RECOVERABLE FROM GOVERNMENT. THE SAID DEPOSIT REPRESENTS PURCHASE COST OF SAND. HENCE, CONSIDERING THE TOTAL PERIOD OF SAND EXTRACTION CONTRACT, THE DEPOSIT IN BALANCE SHEET COULD B E AT THE MOST TO THE EXTENT OF RS.50,00,000/ - . IF THIS AMOUNT IS CONSIDERED AS DEPOSIT WITH THE GOVERNMENT FOR EXTRACTING SAND AS ON 31/03/2005, THERE WOULD BE NO UNEXPLAINED DEPOSIT WORKED OUT AT RS.12,61,375/ - IN VIEW OF MINIMUM REDUCTION OF RS.20,11,37 5/ - FROM THE AMOUNT OF DEPOSIT AS AT 31/03/2005 CONSIDERED BY THE CIT, AURANGABAD AND THE A.O. AT RS.70,11,375/ - . IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED VIEW THAT THE ADDITION TOWARDS UNEXPLAINED DEPOSIT OF RS.12,61,375/ - IS NOT PROVED. THE EXP LANATION FILED BY THE APPELLANT AGAINST THE ALLEGED UNEXPLAINED DEPOSIT OF RS.12,61,375/ - IS FOUND TO BE BONAFIDE AND ACCEPTABLE, THEREFORE, IN VIEW OF PROVISIONS OF EXPLANATION - 1B TO SECTION 271(L)(C), PENALTY U/S 271(L)(C) OF THE ACT IS NOT LEVIABLE . IN VIEW OF THESE FACTS AND VARIOUS DECISIONS RELIED UPON BY THE APPELLANT, THE PENALTY U/S 271(L)(C) OF THE ACT AMOUNTING TO RS.4,27,957/ - IS, THEREFORE, CANCELLED. 6. SO FAR AS A.Y. 2006 - 07 IS CONCERNED, THE ASSESSING OFFICER ISSUED THE NOTICE TO THE A SSESSEE U/S. 148 OF THE INCOME - TAX ACT FOR THE A.Y. 2006 - 07 ON 30 - 03 - 2009 AS WELL AS NOTICE U/S. 142(1) AND THE ASSESSEE FILED THE RETURN OF INCOME DECLARING INCOME AT RS.1,26,000/ - AND AGRICULTURAL INCOME OF RS.1,95,880/ - . THE ASSESSMENT OF THE ASSESSEE 6 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD WAS COMPLETED EX - PARTE U/S. 144 R.W.S. 147 OF THE ACT FOR THE A.Y. 2006 - 07 DETERMINING TOTAL INCOME AT RS. 21,79,244/ - . THE ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS: (1). UNEXPLAINED CASH CREDITS U/S. 68 : RS. 9, 00,000/ - (2). UNEXPLAINED AMOUNT DEPO SITED WITH GOVT. IN RESPECT OF SAND CONTRACTS : RS. 1,00,000/ - (3). UNEXPLAINED INVESTMENT FOR PURCHASE OF TRUCK : RS. 7,93,364/ - (4). UNPROVED AGRICULTURAL INCOME DECLARED IN RETURN : RS. 1,95,880/ - TOTAL RS. 19,89,244/ - 7 . T HE ASSESSEE PREFERRED TO FILE REVISION PETITION U/S. 264 OF THE INCOME - TAX ACT BEFORE CIT, AURANGABAD. THE ASSESSEE GOT THE SUBSTANTIAL RELIEF IN THE ORDER PASSED BY THE CIT, AURANGABAD U/S. 264 OF THE INCOME - TAX ACT DATED 07 - 04 - 2010. THE CIT, AURANGABAD DELETED THE FOLLOWING ADDITIONS: (1). UNEXPLAINED CASH CREDITS U/S. 68 : RS. NIL (2). UNEXPLAINED AMOUNT DEPOSITED WITH GOVT. IN RESPECT OF SAND CONTRACTS : RS. NIL (3). UNEXPLAINED INVESTMENT FOR PURCHASE OF TRUCK : RS. 7,93,364/ - (4) . UNPROVED AGRICULTURAL INCOME DECLARED IN RETURN : RS. 1,95,880/ - TOTAL RS. 9,89,244/ - 8 . IN SUM AND SUBSTANCE TO THE EXTENT OF RS. 9,89,244/ - , THE ASSESSEE WAS GIVEN THE RELIEF . A FTER GIVING EFFECT TO THE ORDER OF THE CIT, AURANGABAD PASSED U /S. 264 OF THE ACT , T HE REVISE TAXABLE INCOME OF THE ASSESSE WAS DETERMINED AT RS. 11,89,986/ - . T HE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) ON THE ADDITION SUSTAINED TO THE EXTENT OF RS. 10,00,000/ - AND LEVIED THE PENALTY OF RS. 3, 16,910/ - . THE ASSESSEE CHALLENGED THE PENALTY ORDER FOR THE A.Y. 200 6 - 07 BEFORE THE LD. CIT(A) BY TAKING THE FOLLOWING CONTENTIONS: 7 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD 5. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS RAISED FOLLOWING CONTENTIONS AGAINST THE PENALTY OF RS. 3, 16,910/ - LEVIED U/S 271(L)(C) OF THE ACT. (1) THE ASSESSMENT RESULTED INTO EX - PARTE ASSESSMENT AS VIDE LETTER DATED 29/04/2009, THE APPELLANT HAS AUTHORIZED SHRI DILIP GOVIND RATHOD TO LOOK AFTER THE INCOME TAX MATTERS. IT CAN BE NOTICED FROM THE ASSESSME NT ORDER AND RELEVANT RECORD THAT THE SAID AUTHORIZED REPRESENTATIVE HAS NEVER ATTENDED BEFORE THE A.O. THE APPELLANT IS BASICALLY AN AGRICULTURIST AND LOOKING AFTER THE SAND BUSINESS AND AGRICULTURE SINGLE HANDEDLY AND DO NOT HAVE ANY KNOWLEDGE OF ACCOUNT ING AND INCOME TAX, HENCE, FULLY RELIED ON THE SAID AR. (2) ON PERUSAL OF THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET IT CAN BE NOTICED THAT THE A.R. DOES NOT HAVE KNOWLEDGE OF ACCOUNTING AND FINAL STATEMENTS OF ACCOUNTS AND THE SAID FINAL STATEMENTS OF AC COUNTS ARE APPARENTLY INCORRECT. IT CAN BE NOTICED THAT IN THE BALANCE SHEET, THE AR HAS SHOWN PAYMENT DEPOSITED WITH GOVERNMENT FOR SAND CONTRACTS AT RS.62,62,000/ - WHEREAS AS PER RECEIPTS ENCLOSED WITH THE RETURN FILED WITH THE A.O. ARE RS.70,11,375/ - UP TO 31 - 03 - 2005 AND RS.80,11,375/ - UP TO 31 - 03 - 2006 . (3) THE AMOUNT DEPOSITED WITH THE COLLECTOR/GOVERNMENT OF MAHARASHTRA FOR EXTRACTING SAND IS BUSINESS EXPENDITURE OF THE APPELLANT AND IS SIMILAR TO THE PURCHASE OF COST OF MATERIAL I.E. SAND. THE AR OF T HE APPELLANT HAS NOT DEBITED THE PROPORTIONATE COST OF EXTRACTING SAND DURING THE PERIOD OF AUGUST, 2004 TO MARCH, 2006 ON PROPORTIONATE BASIS. THEREFORE, THE AR OF THE APPELLANT, THE A.O. AND THE LD.CIT, AURANGABAD HAVE ERRED IN NOT CONSIDERING THE FACT T HAT THE INVESTMENT IN DEPOSIT FOR EXTRACTING SAND AS ON 31/03/2005 CONSIDERED BY THEM AT RS.70,11,375/ - AND AS ON 31/03/2006 HAS BEEN CONSIDERED BY THEM AT RS 80,11,375/ - SHOULD HAVE BEEN CONSIDER ED AT THE MOST AT RS.50,00,000/ - CONSIDER ING THE TOTAL PERIOD OF CONTRACT OF SAND EXTRACTION AND THE PERIOD COVERED BY F.Y.2004 - 05. IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THERE IS NO UNEXPLAINED INVESTMENT IN AMOUNT DEPOSITED WITH THE GOVERNMENT FOR EXTRACTING SAND. IN SUPPORT OF THE ABOVE CLAIM, THE APPELLA NT HAS FILED COPY OF CONTRACT/TENDER/EVIDENCE SHOWING THAT THE APPELLANT WAS AUTHORIZED TO EXTRACT SAND FROM APEGAON AND KURAN PIMPRI VILLAGE WITHIN THE PERIOD FROM 15/12/2004 TO 31/07/2005. (4) THE A.O. HAS MADE ADDITION TOWARD UNEXPLAINED CASH CREDIT AMO UNTING TO RS.9,00,000/ - IN RESPECT OF LOANS FROM CLOSE RELATIVES I.E. 8 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD SANJAY PADIT JADHAV RS.5,00,000/ - , PRAMOD PANDIT JADHAV RS.2,00,000/ - AND SUMAN PANDIT JADHAV RS.2,00,000/ - . THE APPELLANT HAS FILED DULY NOTARIZED AFFIDAVITS OF THE ABOVE MENTIONED PER SONS BEFORE THE A.O. WHICH ARE AVAILABLE IN THE ASSESSMENT RECORD. FURTHER, IN VIEW OF THE AVAILABILITY OF SUBSTANTIAL CASH BALANCE ON ACCOUNT OF ABOVE MENTIONED MISTAKE OF THE AR IN PREPARING BALANCE SHEET, THE SAID CREDITS SHALL ALSO STAND EXPLAINED DUE TO AVAILABILITY OF THE SAID CASH. IT IS PERTINENT TO NOTE HERE THAT AFTER CONSIDERING THE MISTAKE IN THE BALANCE SHEET OF SHOWING DEPOSIT FOR SAND CONTRACT WITH GOVERNMENT AT HIGHER FIGURE, THERE WILL NOT BE ANY EXCESS ASSETS IN THE BALANCE SHEET OVER CA PITAL AND LIABILITIES EVEN WITHOUT CONSIDERING THE SAID LOANS OF RS.9,00,000/ - . (4) IT IS SETTLED LAW THAT THE APPELLANT SHOULD NOT BE PUNISHED FOR THE DEFAULT OF THE AUTHORIZED REPRESENTATIVE/TAX CONSULTANT. THE APPELLANT HAS ALREADY BEEN PUNISHED IN THE ASSESSMENT PROCEEDINGS IN VIEW OF THE ABOVE STATED MISTAKE POINTED OUT IN PRECEDING PARAGRAPH AND HENCE HE SHOULD NOT AGAIN BE PUNISHED BY WAY OF PENALTY ON THE SAID INCORRECT ADDITION. (5) IT IS SETTLED LAW THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROC EEDINGS ARE TOTALLY DIFFERENT AND EVERY ADDITION MADE IN THE ASSESSMENT PROCEEDINGS DOES NOT RESULT INTO LEVY OF PENALTY U/S 271(L)(C) IN THE CASES WHERE THE EXPLANATION FILED BY THE APPELLANT IS PLAUSIBLE AND BONAFIDE. IN SUCH CASES, IN VIEW OF EXPLANATIO N - 1 B TO SECTION 271(L)(C) PENALTY U/S 271(L)(C) IS NOT LEVIABLE. (6) THE PENALTY IS NOT LEVIABLE IN VIEW OF VARIOUS DECISIONS LIKE CIT VS. D.N. DOSANI (2006) 280 ITR 275 (GUJ), HINDUSTAN AERONAUTICS LTD. VS CIT (2000) 243 ITR 808 (SC), CIT VS. BIMLA DEVI S HARMA (1991) 192 ITR 282 (PATNA), RAM COMMERCIAL ENTERPRISES LTD. VS. ACIT (1995) 52 ITD 147 (DEL) (AT). 9 . THE LD. CIT(A) FORWARDED THE ABOVE CONTENTIONS OF THE ASSESSEE TO THE ASSESSING OFFICER FOR HIS COMMENTS AND THE ASSESSING OFFICER SUBMITTED HIS CO MMENTS VIDE LETTER DATED 23 - 11 - 2011. THE ASSESSING OFFICER REITERATED THE STAND IN ASSESSMENT AND PENALTY ORDER BUT HAS NOT MADE ANY COMMENTS IN RESPECT OF ABOVE CONTENTION OF THE ASSESSEE. THE LD. CIT(A) DELETED THE PENALTY FOR THE A.Y. 200 6 - 07 BY GIVIN G THE FOLLOWING REASONS: 9 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED THAT THE A.O. HAS LEVIED PENALTY ON ACCOUNT OF UNEXPLAINED LOANS OF RS.9,00,000/ - AND UNEXPLAINED AMOUNT OF DEPOSIT WITH GOVERNMENT IN RESPECT OF SAND CONTRACT RS.1,00,000/ - AFTER CONSIDERING THE TOTAL INVESTMENT IN BALANCE SHEET TOWARDS DEPOSIT FOR EXTRACTING SAND AT RS. 80,11,375/ - . IN FACT, CONSIDERING THE SAND EXTRACTED BY THE APPELLANT DURING 15/12/2004 TO 31/03/2 00 6 , THE AMOUNT OF SAID DEPOSIT APPEARING IN THE BALANCE SHEET SHOULD HAVE BEEN REDUCED. THE COST OF SAND EXTRACTED INCLUDES THE DEPOSIT GIVEN TO THE GOVERNMENT FOR EXTRACTING SAND WHICH IS NOT RECOVERABLE FROM GOVERNMENT. THE SAID DEPOSIT REPRESENTS PURCH ASE COST OF SAND. HENCE, CONSIDERING THE TOTAL PERIOD OF SAND EXTRACTION CONTRACT, THE DEPOSIT IN BALANCE SHEET COULD BE AT THE MOST TO THE EXTENT OF RS.50,00,000/ - . IF THIS AMOUNT IS CONSIDERED AS DEPOSIT WITH THE GOVERNMENT FOR EXTRACTING SAND AS ON 31/ 03/200 6 , THERE WOULD BE NO UNEXPLAINED LOANS OF RS.9,00,000/ - AND UNEXPLAINED DEPOSIT WITH GOVERNMENT OF RS.1,00,000/ - IN VIEW OF MINIMUM REDUCTION OF RS. 30,11,375/ - FROM THE AMOUNT OF DEPOSIT AS AT 31/03/200 6 CONSIDERED BY THE CIT, AURANGABAD AND THE A.O. AT RS. 80,11,375/ - . IT IS ALSO PERTINENT TO NOTE HERE THAT THE LENDERS OF RS.9,00,000/ - HAVE ALSO FILED AFFIDAVITS IN SUPPORT OF THE OANS ADVANCED TO THE APPELLANT AND THE SAID LENDERS HAVE NOT BEEN VERIFIED OR EXAMINED BY THE A.O. IN VIEW OF THE ABOVE F ACTS, I AM OF THE CONSIDERED VIEW THAT THE ADDITION TOWARDS UNEXPLAINED LOANS OF RS.9,00,000/ - AND UNEXPLAINED DEPOSIT WITH GOVERNMENT OF RS.1,00,000/ - FOR EXTRACTING SAND SAND HAVE NOT BEEN PROVED. THE EXPLANATION FILED BY THE APPELLANT AGAINST THE ALLEG ED ADDITIONS OF RS.10,00,000/ - IS FOUND TO BE BONAFIDE AND ACCEPTABLE, THEREFORE, IN VIEW OF PROVISIONS OF EXPLANATION - 1B TO SECTION 271(L)(C), PENALTY U/S 271(L)(C) OF THE ACT IS NOT LEVIABLE. IN VIEW OF THESE FACTS AND VARIOUS DECISIONS RELIED UP ON BY THE APPELLANT, THE PENALTY U/S 271(L)(C) OF THE ACT AMOUNTING TO RS. 3,16,910 IS, THEREFORE, CANCELLED. IN BOTH THESE YEARS THE LD. CIT(A) DELETED THE PENALTY AND HENCE, THE REVENUE IS IN APPEALS BEFORE US. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. IN BOTH THESE CASES THE ASSESSMENT S OF THE ASSESSEE W ERE COMPLETED U/S. 144 AFTER ISSUING THE NOTICE U/S. 148. ALTHOUGH THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE INCOME OF RS.1,60,361/ - AND RS.1,95,880/ - FOR THE A.YS. 2005 - 6 AND 2006 - 07 RESPECTIVELY BUT HIGH PEACH ASSESSMENTS WERE MADE. THE ASSESSEES HAVING SAND EXTRACTING BUSINESS AND THE ASSESSEE HAS TO DEPOSIT AMOUNT WITH THE GOVERNMENT. THE ASSESSEE PREFERRED TO FILE REVISION PETITION TO THE CIT 10 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD U/ S. 264 OF THE ACT INSTEAD OF ADOPTING THE APPELLATE PROCEEDINGS. THE CIT, AURANGABAD GIVEN A SUBSTANTIAL RELIEF TO THE ASSESSE WHICH FACTS ARE ALREADY NARRATED HERE - IN - ABOVE. 11. SO FAR AS A.Y. 2005 - 06 IS CONCERNED, THE ASSESSE CONTENDED THAT THE AMOUN T DEPOSITED WITH THE COLLECTOR/GOVERNMENT FOR EXTRACTING SAND IS A BUSINESS EXPENDITURE OF THE ASSESSEE AND IS SIMILAR TO THE PURCHASE OF COST OF MATERIAL I.E. SAND. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DID NOT ALLOCATE THE PROPORTIONATE COST OF E XTRACTING SAND FOR THE PERIOD OF 15/12/2004 TO 31/03/2005 . THE ASSESSEE ALSO CONTENDED THAT THERE IS NO UNEXPLAINED INVESTMENT IN RESPECT OF THE AMOUNT DEPOSITED WITH THE GOVERNMENT. THE ASSESSEE ALSO TOOK THE STAND THAT THE AUTHORIZED REPRESENTATIVE WHO HAD PREPAID THE PROFIT AND LOSS ACCOUNTS AND BALANCE SHEET OF THE ASSESSE HAD MADE GLARING MISTAKES. 12. SO FAR AS A.Y. 2006 - 07 IS CONCERNED, THE CIT, AURANGABAD GRANTED SUBSTANTIAL RELIEF IN THE ORDER PASSED U/S. 264 IN FAVOUR OF THE ASSESSEE AND ONLY SUSTAINED THE ADDITION TO THE EXTENT OF RS.10,00,000/ - . IN RESPECT OF THE ADDITION SUSTAINED TO THE EXTENT OF RS.10,00,000/ - THE ASSESSEE CONTENDED THAT THE ASSESSEE T OOK LOANS FROM CLOSE RELATIVES I.E. SANJAY PANDIT JADHAV RS.5,00,000/ - , PRAMOD PANDIT J ADHAV RS.2,00,000/ - AND SUMAN PANDIT JADHAV RS.2,00,000/ - AND TO SUPPORT THE SAID LOANS , T HE ASSESSEE FILED THE AFFIDAVITS OF THOSE LOAN CREDITORS BEFORE THE ASSESSING OFFICER. IT IS ALSO CONTENDED THAT THE ASSESSE E HAD SUFFICIENT CASH AVAILABLE AND EVEN IF THE LOAN CREDITORS ARE IGNORED THEN ALSO NO ADDITION CAN BE MADE. WE FIND THAT THE LD. CIT(A) HAS OBSERVED THAT THE COST OF SAND EXTRACTING INCLUDES T HE DEPOSIT S GIVEN TO THE GOVERNMENT WHICH ARE NOT RECOVERABLE. LD. CIT(A) HAS ACCEPTED THE EXPLANATIO N OF THE ASSESSEE FOR THE A.Y. 2005 - 06 THAT THERE CANNOT BE SAID TO BE UNEXPLAINED DEPOSIT TO THE EXTENT OF RS.12,61,375/ - AND DELETED THE ENTIRE PENALTY. 11 ITA NOS. 132 & 133/PN/2012, SHRI PANDIT BHIKA JADHAV, AURANGABAD 13. SAME WAY IN THE A.Y. 2006 - 07 THE LD. CIT(A) HAS OBSERVED THAT THE ADDITION TOWARDS UNEXPLAINED LOANS OF RS.9,00,000/ - AND UNEXPLAINED DEPOSIT WITH THE GOVERNMENT OF RS.1,00,000/ - FOR EXTRACTING SAND HAVE NOT BEEN PROVED AND HE DELETED THE PENALTY IN THE A.Y. 2006 - 07 ALSO . THE FINDING OF THE LD. CIT(A) REMAINED UNCONTROVERTED BEFORE US. AFTER GIVI NG DUE CONSIDERATION TO THE REASONS GIVEN BY THE LD. CIT(A) FOR DELETING THE PENALTY, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR. WE, ACCORDINGLY, CONFIRMED THE ORDERS OF THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS. 14. IN THE RESULT, THE REVENUES APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27 - 09 - 20 1 3 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 27 TH SEPTEMBER, 20 1 3 COPY TO 1 DEPART MENT 2 ASSESSEE 3 THE CIT(A), AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE