M/s Aggarwal Sales, Zirakpur V. ACIT, CC, Patiala

ITA 141/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2722 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 06-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPIKA MOHAN
• Keywords: Income from undisclosed sources; Additional evidence
• Section: 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.141/CHD/2018 (ASSESSMENT YEAR : 2004-05) M/S AGGARWAL SALES, VS. THE A.C.I.T., C/O ROYALE ESTATE, CENTRAL CIRCLE, CHANDIGARH, AMBALA HIGHWAY, PATIALA. NAC, ZIRAKPUR. PAN: AAJFA5732C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL, ADV. RESPONDENT BY : MS.DEEPIKA MOHAN, JCIT DATE OF HEARING : 15.05.2018 DATE OF PRONOUNCEMENT : 13.08.2018 ORDER PER ANNAPURNA GUPTA, A.M. : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(AP PEALS)- 5, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)], DA TED 15.11.2017 RELATING TO ASSESSMENT YEAR 2004-05 CONF IRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) AMOUNTING TO RS.7,72,271/- . THE IMPUGNED PENALTY HAS BEEN LEVIED ON ACCOUNT OF ADDITION MADE TO THE INCOME OF THE ASSESSEE OF UNSE CURED LOANS TAKEN BY THE ASSESSEE, THE GENUINENESS OF WHI CH REMAINED UNPROVED. 2. BRIEFLY STATED, THE FACTS LEADING TO THE IMPOSIT ION OF PENALTY ARE THAT THE ASSESSING OFFICER MADE ADDITIO N OF UNSECURED LOANS TAKEN BY THE ASSESSEE FROM 24 PERSO NS ITA NO.141/CHD/2018 A.Y. 2004-05 2 AMOUNTING IN ALL TO RS.41,59,000/- SINCE NO DOCUMEN TS PROVING THE GENUINENESS OF THE SAID LOANS WAS FILED BY THE ASSESSEE. THE ASSESSING OFFICER ALSO RECORDED HIS SATISFACTION FOR IMPOSITION OF PENALTY U/S 271(1) ON ACCOUNT OF THE ADDITION SO MADE. THE MATTER WAS CAR RIED IN APPEAL BEFORE THE CIT(APPEALS) WHO PARTLY ALLOWED T HE ASSESSEES APPEAL, ON APPRAISING THE EVIDENCES FILE D BY THE ASSESSEE BEFORE HIM ,DELETING THE ADDITIONS MADE TO THE EXTENT OF RS.20 LACS AND UPHOLDING THE BALANCE AMOU NTING TO RS.21,59,000/-. THEREAFTER THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS BY ISSUING NOTICE U/S 274 OF TH E ACT. THE ASSESSEE REQUESTED THE MATTER BE KEPT IN ABEYAN CE TILL THE DISPOSAL OF THE APPEAL FILED AGAINST THE ORDER OF THE CIT(APPEALS) TO THE I.T.A.T AND NOTHING WAS STATED ON THE MERITS OF THE CASE. THE ASSESSING OFFICER REJECTED THE PLEA OF THE ASSESSEE AND THEREAFTER LEVIED PENALTY ON THE ADDITION CONFIRMED BY THE CIT(APPEALS) OF UNSECURED LOANS AMOUNTING TO RS.21,59,000/- @ 100% OF THE TAX EVADE D ON THE SAME, AMOUNTING TO RS.7,72,271/-. 3. THE ASSESSEE FILED APPEAL AGAINST THE PENALTY O RDER SO PASSED TO THE CIT(APPEALS). DURING THE COURSE OF PROCEEDINGS BEFORE THE CIT(APPEALS) THE ASSESSEE PL EADED THAT IT HAD BEEN UNABLE TO ADDUCE EVIDENCES TO PROV E THE GENUINENESS OF THE UNSECURED LOANS TO THE REVENUE AUTHORITIES EARLIER SINCE THEY HAD BEEN PROCURED BY ONE OF THE PARTNERS OF THE ASSESSEE FIRM, MR.PAWAN BANSAL, WHO HAD SINCE THEN RETIRED FROM THE PARTNERSHIP CONCERN AND ITA NO.141/CHD/2018 A.Y. 2004-05 3 THE EXISTING PARTNERS WERE NOT IN GOOD TERMS WITH T HE PERSONS WHO HAD GIVEN THE LOANS AND, THEREFORE, THE EVIDENCES COULD NOT BE PROCURED. THE ASSESSEE STATE D THAT IT HAD SINCE THEN PROCURED EVIDENCES AND FILED THEM IN THE FORM OF THREE PAPER BOOKS AND REQUESTED THE CIT(APP EALS) TO ADMIT THE SAME IN VIEW OF THE REASONS AS AFORESTAT ED . THE CIT(APPEALS) FORWARDED THE SUBMISSIONS OF THE ASSES SEE TO THE ASSESSING OFFICER FOR HIS COMMENTS, WHO STATED THAT THERE WAS NO MERIT IN THE CONTENTION OF THE ASSESSE E THAT IT HAD VALID REASON FOR NOT ADDUCING THE EVIDENCES TO THE AUTHORITIES BELOW SINCE THE ASSESSEE HAD BEEN UNABL E TO SUBSTANTIATE ITS CLAIM THAT THE LOAN HAD BEEN PROCU RED THROUGH SHRI PAWAN BANSAL AND THAT OTHER PARTNERS W ERE UNAWARE OF THE TRANSACTION. THE ASSESSING OFFICER A LSO STATED THAT THE DOCUMENTS NOW SUBMITTED WERE PART O F THE BOOKS OF ACCOUNT OF THE ASSESSEE ONLY AND, THEREFOR E, ALSO THERE WAS NO REASON FOR NOT PRODUCING THE SAME EARL IER. THE ASSESSING OFFICER FURTHER POINTED OUT THAT EVEN THE I.T.A.T. HAD DECIDED NOT TO ENTERTAIN THE ADDITIONA L EVIDENCES WHICH WERE PRODUCED BEFORE IT IN QUANTUM PROCEEDINGS SINCE, IT WAS HELD, THEY COULD NOT BE C ONSTRUED AS EVIDENCES FOR PROVING THE LOANS U/S 68 OF THE AC T. THE ASSESSING OFFICER THUS IN ABOVE TERMS OBJECTED TO T HE ADMISSION OF ADDITIONAL EVIDENCE. THE COPY OF THE R EPORT OF THE ASSESSING OFFICER WAS FORWARDED TO THE ASSESSEE FOR HIS COMMENTS WHO REBUTTED ALL THE CONTENTIONS OF THE AS SESSING OFFICER STATING THAT THE PROOF OF SHRI PAWAN BANSAL BEING RESPONSIBLE FOR PROCURING LOANS CANNOT BE DEMONSTRA TED BY ITA NO.141/CHD/2018 A.Y. 2004-05 4 WAY OF ANY DOCUMENTS AND THAT THE DOCUMENTS NOW SUBMITTED ADEQUATELY DEPICTED THE GENUINENESS OF TH E TRANSACTION SHOWING THE SAME TO HAVE BEEN CONDUCTED THROUGH BANKING CHANNELS ONLY. THE CIT(APPEALS) REF USED TO ADMIT THE ADDITIONAL EVIDENCES, FOLLOWING THE JUDGM ENT OF THE I.T.A.T. IN QUANTUM PROCEEDINGS WHEREIN THE IT AT HAD HELD THAT THE DOCUMENTS WERE NOT WORTHY FOR ADMISSI ON AS EVIDENCES. FURTHER THE CIT(APPEALS) ISSUED SUMMONS U/S 131 OF THE ACT TO FOUR PERSONS WHO HAD GIVEN UNSECU RED LOANS AND WHOSE CONFIRMATIONS HAD NOW BEEN FILED BY THE ASSESSEE, BUT THE SAME WERE RECEIVED BACK UNSERVED. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE REQU ESTING HIM TO EITHER INTIMATE THE ADDRESSES OF THESE PERSO NS OR TO PRODUCE THEM IN PERSON. BUT THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THE SAID PERSONS AND ALSO DID NOT GIVE THEIR ADDRESSES, STATING THAT THE LOANS WERE TAKEN MANY YEARS BACK AND HAD ALSO BEEN RETURNED SINCE THEN AN D THE ASSESSEE HAD NO MORE ANY LINK WITH THE SAID PERSONS . THE CIT(APPEALS) THEREAFTER PROCEEDED TO ADJUDICATE THE APPEAL BEFORE HIM AND HELD THAT THE PENALTY HAD BEEN RIGHT LY IMPOSED BY THE ASSESSING OFFICER SINCE THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THE LOANS EI THER BEFORE THE ASSESSING OFFICER, THE CIT(APPEALS) OR I .T.A.T. IN QUANTUM PROCEEDINGS. THE RELEVANT FINDINGS OF THE LD.CIT(APPEALS) AT PARA 4.1 OF HIS ORDER ARE AS UND ER: 4.1 GROUNDS OF APPEAL NOS. 1 & 2 PERTAIN TO IMPOSITION OF PENALTY U/S 271(L)(C). THE ASSESSEE IS AGGRIEVED A GAINST THE ORDER OF THE AO IMPOSING PENALTY AMOUNTING TO RS . 7,72,271/- U/S 271(L)(C). THE AO HAS MENTIONED THAT A SEARCH ITA NO.141/CHD/2018 A.Y. 2004-05 5 U/S 132 WAS CONDUCTED IN THIS CASE ON 25.02.2009 AND IN RESPONSE TO NOTICE U/S 153A, ASSESSEE FILED RETURN ON 02.09.2009 DECLARING LOSS OF RS. 6,330/-. THE ASSESS MENT WAS COMPLETED AT AN INCOME OF RS. 41,52,670/- VIDE O RDER DATED 22.12.2010. THE ADDITION WAS MADE ON ACCOUNT OF UNSECURED LOANS FROM 24 PERSONS TOTALING TO RS. 41,5 9,000/-. THE ASSESSEE FILED APPEAL AND THE CIT(A) ALLOWED PART IAL RELIEF TO THE ASSESSEE AND ADDITION OF RS. 21,52,670/- WAS CONFIRMED. THEREAFTER A SHOW CAUSE NOTICE WAS ISSUED AND AFTER CONSIDERING THE REPLY, THE AO IMPOSED PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. THE REQUEST OF THE ASSE SSEE TO KEEP THE PENALTY PROCEEDINGS PENDING TILL THE DISPO SAL OF THE APPEAL BY THE HON'BLE ITAT WAS NOT ACCEPTED. THE FACTS OF THE CASE, THE BASIS OF PENALTY IMPOSED B Y THE A.O. AND THE SUBMISSIONS/ARGUMENTS OF THE AR DURI NG THE APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED. IT IS RE LEVANT TO MENTIONED HERE THAT THE APPEAL FILED BY THE ASSESSE E HAS BEEN DISMISSED BY THE HON'BLE ITAT, CHANDIGARH VIDE ITS ORDER DATED 25.03.2015. THE RELEVANT PARA OF THE ITAT ORD ER IN ITA NOS. 224/CHD/2013 AND 232/CHD/2013 IS REPRODUCE D BELOW:- '9. IN THE LIGHT OF THE REJECTION OF APPLICATION FOR ADDITIONAL EVIDENCE THE GROUND RAISED BY THE ASSESSEE REQUIRED TO BE DISMISSED BECAUSE ASSESSEE HAS MISERABLY FAILED TO PR OVE THE LOANS TO THE EXTENT OF RS. 41,59,0007- BECAUSE NO CONFIRMATION OR ANY EVIDENCE PROVING SUCH TRANSACTI ON WAS FURNISHED BEFORE AO OR EVEN BEFORE THE CIT(A) OR EV EN BEFORE US.' DURING THE PRESENT APPELLATE PROCEEDINGS, THE AR FILED THREE PAPER BOOKS -ONE CONTAINING THE DOCUMENTS WHICH WERE FILED BEFORE THE HON'BLE ITAT ALSO AND AS ALREADY H ELD, THESE WERE NOT FOUND RELEVANT TO PROVE THE GENUINENESS OF THE LOAN. THE SECOND PAPER BOOK CONTAINED THE CONFIRMATION FRO M FOUR PERSONS, WHICH COULD NOT BE SUBSTANTIATED AS THE SU MMONS ISSUED U/S 131 WERE RECEIVED BACK AND THE APPELLANT SHOWED HIS INABILITY TO PRODUCE THESE PERSONS DURING T HE APPELLATE PROCEEDINGS AS REQUIRED BY LETTER DATED 03.10.2017. IN THE ABSENCE OF INDEPENDENT VERIFICATION DURING THE APPELLATE PROCEEDINGS, THE CONFIRMATIONS F ILED ON THEIR BEHALF REMAIN UNSUBSTANTIATED. THE FACTS MENT IONED IN THE CONFIRMATION ARE REQUIRED TO BE SUPPORTED BY DOCUMENTS TO SHOW THAT THESE PERSONS EXISTS & THEY H AVE THE CAPACITY TO PAY THE LOAN, THE FUNDS WERE AVAILA BLE WITH THEM ON THE DATE WHEN THE LOAN WAS ALLEGEDLY GIVEN ETC. IN ORDER TO VERIFY THESE THINGS, SUMMONS WERE ISSUED A ND LATER THE ASSESSEE WAS ALSO PROVIDED AN OPPORTUNITY TO PRO DUCE THEM DURING THE APPELLATE PROCEEDINGS, IN ORDER TO CON FIRM THE LOANS GIVEN BY THEM. THE PRESENCE WAS REQUIRED TO ESTABLISH WHETHER THE LOANS IN THEIR NAMES WERE GENUINE OR THESE WERE ASSESSEE'S OWN UNACCOUNTED FUNDS INTRODUC ED IN THE GARB OF UNSECURED LOANS. HOWEVER, IT HAS CLEARLY BEEN MENTIONED THAT 'THEY CANNOT BE PRODUCED'. THIS CASTS DOUBT ABOUT THE GENUINENESS OF THE LOANS SHOWN IN THEIR NA MES. ITA NO.141/CHD/2018 A.Y. 2004-05 6 THE CONFIRMATIONS FILED BY THE AR REMAINS UNSUBSTANTIATED AS THESE PERSONS HAVE NOT COME FORW ARD TO GIVE STATEMENT ABOUT THE TRUTHFULNESS OF THE FACTS MENTIONED IN THE DOCUMENT. THEY WERE REQUIRED TO CO NFIRM THE FACTS MENTIONED IN THE DOCUMENT FILED AS CONFIRMA TION. IN THE ABSENCE OF THE SAME, THE CONFIRMATIONS FILED ARE NOT FOUND SUFFICIENT TO PROVE THE GENUINENESS OF THE LOAN S FROM THESE FOUR PERSONS. THE MONEY INTRODUCED HAS TO BE T REATED AS ASSESSEE'S OWN UNACCOUNTED INCOME, THE PARTICULAR S OF WHICH HAVE BEEN CONCEALED. THE PENALTY HAS BEEN IMPOSED BY THE AO FOR CONCEALI NG THE PARTICULARS OF INCOME AND HAVING FURNISHED INACC URATE PARTICULARS OF THE INCOME BY GIVING A DIFFERENT TRE ATMENT TO THE CREDIT ENTRIES LEADING TO EVASION OF TAX. THE ASSESSE E CLAIMING THESE CREDIT ENTRIES AS LOANS, HOWEVER FAILED TO ES TABLISH THE GENUINENESS OF THE LOANS. THE AO ASKED THE ASSES SEE TO FILE CONFIRMATION ALONG WITH THEIR BANK STATEMENTS AND INCOME TAX RETURNS, HOWEVER, NO SUCH DOCUMENT WERE FILED BEFORE THE AO. EVEN DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE DID NOT FILED THE BANK STATEMENT OR OTHER D OCUMENTS TO SHOW THE AVAILABILITY OF CASH WITH THESE PARTIES AND THEIR CAPACITY TO PAY THE LOANS. THE DOCUMENTS FILED BY TH E AR HAVE ALREADY BEEN HELD BY THE HON'BLE ITAT AS INSUFFI CIENT TO PROVE THE GENUINENESS OF THE LOANS. FURTHER, IN VIE W OF THE FAILURE OF THE APPELLANT TO PRODUCE THE FOUR PERSON S WHOSE CONFIRMATION HAVE BEEN FILED (AFTER SUMMONS ISSUED T O THEM BY THIS OFFICE WERE RECEIVED BACK), INDICATE THAT THE LOANS ARE NOT GENUINE AND THE ASSESSEE HAS INTRODUCED ITS OWN UNACCOUNTED INCOME/MONEY AS UNSECURED LOANS. THE ARGUMENT OF THE AR REGARDING SH. PAWAN BANSAL IS NOT FOUND CONVINCING AS THE LOANS HAVE BEEN SHOWN IN THE ACCOU NTS OF M/S. AGGARWAL SALES, THE ASSESSEE, AND NOT IN THE INDIVI DUAL CAPACITY OF SH. PAWAN BANSAL. HAD SH. PAWAN BANSAL TAKEN THESE LOANS IN HIS INDIVIDUAL CAPACITY AND ROUTED THROU GH HIS CAPITAL ACCOUNT, THEN THIS ARGUMENT COULD HAVE B EEN GIVEN. THE PERSON PAYING THE LOAN MAINTAINS A CONTACT WITH THE PARTIES TO WHOM THE PAYMENTS HAVE BEEN MADE BECA USE THE MONEY IS REQUIRED TO BE RECOVERED EVEN IF NO IN TEREST IS CHARGED. IF THE PERSON WHO HAS PAID THE LOAN IS NOT KNOWN, THIS INDIRECTLY INDICATES THAT THE MONEY BELONG TO THE ASSESSEE ITSELF. IT HAS ALSO BEEN MENTIONED IN THE GR OUNDS THAT THE SUBMISSION HAVE NOT BEEN PROPERLY CONSIDERE D BY THE AO, HOWEVER THE FACT IS THAT NO SUBMISSION ON MERITS WE RE FILED BEFORE THE AO. THE SUBMISSIONS/ DOCUMENTS FILED DURING THE APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED BUT NOT FOUND ACCEPTABLE AS DISCUSSED ABOVE. UNDER THES E FACTS AND THE CIRCUMSTANCE OF THE CASE, THE PENALTY IMPOSED BY THE AO IS FOUND SUSTAINABLE AS PER LAW AND HENCE CONFIRMED. 4. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP I N APPEAL BEFORE US RAISING FOLLOWING GROUNDS: ITA NO.141/CHD/2018 A.Y. 2004-05 7 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DISMISSING THE APPEAL FILED BY THE APPELLANT AND UPHOLDING PENALTY OF RS.7,72,271/ - LEVIED BY THE ASSESSING OFFICER U/S 271 (1)( C) OF THE INCOME TAX ACT, 1961. 2. THAT PENALTY OF RS.7,72,271/- U/S 271(1)(C) HAS BEE N UPHELD BY THE CIT (A) AGAINST THE FACTS AND CIRCUMSTANCES AND DETAILED SUBMISSIONS FILED BEFORE HIM AND ALSO BEFORE THE ASSESSING OFFICER HAV E NOT BEEN CONSIDERED PROPERLY. 3. THAT THE WORTHY CIT (A) HAS ERRED IN NOT ENTERTAIN ING AND REJECTING THE APPLICATION FOR ADDITIONAL EVIDENCE FILED BEFORE HIM. 4. THAT THE LEVY OF PENALTY IS OTHERWISE NOT VALID SIN CE NO SPECIFIC CHARGE HAS BEEN MADE AGAINST THE ASSESSEE AS PER THE DECISION IN THE CASE OF SSA'S EMERALD MEADO WS OF THE APEX COURT. 5. NOTWITHSTANDING THE ABOVE, IT IS SUBMITTED THAT ADDITION MADE BY THE ASSESSING OFFICER WAS PARTLY DELETED BY THE CIT(A) IN APPEAL, THUS, NO PENALTY U/ S 271(1)(C) CAN BE LEVIED AS HAS BEEN UPHELD BY VARIO US COURTS. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND TH E GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD O R DISPOSED OFF. 5. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE FIRST TOOK UP THE ISSUE RELATING TO AD MISSION OF ADDITIONAL EVIDENCES AND STATED THAT THE CIT(APPEAL S) HAD MERELY FOLLOWED THE OBSERVATIONS OF THE I.T.A.T. IN QUANTUM PROCEEDINGS TO REJECT THE ADMISSION OF THE SAME HOL DING THAT THE SAID DOCUMENTS COULD NOT BE CONSTRUED AS EVIDENCES FOR PROVING THE LOANS U/S 68 OF THE ACT. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE CIT(A) R EJECTING THE ADMISSION OF ADDITIONAL EVIDENCES AT PARA 3.3 O F HIS ORDER AS UNDER: 3.3 THE ORDER PASSED BY THE HON'BLE ITAT, CHANDIGA RH BENCH, IN ITA NO, 224/CHD/2013 (M/S. AGGARWAL SALES V S. DCIT, CENTRAL CIRCLE, PATIALA, A.Y. 2004-05) AND IT A NO. 232/CHD/2013 (ACIT, CENTRAL CIRCLE, PATIALA VS. M/S. ITA NO.141/CHD/2018 A.Y. 2004-05 8 AGGARWAL SALES, A.Y. 2004-05) RELATING TO THE QUANT UM ADDITION IN THIS CASE FOR ASSESSMENT YEAR UNDER CONSIDERATION HAS BEEN PERUSED. AS RIGHTLY POINTED O UT BY THE AO IN HER REPORT DATED 20.03.2017, THE DOCUMENT FILE D AS ADDITIONAL EVIDENCE BY THE AR OF THE APPELLANT IN TH E FORM OF 'COPIES OF ACCOUNTS' AND 'COPY OF TDS CERTIFICATE' W ERE NOT FOUND RELEVANT BY THE HON'BLE ITAT, CHANDIGARH FOR PR OVING THE LOANS U/S 68 AND IT WAS HELD THAT ASSESSEE IS RE QUIRED TO FILE CONFIRMATION AS WELL AS SHOW CREDITWORTHINESS OF SUCH PARTIES. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMEN T OF THE HON'BLE ITAT, THESE DOCUMENTS ARE NOT FOUND WORTH AD MISSION AS ADDITIONAL EVIDENCE TO PROVE THE IDENTITY, CREDITW OJ?FNINESS AND GENUINENESS OF THE LOANS UNDER SECTION 68 OF TH E I.T. ACT, 1961. 6. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT IS S ETTLED LAW THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE INDEPENDENT AND DIFFERENT PROCEEDIN GS AND THE FINDINGS IN THE QUANTUM PROCEEDINGS ARE NOT CON CLUSIVE FOR THE PURPOSE PENALTY PROCEEDINGS AND, THEREFORE, THE REJECTION OF ADDITIONAL EVIDENCES FILED BY THE ASSE SSEE FOLLOWING THE FINDINGS IN QUANTUM PROCEEDINGS WAS N OT SUSTAINABLE. THE LD. COUNSEL FOR ASSESSEE POINTED O UT THAT EVEN OTHERWISE THE ASSESSEE BESIDES FILING DOCUMENT S WHICH WERE FILED BEFORE THE I.T.A.T., HAD FILED CONFIRMAT IONS OF FOUR PERSONS ALSO WHO HAD GIVEN UNSECURED LOANS. THEREFO RE, THE PARITY OF REASONING GIVEN BY THE I.T.A.T. IN QUANTU M PROCEEDINGS FOR REJECTING THE ADMISSION OF ADDITION AL EVIDENCES COULD NOT HAVE BEEN APPLIED IN PENALTY PROCEEDINGS SINCE THE CONFIRMATIONS FILED OF THE FO UR PERSONS COULD NOT BE REJECTED AS NOT BEING IN THE N ATURE OF EVIDENCE FOR THE PURPOSE PROVING THE GENUINENESS OF THE TRANSACTIONS. THE LD. COUNSEL FOR ASSESSEE, THEREAF TER STATED THAT THOUGH HAVING REJECTED THE ADMISSION OF ADDITI ONAL EVIDENCES, THE LD.CIT(APPEALS) HAD TAKEN NOTE OF T HE SAME ITA NO.141/CHD/2018 A.Y. 2004-05 9 AND HELD THAT THEY WERE INSUFFICIENT TO PROVE THE GENUINENESS OF THE LOANS FOLLOWING AGAIN THE FINDIN GS OF THE I.T.A.T. IN QUANTUM PROCEEDINGS. 7. ON THE MERITS OF THE CASE, THE ARGUMENT ADVANCED BY THE LD. COUNSEL FOR ASSESSEE WAS THAT FOR THE PURPO SE OF LEVYING PENALTY ON ACCOUNT OF THE ADDITIONS MADE OF UNSECURED LOANS, THERE HAD TO BE CONCLUSIVE FINDING S THAT THE AMOUNT REPRESENTED THE ASSESSEES INCOME AND PE NALTY COULD NOT HAVE BEEN LEVIED ON THE FINDINGS THAT THE EVIDENCES WERE INSUFFICIENT TO PROVE THE GENUINENES S OF THE LOANS, MERELY REITERATING THE FINDINGS IN QUANTUM PROCEEDINGS. THE LD. COUNSEL FOR ASSESSEE RELIED UP ON THE FOLLOWING JUDGEMENTS IN SUPPORT OF ITS CONTENTION: CIT VS BHOJ RAJ AND CO.(2001) 247 ITR 696(P&H) NATIONAL TEXTILES VS. CIT, 249 ITR 125(GUJ) CIT VS. JALARAM OIL MILLS, 253 ITR 192 (GUJ), ARIEL SAREES PVT. LTD. VS. ITO IN ITA NO.3180/AHD/2011, DATED 23.10.2015 (I.T.A.T. AHMEDABAD BENCH) BHARTESH JAIN VS. ITO (2011) 137 TTJ (DELHI) 200. 8. THE LD. COUNSEL FOR ASSESSEE STATED THAT EVEN OTHERWISE THE EVIDENCES FILED BY THE ASSESSEE, THOU GH MAY NOT HAVE CONCLUSIVELY PROVED THE GENUINENESS OF THE TRANSACTION, BUT COULD NOT HAVE BEEN DISCARDED AS B EING IRRELEVANT ALSO. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE EVIDENCES FILED IN THE THREE PAPER BOOKS AS REPRODUCED IN THE ORDER OF THE CIT(APPEALS) ALSO AS UNDER: 1) DETAILS OF RECEIPT OF IMPUGNED LOANS. ITA NO.141/CHD/2018 A.Y. 2004-05 10 2) COPY OF BANK STATEMENT SHOWING RECEIPT OF LOANS BY WAY OF CHEQUES. 3) COPY OF ACCOUNTS OF LATER YEARS DEPICTING REPAYMENT OF LOANS AND INTEREST BEING PAID TO THE LOAN CREDITORS. 4) COPIES OF TDS CERTIFICATES SHOWING TDS ON THE INTEREST PAID. 5) CONFIRMATIONS OF RECEIPT OF LOANS FROM FOUR PARTIES. 9. REFERRING TO THE ABOVE, THE LD. COUNSEL FOR ASSE SSEE STATED THAT THE AFORESAID DOCUMENTS DEMONSTRATED TH AT THE LOANS HAD BEEN TAKEN AND REPAID ALSO AND THAT BOTH THE TRANSACTIONS WERE DONE THROUGH THE BANKING CHANNELS AND EVEN INTEREST WAS PAID ON THE SAID LOANS ON WHICH T DS WAS ALSO DEDUCTED AND DEPOSITED WITH THE GOVERNMENT. FU RTHER CONFIRMATIONS HAD BEEN FILED BY FOUR PERSONS ALSO. NO ADVERSE REMARKS HAVING BEEN GIVEN AGAINST THE AFORE SAID DOCUMENTS FILED BY THE ASSESSEE. LD. COUNSEL FOR A SSESSEE, THEREFORE, CONTENDED THAT THOUGH THE DOCUMENTS MAY BE INSUFFICIENT TO PROVE THE GENUINENESS OF THE UNSECU RED LOANS BUT IT CANNOT ALSO BE SAID THAT THE ASSESSEE HAD COMPLETELY FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THEREFORE, IN SUCH CIRCUMSTANCES ,IT WAS CONTENDED, THAT ALL THE PARTICULARS OF THE LOAN TRA NSACTIONS HAVING BEEN DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSEE COULD NOT BE HELD TO HAVE CO NCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME FOR L EVYING PENALTY U/S 271(1)(C) OF THE ACT. 10. THE LD. DR, ON THE OTHER HAND RELIED UPON THE O RDER OF THE CIT(APPEALS). THE LD. DR VEHEMENTLY ARGUED THAT THE ITA NO.141/CHD/2018 A.Y. 2004-05 11 ASSESSEE HAD CATEGORICALLY FAILED TO PROVE THE GENU INENESS OF THE TRANSACTIONS BOTH IN QUANTUM PROCEEDINGS AND EVEN IN PENALTY PROCEEDINGS SO MUCH SO THAT THE ENQUIRY CONDUCTED BY THE CIT(APPEALS) IN APPELLATE PROCEEDI NGS BY ISSUING SUMMONS TO FOUR PARTIES WHICH WERE RECEIVED BACK UNSERVED, INDICATED THAT THE LOANS WERE NOT GENUINE AND THE ASSESSEE HAD INTRODUCED ITS UNACCOUNTED MONEY. AS F OR THE ADMISSION OF ADDITIONAL EVIDENCES, THE LD. DR STATE D THAT THE LD.CIT(APPEALS) HAD RIGHTLY REJECTED ADMITTING THE SAME SINCE THEY HAD BEEN HELD TO BE NOT RELEVANT FOR PRO VING THE LOANS U/S 68 OF THE ACT, BY THE ITAT IN QUANTUM PROCEEDINGS. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND GONE THROUGH TH E DOCUMENTS REFERRED TO BEFORE US. 12. THE ISSUE BEFORE US RELATES TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT AND/OR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. THE INCOME, PART ICULARS RELATING TO WHICH WERE HELD TO BE CONCEALED OR INAC CURATE PARTICULARS FURNISHED, RELATED TO UNSECURED LOANS SHOWN TO HAVE BEEN TAKEN BY THE ASSESSEE AMOUNTING TO RS.21,59,000/-, THE GENUINENESS OF WHICH COULD NOT BE PROVED BY THE ASSESSEE. 13. THE ASSESSEE, WE FIND, HAD FILED ADDITIONAL EVI DENCES BEFORE THE CIT(APPEALS) IN PENALTY PROCEEDINGS IN T HREE PAPER BOOKS WHICH CONSISTED OF THE FOLLOWING: ITA NO.141/CHD/2018 A.Y. 2004-05 12 1) DETAILS OF RECEIPT OF IMPUGNED LOANS. 2) COPY OF BANK STATEMENT SHOWING RECEIPT OF LOANS BY WAY OF CHEQUES. 3) COPY OF ACCOUNTS OF LATER YEARS DEPICTING REPAYMENT OF LOANS AND INTEREST BEING PAID TO THE LOAN CREDITORS. 4) COPIES OF TDS CERTIFICATES SHOWING TDS ON THE INTEREST PAID. 5) CONFIRMATIONS OF RECEIPT OF LOANS FROM FOUR PARTIES. 14. THE CIT(APPEALS), REFUSED TO ADMIT THE SAID ADD ITIONAL EVIDENCES FOLLOWING THE ORDER OF THE I.T.A.T. IN QU ANTUM PROCEEDINGS, WHEREIN THE ABOVE DOCUMENTS WERE ALSO FILED AS ADDITIONAL EVIDENCES BUT WERE REFUSED TO BE ADMI TTED FOR THE REASON THAT THEY WERE NOT FOUND WORTHY FOR ADMI SSION AS ADDITIONAL EVIDENCES TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOANS U/S 6 8 OF THE ACT. ALSO THE LEVY OF PENALTY WAS CONFIRMED FOR THE REASON THAT THE GENUINENESS OF THE LOANS REMAINED UNESTABL ISHED. 15. WE ARE UNABLE TO AGREE WITH THE REASONING OF TH E LD.CIT(APPEALS) BOTH FOR REJECTING THE ADMISSION OF ADDITIONAL EVIDENCES AND UPHOLDING THE LEVY OF PENA LTY . AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR ASSESSEE , THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE. THE STANDARD OF PROOF/CONSID ERATION FOR MAKING AN ADDITION OR DISALLOWANCE IN QUANTUM PROCEEDINGS, RANGING FROM INSUFFICIENCY OF EVIDENCE S TO ABSENCE OF ANY EVIDENCES FILED, ARE DIFFERENT FROM THE STANDARD OF PROOF /CONSIDERATION WHICH MAY LEAD TO THE LEVY OF PENALTY, WHICH REQUIRES CONCLUSIVE FINDINGS TO THE EFFECT ITA NO.141/CHD/2018 A.Y. 2004-05 13 THAT WRONG PARTICULARS OF INCOME HAD BEEN FURNISHE D OR PARTICULARS OF INCOME HAD BEEN CONCEALED. THUS WHIL E ADDITIONS/DISALLOWANCES MAY BE MADE ON ACCOUNT OF INSUFFICIENCY OF EVIDENCES TO PROVE THE CLAIM OF TH E ASSESSEE, THE SAID FACTOR MAY NOT BE SUFFICIENT FOR HOLDING THAT THE ASSESSEE HAD CONCEALED OR FURNISHED INACCU RATE PARTICULARS OF INCOME SO AS TO LEVY PENALTY. THE FI NDINGS IN QUANTUM PROCEEDINGS CANNOT THEREFORE BE BLINDLY FOL LOWED FOR IN PENALTY PROCEEDINGS. THE RELIANCE PLACED BY THE LD.COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF BHOJ RAJ AND CO.(SUPRA) AND THE DECISION OF THE HONBE GUJARAT H IGH COURT IN THE CASE OF JALARAM OIL MILLS(SUPRA) IN TH IS REGARD IS APT WHEREIN THE AFORESAID DISTINCTION BETWEEN QU ANTUM PROCEEDINGS AND PENAL PROCEEDINGS HAS BEEN CLEARLY BROUGHT OUT. 16. VIEWED IN THE ABOVE BACKDROP, THE ADDITIONAL EV IDENCES NOW FILED BY THE ASSESSEE, WE HOLD, CANNOT BE REJEC TED FOR ADMISSION SIMPLY FOLLOWING THE ORDER OF THE ITAT IN QUANTUM PROCEEDINGS IN THIS REGARD, HOLDING THEM TO BE WHOLLY IRRELEVANT FOR THE PURPOSE OF DETERMINING WH ETHER THE ASSESSEE HAD CONCEALED/FURNISHED INACCURATE PARTICU LARS OF INCOME SO AS TO LEVY PENALTY U/S 271(1) OF THE ACT . THE SAID EVIDENCES DO SHOW THAT THE TRANSACTIONS TOOK P LACE THROUGH BANKING CHANNELS, THAT THE LOANS WERE REPAI D ALSO IN LATER YEARS, THAT INTEREST WAS ALSO PAID ON THE SAME AND TDS WAS DEDUCTED BY THE GOVERNMENT ALSO. FURTHER TH E ITA NO.141/CHD/2018 A.Y. 2004-05 14 ASSESSEE HAD ALSO FILED CONFIRMATIONS FROM FOUR PAR TIES WHICH HAD NOT BEEN FILED TO THE I.T.A.T. IN QUANTUM PROCEEDINGS. THE AFORESAID DOCUMENTS THEREFORE THRO W SOME LIGHT ON THE FACT THAT LOANS HAD BEEN TAKEN BY THE ASSESSEE, THOUGH THEY MAY NOT BE SUFFICIENT ENOUGH TO CONCLUS IVELY PROVE THE GENUINENESS OF THE TRANSACTIONS. IN THE L IGHT OF THESE DOCUMENTS ,THE UNSECURED LOANS SHOWN TO BE TA KEN BY THE ASSESSEE CANNOT BE CATEGORICALLY HELD TO BE A B OGUS TRANSACTION, THOUGH IT MAY BE SUFFICIENT FOR MAKING ADDITION U/S 68 OF THE ACT .THE DOCUMENTS THEREFORE ARE RELE VANT FOR THE PURPOSE OF DETERMINING WHETHER THE ASSESSEE HAD CONCEALED /FURNISHED ANY INACCURATE PARTICULARS OF INCOME, FOR THE LEVY OF PENALTY. THE REJECTION OF THE SAME FOR ADMISSION BY THE LD.CIT(APPEALS) IS THEREFORE SET ASIDE. . EVEN OTHERWISE, AS RIGHTLY POINTED OUT BY THE LD. C OUNSEL FOR ASSESSEE, THE LD.CIT(APPEALS) HAD TAKEN COGNIZA NCE OF THESE ADDITIONAL EVIDENCES AND HELD THEM TO BE INSU FFICIENT FOR PROVING THE GENUINENESS OF THE UNSECURED LOANS. THEREFORE, HAVING TAKEN COGNIZANCE OF THE SAME, THE FINDINGS OF THE CIT(APPEALS) THAT IT HAD REJECTED T HE ADDITIONAL EVIDENCES MERITS NO CONSIDERATION AND IS WHOLLY IRRELEVANT. 17. FOR THE SAME REASON, WE HOLD THAT NO PENALTY WA S LEVIABLE IN THE PRESENT CASE. AS STATED ABOVE, THE DOCUMENTS FILED BY THE ASSESSEE THOUGH MAY NOT HAVE CONCLUSIV ELY PROVED THE GENUINENESS OF THE TRANSACTIONS, THE SAI D DOCUMENTS DO SHOW THAT THE MONEY WAS RECEIVED AND R EPAID ITA NO.141/CHD/2018 A.Y. 2004-05 15 BY THE ASSESSEE THROUGH BANKING CHANNELS AND EVEN I NTEREST WAS PAID ON THE SAME AND TDS DEDUCTED. THE UNSECURE D LOANS TAKEN, CANNOT THEREFORE BE CATEGORICALLY HELD TO BE A SHAM TRANSACTION AND THE MONEY SO INTRODUCED THERE FORE CANNOT BE HELD TO BE THE OWN MONEY OF THE ASSESSEE SO AS TO CHARGE IT WITH HAVING CONCEALED PARTICULARS /FURNIS HED INACCURATE PARTICULARS OF INCOME BY SHOWING THE SAM E AS LOANS TAKEN INSTEAD OF ITS OWN INCOME. THERE IS, TH EREFORE, WE HOLD, NO CASE FOR LEVY OF PENALTY U/S 271(1) OF THE ACT AND THE PENALTY LEVIED THEREFORE AMOUNTING TO RS.7, 72,271/- IS DIRECTED TO BE DELETED. THE ORDER OF THE CIT(APP EALS) IS THEREFORE SET ASIDE. GROUND OF APPEAL NOS.1, 2 AND 3 RAISED BY THE ASSESSEE ARE ALLOWED. 18. IN REST OF THE GROUNDS RAISED BY THE ASSESSEE, NO ARGUMENTS WERE MADE BY EITHER OF THE PARTIES, THE S AME ARE, THEREFORE, DISMISSED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH AUGUST, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH