Shri Girish Chandanmal Shriman, Pune V. Income-tax Officer, Pune

ITA 1704/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66892 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 29-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K OJHA
• Keywords: Document seized; Reasonable cause; Documents seized
• Section: 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NOS. 1702 TO 1708/PN/2011 (ASSESSMENT YEARS : 2001-02 TO 2007-08) SHRI GIRISH CHANDANMAL SHRIMAN 1752, SHUKRAWAR PETH PUNE 411 002 PAN : ADXPS3982K . APPELLANT VS. INCOME TAX OFFICER CENTRAL II PUNE. . RESPONDENT APPELLANT BY : MR. NIKHIL PATHAK RESPONDENT BY : MR. K. K. OJHA DATE OF HEARING : 08-04-2013 DATE OF PRONOUNCEMENT : 29-04-2013 ORDER PER SHAILENDRA KUMAR YADAV, JM ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE FOR ASSESSMENT YEARS 2001-02 TO 2007-08 ON SIMILAR POIN T I.E. PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). SO THEY ARE BEING DISPOSED OF F BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 1702/PN/2011 FOR A.Y. 2001-02 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS WITHOUT PREJU DICE TO EACH OTHER :- 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY IN RESPECT OF THE ADDITION MADE U/S 68 ON ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 ACCOUNT OF THE LOAN TAKEN OF RS. 2 LAKHS BY THE APP ELLANT FROM DAWLAL K. OSWAL. 1.1] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ADDITION ITSELF WAS NOT WARRANTED AND HENCE, THE LE VY OF PENALTY IN RESPECT OF THE SAID AMOUNT OF RS. 2 LAKH S WAS ALSO NOT JUSTIFIED. 2] THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY IN RESPECT OF DISALLOWANCE OF INTEREST OF RS. 2,59,050/-. 2.1] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE PAYMENT OF INTEREST TO THE CREDITORS/LENDERS WERE N OTED IN THE SEIZED DIARIES AND THEREFORE, THE CLAIM OF DEDUCTION OF THE INTEREST PAID WAS JUSTIFIED ON THE PART OF THE APPELLANT AND HENCE, THE ADDITION MADE ITSELF W AS NOT WARRANTED. 2.2] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT THE CLAIM MADE BY THE ASSESSEE WAS A DEBATABLE ONE AND SINCE TWO OPINIONS WERE POSSIBLE, NO PENALTY WA S LEVIABLE IN RESPECT OF THE DISALLOWANCE OF INTEREST . 3. IN THIS YEAR (A.Y. 2001-02), THE ORIGINAL ASSESS MENT WAS COMPLETED UNDER SECTION 153A WHEREIN THE INCOME OF ASSESSEE WAS DETERMINED AT RS. 15,13,020/-. THE ASS ESSING OFFICER MADE AN ADDITION OF RS. 11,65,000/- WHICH W AS NOT APPEALED AGAINST. SUBSEQUENTLY, THE ASSESSING OFFIC ER LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE CIT(A) PARTLY SUSTAINED THE SAME BY OBSERVING AS UNDER :- 8. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. THE A.O. HAS ADDED OF ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 RS. 11,65,000/- ON THE GROUND THAT THE APPELLANT CO ULD NOT PROVE THE GENUINENESS OF THE LOANS. THE APPELLA NT'S STAND IN RESPECT OF THESE LOANS BEFORE THE AO WAS T HAT THESE LOANS WERE TAKEN IN THE PERIOD PRIOR TO THE P ERIOD RELEVANT FOR A.Y.2001-02. THE APPELLANT TOOK THIS S TAND BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS AS WELL AS IN THE PENALTY PROCEEDINGS. HE FURTHER STATED THAT THE FACT RELATING TO RECEIPT OF THESE LOANS IN THE PERIOD PR IOR TO THE PREVIOUS YEAR RELEVANT FOR A.Y.2001-02 CAN BE VERIFIED FROM THE CONTENTS OF THE SEIZED DOCUMENTS. THE AO H AS NOT GIVEN ANY SPECIFIC COMMENTS RELATING TO THE CON TENTS OF THE SEIZED DOCUMENTS WHICH CONTAIN THE DATE(S) ON W HICH THESE LOANS WERE RECEIVED BY THE APPELLANT. IT IS S EEN FROM THESE DOCUMENTS THAT THE FOLLOWING LOANS WERE TAKEN IN THE PERIOD PRIOR TO THE PREVIOUS YEAR RELEVANT FOR A.Y.2001-02. A.Y. UNSECURED LOANS DATE BUNDLE NO. PAGE NO. OPENING BALANCE (RS.) 2001-02 BHAGCHANDJI CHAJED 6.8.1998 8 143 3,90,000/- 2001 - 02 MAHENDRA S. SHAH 1.3.2000 10 55 4,00,000/ - 2001 - 02 UMARANI S. BARDIA 5.2.1997 10 56 1,75,000/ - 9,65,000/- UNDER THE CIRCUMSTANCES, THE ABOVE MENTIONED LOANS OF RS.9,65,000/- CANNOT REPRESENT APPELLANT'S UNDISCLOSED INCOME FOR A.Y.2001-02. THEREFORE, PENALTY U/S.271( 1)(C) OF I.T. ACT CANNOT BE LEVIED IN RESPECT OF THIS AMO UNT. 9. IN RESPECT OF OTHER LOANS, THE APPELLANT WAS REQ UIRED TO PROVE THEIR GENUINENESS. AFTER THIS SPECIFIC INQ UIRY, THE APPELLANT SURRENDERED THIS AMOUNT BEFORE THE AO. TH E APPELLANT HAS NOT GIVEN ANY DETAILS OF THE PERSON F ROM WHOM THE ALLEGED LOANS WERE TAKEN. THUS, HE DID NOT DISCHARGE HIS ONUS IN RESPECT OF THESE LOANS. UNDER THE CIRCUMSTANCES, PENALTY IS LEVIABLE IN RESPECT OF OT HER LOANS. 9.1 THE APPELLANT HAS RELIED ON CERTAIN CASE LAWS INCLUDING THE DECISION OF ITAT CHENNAI IN THE CASE OF SHRI ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 T.S. KUMARASAMY (65 ITD 188) AND DECISION OF DELHI ITAT IN THE CASE OF BALDEV KRISHAN KAPOOR [68 ITD 37 (TM )]. THE APPELLANT'S STAND IS THAT THESE CASE LAWS TREAT LOANS AS GENUINE ON THE BASIS OF PRESUMPTION U/S.132(4A) OF I.T. ACT. HOWEVER, THE RATIO OF DECISION GIVEN IN T HESE JUDGMENTS ARE DIFFERENT E.G. IN THE CASE OF SHRI T.S.KUMARASAMY, HON'BLE ITAT TREATED THE LOANS AS GENUINE BECAUSE SUFFICIENT OPPORTUNITY TO THE ASSESSEE WAS NOT GIVEN TO PROVE THEIR GENUINENESS. IN THIS C ASE, THE AO, ON THE LAST DAY, SENT INSPECTORS FOR MAKING INQUIRIES TO ASCERTAIN GENUINENESS OF THE LOANS. ON THESE FACTS, HON'BLE ITAT HELD THAT LOANS WERE TO BE TREATED AS GENUINE AS THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE. UNDER THE CIRCUMSTANCES, RELIANCE OF THE APPELLANT ON THESE CASE LAWS IS MISPLACED. SIMILARL Y, THE APPELLANT HAS RELIED ON THE JUDGMENT OF HON'BLE SUP REME COURT IN THE CASE OF VEGETABLE PRODUCTS (88 ITR 192) AND ON THE DECISION OF PUNE ITAT IN THE CASE OF KANBAY SOFTWARE (INDIA) PVT.LTD. (122 TTJ 721). IN THE CAS E OF VEGETABLE PRODUCTS (88 ITR 192), HON'BLE SUPREME CO URT HAS HELD THAT NO PENALTY CAN BE LEVIED IN RESPECT O F A DEBATABLE ISSUE. AFTER, ACCEPTANCE OF THE LOANS AS HIS UNDISCLOSED INCOME, THE ISSUE DOES NOT REMAIN DEBAT ABLE. IN THE CASE OF KANBAY SOFTWARE (INDIA) PVT.LTD. (12 2 TTJ 721), HON'BLE ITAT PUNE HELD THAT NO PENALTY CAN BE IMPOSED WHERE THE ASSESSEE HAS MADE A LEGAL CLAIM. ADMITTEDLY, THERE IS NO LEGAL CLAIM MADE BY THE APP ELLANT IN RESPECT OF WHICH PENALTY HAS BEEN IMPOSED. THE APPELLANT HAS SIMILARLY RELIED ON CERTAIN CASE-LAWS NARRATED BY HIM IN PARA 10 OF HIS SUBMISSION. THESE CASE-LAWS ARE APPLICABLE IN THE CASES OF DEBATABLE ISSUES. AS DISCUSSED ABOVE, THE ISSUE IS NOT DEBATA BLE. SIMILARLY, FACTS OF OTHER CASE-LAWS MENTIONED BY TH E APPELLANT ARE ALSO NOT APPLICABLE. ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 10. IN RESPECT OF LEVY OF PENALTY ON THE DISALLOWAN CE OF INTEREST, IT HAS BEEN SUBMITTED BY THE APPELLANT TH AT THE DIARIES SEIZED INDICATE PAYMENTS OF INTEREST ON LOA N. THEREFORE, ON THE BASIS OF CONTENTS OF THESE DIARIE S, EXPENDITURE IN RESPECT OF INTEREST SHOULD HAVE BEEN ALLOWED AND PENALTY SHOULD HAVE NOT BEEN IMPOSED. T HIS CONTENTION OF THE APPELLANT IN RESPECT OF INTEREST IS NOT JUSTIFIED. IT IS TRUE THAT THERE ARE CERTAIN ENTRIE S IN RESPECT OF CALCULATION OF INTEREST ON SOME OF THE LOANS TAK EN BY THE APPELLANT FOR SOME PERIOD. HOWEVER, THE FACT RE MAINS THAT THE APPELLANT COULD NOT PROVE THAT THE AMOUNT OF INTEREST CLAIMED BY HIM IN HIS RETURN OF INCOME WAS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF EARNING THE CORRESPONDING INTEREST. UNDER THE CIRCUMSTANCES, THE AO WAS RIGHT IN IMPOSING PENALTY ON THIS AMOUNT U/S.271(1)(C) OF THE IT. ACT. 11. IN VIEW OF THE DISCUSSION IN THE PRECEDING PARAGRAPHS, THE AO IS DIRECTED NOT TO IMPOSE PENALTY U/S.271(1)(C) OF I.T. ACT ON THE AMOUNT OF LOAN OF RS.9,65,000/-. THEREFORE, THE APPEAL IS PARTLY ALLO WED. 4. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF ASS ESSEE BY WAY OF VARIOUS CONTENTIONS AND SUBMITTED THAT PE NALTY IN QUESTION BE DELETED. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARING FOR THE REVEN UE SUBMITTED THAT THE CIT(A) WAS JUSTIFIED IN CONFIRMI NG THE LEVY OF PENALTY IN RESPECT OF ADDITION SUSTAINED UN DER SECTION 68 ON ACCOUNT OF THE LOAN TAKEN OF RS. 2 LA KHS BY ASSESSEE FROM DAWLAL K. OSWAL. AND CIT(A) WAS ALSO JUSTIFIED IN CONFIRMING THE LEVY OF PENALTY IN RESPECT OF DIS ALLOWANCE OF INTEREST OF RS. 2,59,050/-. ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 5. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND PE RUSING THE MATERIAL ON RECORD, WE FIND THAT IN THIS CASE, THERE WAS A SEARCH IN ASSESSEES CASE ON 14.02.2007. ASSESSEE F ILED THE RETURNS UNDER SECTION 153A AFTER SEARCH. ASSESSING OFFICER COMPLETED THE ASSESSMENT MAKING CERTAIN ADDITIONS F OR ALL THE YEARS INCLUDING A.Y. 2001-02 AND SAID ADDITIONS WERE ACCEPTED BY ASSESSEE AND NO APPEAL WAS FILED. THE 1 ST SET OF ADDITIONS WERE MADE ON ACCOUNT OF THE LOANS TAKEN B Y ASSESSEE WHICH WERE REFLECTED IN SEIZED DIARIES. IN THE COURSE OF SEARCH, CERTAIN DIARIES WERE SEIZED WHICH INDICA TED LOANS TAKEN, LOANS GIVEN BY ASSESSEE, THE INTEREST PAID A ND INTEREST RECEIVED. DURING THE QUANTUM ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY THE GENUINENESS OF LOANS TAKEN WHICH WERE RECORDED IN S EIZED DIARIES. ASSESSEE IN ORDER TO AVOID PROTECTED LITIG ATION AND TO BUY PEACE ACCEPTED THE ADDITION OF LOANS AND DID NO T FILE ANY APPEAL. THE INTEREST PAID ON LOANS TAKEN WAS ALSO D ISALLOWED BY ASSESSING OFFICER AND SAME WAS ALSO ADMITTED BY ASSESSEE. 6. THE ASSESSING OFFICER HAS LEVIED PENALTIES ON AC COUNT OF THE ADDITIONS MADE IN ALL THESE ASSESSMENT YEARS . FOR ALL THESE YEARS, ASSESSING OFFICER MADE ADDITION ON ACC OUNT OF LOANS TAKEN BY ASSESSEE AND INTEREST PAID THEREON. AGAINST PENALTY, ASSESSEE PREFERRED THE APPEAL BEFORE FIRST APPELLATE AUTHORITY. FOR ALL THE YEARS, THE CIT(A) CONFIRMED THE LEVY OF ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 PENALTIES ON ACCOUNT OF LOANS AND INTEREST THEREON. AS REGARDS, A.Y. 2001-02, PENALTY WAS LEVIED BY ASSESS ING OFFICER IN RESPECT OF ADDITION OF RS. 11,65,000/- M ADE UNDER SECTION 68. IN APPEAL, THE CIT(A) HELD THAT OUT OF RS. 11,65,000/-, AN AMOUNT OF RS. 9,65,000/- WAS PERTAINING TO THE LOANS TAKEN BY ASSESSEE IN THE EA RLIER YEARS. ACCORDINGLY, HE GAVE PART RELIEF WHEREBY HE DELETED PENALTY OF RS. 9,65,000/- AND SUSTAINED PENALTY ON BALANCE AMOUNT OF RS. 2,00,000/-. YEAR WISE DETAILS OF ADDI TIONS ON WHICH PENALTY HAS BEEN SUSTAINED BY CIT(A) FOR RELE VANT YEARS ON THIS ACCOUNT IS GIVEN AS UNDER :- ASST. YEAR ADDITION U/S 68 (RS.) DISALLOWANCE OF INTEREST (RS.) TOTAL (RS.) 2001-02 2,00,000/- 2,59,050/- 4,59,050/- 2002-03 3,00,000/- 1,58,300/- 4,58,300/- 2003-04 NIL 1,04,975/- 1,04,975/- 2004-05 4,00,000/- 1,32,400/- 5,32,400/- 2005-06 1,50,000/- 84,500/- 2,34,500/- 2006-07 2,00,000/- 1,20,125/- 3,20,125/- 2007-08 NIL 1,22,102/- 1,22,102/- 7. DURING SEARCH, SOME DIARIES WERE FOUND WHICH INDICATED THAT ASSESSEE HAS BEEN CARRYING OUT FINAN CING BUSINESS FROM 1993 TILL DATE OF SEARCH I.E. 14.02.2 007. THE ASSESSING OFFICER FOUND VARIOUS ENTRIES OF FUNDS TA KEN AND GIVEN BY ASSESSEE IN THESE DIARIES. THE ASSESSEE WA S SUFFERING FROM ALZHEIMER AT RELEVANT POINT OF TIME. ACCORDINGLY, HIS NERVOUS SYSTEM WAS NOT HEALTHY ENO UGH TO RESPOND TO THE QUERY RAISED ON BEHALF OF REVENUE WI TH ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 REGARDS TO RELEVANT ENTRIES IN SEIZED BOOK AT RELEV ANT POINT OF TIME. THUS ASSESSEE WAS NOT IN A POSITION TO ESTABL ISH GENUINENESS OF THE LOAN TAKEN BY HIM. THIS FACT WAS BROUGHT TO THE KNOWLEDGE OF ASSESSING OFFICER AND THE CIT(A ) AT RELEVANT POINT OF TIME DURING PENALTY PROCEEDINGS. WITH REGARDS TO ASSESSEE BEING ENGAGED IN FINANCING BUSI NESS, THE SEIZED DIARY ITSELF INDICATED INTEREST PAYMENT BY A SSESSEE TO VARIOUS PARTIES. AS SAMPLE PAGES OF SEIZED DIARIES HAVE BEEN ENCLOSED BY ASSESSEE ON PAGES 33 TO 40 OF PAPER BOO K CLAIMED TO BE CERTIFIED THAT SAME WERE BEFORE THE A UTHORITIES BELOW. IT IS EVIDENT FROM SEIZED RECORDS THAT ASSES SEE HAS TAKEN LOAN AND HAD PAID INTEREST ON SAID LOAN. IN C ASE ANY DOCUMENT RELIED IS PRESUMED TO BE TRUE AND CORRECT, SUCH PRESUMPTION APPLIES TO ENTIRE ENTRIES ON SAID DOCUM ENT AND NOT TO A FEW NOTINGS THEREOF. THE DIARY REFLECTS TH E RECEIPT OF LOAN FROM CERTAIN PERSONS ON INTEREST. HE HAS ALSO ADVANCED LOAN TO CERTAIN PERSONS ON INTEREST. IN THIS CASE, THE ASSESSING OFFICER HAS MADE ADDITIONS ON ACCOUNT OF INTEREST FROM FINANCING BUSINESS BASED ON DIARY ALONE. THE A SSESSING OFFICER HAS PRESUMED THAT NOTINGS PERTAINING TO INT EREST RECEIPTS ARE TRUE AND CORRECT. THEN THERE IS NO RE ASON TO DISBELIEVE THAT ENTRIES REGARDING LOAN AND PAYMENT OF INTEREST THEREON BE TAKEN AS BOGUS. IN CASE CERTAIN ENTRIES ON DIARIES ARE PRESUMED TO BE GENUINE AND CORRECT T HEN ALL ENTRIES IN THE SAID DIARIES SHOULD BE PRESUMED TO B E GENUINE AND CORRECT. DOCUMENT SHOULD BE READ AS WHOLE. THE ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 REVENUE COULD NOT TAKE THE STAND THAT ENTRIES RELAT ING TO LOAN GIVEN ARE CORRECT BUT EXPECT THE ASSESSEE TO E STABLISH THE GENUINENESS OF LOAN TAKEN, IS NOT JUSTIFIED. TH E ENTIRE DOCUMENT IS PRESUMED TO BE TRUE, GENUINE AND CORREC T AND NOT ONLY A FEW ENTRIES THEREOF. ACCORDINGLY, THE EN TIRE ENTRIES IN THE DIARIES SHOULD BE PRESUMED TO BE TRUE, GENUI NE AND CORRECT. 8. ASSESSING OFFICER HAS STATED THAT ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE LOANS TAKEN BUT HE HAS NOT APPRECIATED THE FACT THAT DIARY INDICATED LOAN TAKE N AND LOAN GIVEN BY ASSESSEE HENCE AS PER PRESUMPTION UNDER SE CTION 132(4A), THE LOANS TAKEN ARE PRESUMED TO BE GENUINE . ITAT, CHENNAI BENCH IN THE CASE OF T.S. KUMARASAMY [65 IT D 188] WHEREIN SIMILAR FACTS WERE INVOLVED I.E. SOME BOOKS OF ACCOUNT FOUND INDICATING LOAN TAKEN BY ASSESSEE. TH ESE BOOKS WERE SEIZED IN COURSE OF SEARCH. THE ASSESSIN G OFFICER MADE SOME ENQUIRIES IN RESPECT OF FEW CREDITORS AND HELD THAT LOAN ENTRIES ARE BOGUS. THUS, ASSESSING OFFICE R MADE AN ADDITION UNDER SECTION 68. IN SECOND APPEAL, ITAT HELD THAT SINCE BOOKS WERE SEIZED IN COURSE OF SEARCH, THE SA ME SHOULD BE CONSIDERED AS TRUE AND GENUINE. ACCORDIN GLY, IT WAS HELD THAT THERE WAS NO REASON TO TREAT THE LOAN S TAKEN AS BOGUS. FOLLOWING THE REASONING AS LAID DOWN BY I TAT, CHENNAI IN T.S. KUMARASAMY (SUPRA), WE ARE OF THE CONSIDERED OPINION THAT LEVY OF PENALTY IS NOT JUST IFIED ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 INSPITE OF FACT THAT QUANTUM ADDITION ACHIEVED FINA LITY IN ABSENCE OF NO APPEAL DUE TO AILMENT OF ASSESSEE AT RELEVANT POINT OF TIME AS DISCUSSED ABOVE. 9. WITHOUT PREJUDICE, PENALTY PROCEEDINGS ARE INDEPENDENT OF ASSESSMENT PROCEEDINGS AND ASSESSEE CAN AGITATE ADDITION IN THE PENALTY PROCEEDINGS IN HIS OWN DIMENSIONS. THE ASSESSEE IS ENTITLED TO MAKE OUT IT S CASE OF CANCELLATION IN PENALTY IN ITS OWN DIMENSIONS. SIMP LY BECAUSE ADDITION HAS BEEN MADE AND ADMITTED FOR SOM E REASONS THERE IS NO JUSTIFICATION TO LEVY THE PENAL TY AUTOMATICALLY. IN THE FOLLOWING CASES IT HAS BEEN H ELD THAT IN CASE ADDITION MADE NOT WARRANTED AND ASSESSEE HAS ACCEPTED THE ADDITION, STILL NO PENALTY COULD BE LE VIED AUTOMATICALLY:- (A) JAINARAYAN BABULAL VS. CIT [170 ITR 399 (BOM)] (B) DILIP YASHWANT OAK [138 TTJ 559 (PUNE)] 10. WE ARE OF THE VIEW THAT PENALTY PROCEEDINGS ARE INDEPENDENT OF QUANTUM PROCEEDINGS. ASSESSEE CAN DI SPUTE MERIT OF ADDITIONS IN PENALTY PROCEEDINGS WITH COGE NT REASONING. HE IS AT LIBERTY TO EXPLAIN THE REASON WHICH PREVENT HIM TO AGITATE QUANTUM ADDITION ON MERIT AT RELEVANT POINT OF TIME. IN CASE ASSESSEE IS ABLE T O MAKE OUT CASE THAT HE WAS PREVENTED BY REASONABLE CAUSE TO A GITATE QUANTUM ADDITION AT RELEVANT POINT OF TIME, HE IS A T LIBERTY TO ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 AGITATE THE SAME IN PENALTY PROCEEDINGS AS WELL. WE ARE AWARE THAT ASSESSEE WILL NOT BE BENEFITED IN ANY MA NNER AS FAR AS QUANTUM IS CONCERNED AS SAME HAS ACHIEVED FI NALITY. WE FIND THAT ITAT B BENCH, PUNE IN THE CASE OF TH AKKAR DEVELOPERS LTD. (SUPRA) IN ITA NO. 488/PN/2006 HAD OCCASION TO DEAL SIMILAR SITUATION, WHERE IT WAS HE LD AS UNDER :- 8. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ADDITION HAS BEEN MADE WITH REGARDS TO DISALLOWANCE OF PAYMENT CLAIMED BY THE ASSESSEE TO JFT FOR A.Y. 199 9- 2000 TO 2002-03. AS DISCUSSED EARLIER, PENALTY HAS BEEN LEVIED ONLY FOR A.Y. 2001-02 WHICH IS NOT JUSTIFIED AS OBSERVED BY US IN THE PRECEDING PARAGRAPHS. ON MERI TS, WE FIND THAT THE ASSESSEE GAVE CERTAIN EXPLANATION WITH REGARDS TO GENUINENESS OF THE PAYMENT WHICH WAS REJECTED. THERE IS NOTHING ON RECORD TO SUGGEST THA T THE PAYMENT WAS MADE TO JFT TO AVOID TAX BECAUSE JFT IS INDEPENDENT ENTITY AND LIABLE TO TAX IN ITS OWN CAP ACITY. THE DEDUCTION OF PAYMENT TO JFT CLAIMED BY THE ASSESSEE IN A.Y. 1999-2000 TO 2002-03 WAS MUCH PRIO R TO A.Y. 1999-2000 AFTER MAKING AN AGREEMENT WITH JF T. AFTER THAT AN APPLICATION TO TEHSILDAR NASIK WAS MA DE, WHICH IS PLACED AT PAGE 87 OF THE PAPER BOOK FOR REGISTERING ITS NAME IN THE RECORDS OF RIGHTS. AT T HE SAME TIME, THE ASSESSEE HAD NOT EVEN ENTERED INTO ANY AGREEMENT WITH THE SOCIETY. THE TEHSILDAR IN A WAY ACKNOWLEDGED THE EXISTENCE OF THE AGREEMENT OF JFT WITH SOCIETY. APART FROM THIS WE FIND THAT THE ASSE SSEE PAID CONSIDERATION AT THE RATE OF RS. 350/- PER SQ. MTR. WHICH IS EVIDENT FROM THE ENTRIES IN READY RECKONER PLACED AT PAGE 166 OF THE PAPER BOOK. THUS THE CONSIDERATION PAID TO THE SOCIETY WOULD NOT BE SO S MALL ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 THAN THE MARKET VALUE AND IT WAS ONLY POSSIBLE BECA USE THE ASSESSEE HAD TO PAY ADDITIONAL AMOUNT TO JFT. THERE WAS NO TAX AVOIDANCE MOTIVE OF ASSESSEE AT TH E RELEVANT POINT OF TIME I.E. IN THE YEAR 1993. WE AR E CONSCIOUS THAT IN THE QUANTUM PROCEEDINGS, THE AGREEMENT ENTERED BY JFT WITH THE SOCIETY HAS NOT B EEN FOUND TO BE AUTHENTIC OR RELIABLE, AND IT HAS RESUL TED IN A DISALLOWANCE. HOWEVER, IN THE PENALTY PROCEEDINGS, WE HAVE NOTICED THE AFORESAID ASPECTS ONLY TO EVALUATE WHETHER ANY OF THE ATTRIBUTES REQUIRED U/S. 271(1)( C) OF THE ACT HAVE BEEN MET OR NOT ? IT IS WELL SETTLED T HAT ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND THE FINDINGS IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE FOR THE PURPOSES OF THE PENALTY PROCEEDINGS, THOUGHT THEY M AY CONSTITUTE A RELEVANT PIECE OF EVIDENCE. ALTHOUGH T HE AGREEMENT HAS BEEN DISREGARDED IN THE QUANTUM PROCEEDINGS BUT, IN OUR VIEW, NO DELIBERATENESS STA NDS PROVED SO AS TO JUSTIFY IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT. AS WE HAVE MENTIONED ABO VE, THE PENALTY PROCEEDINGS ARE INDEPENDENT OF QUANTUM PROCEEDINGS, PENALTY CANNOT BE LEVIED AUTOMATICALLY IN CASE THE ASSESSEE IS ABLE TO MAKE OUT ITS CASE OF CANCELLATION OF PENALTY IN PENALTY PROCEEDINGS. UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY IS NOT JUSTIFIED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE IN TH IS REGARD. THUS, TRIBUNAL HAS TAKEN VIEW IN FAVOUR OF THE ASSESSEE IN PENALTY PROCEEDINGS. WE ALSO FIND THAT IN THE CASE OF JAINARAYAN BABULAL VS. CIT [170 ITR 399 (BO M.)], HONBLE JURISDICTIONAL HIGH COURT HELD THAT SINCE T HE CASH ITA NOS. 1702 TO 1708/PN/2011 SHRI GIRISH CHANDANMAL SHRIMAN A.YS. 2001-02 TO 2007-08 CREDIT WAS OBTAINED IN EARLIER YEAR, PENALTY COULD NOT BE LEVIED SINCE ADDITION WAS NOT JUSTIFIED IN A.Y. 195 0-51. IT SHOWS THAT ADDITIONS CAN BE DISPUTED IN PENALTY PRO CEEDING TO CONTEXT PENALTY WITHOUT PREJUDICE TO FINALITY OF QUANTUM ADDITION IN QUESTION. IN VIEW OF ABOVE DISCUSSIONS PENALTIES IN QUESTION ARE DIRECTED TO BE DELETED. AS A RESULT , APPEALS FILED BY ASSESSEE ARE ALLOWED. SIMILAR ISSUE AROSE IN OTHER YEARS. SO FOLLOWING SAME OTHER APPEALS ARE ALSO ALL OWED. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2013. SD/- SD/- (R. K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH APRIL, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-CENTRAL, PUNE; 4) THE CIT, CENTRAL, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE