Shri Chirag Harmanbhai Patel, Anand V. The Dy.CIT.,Cent.Circle-1, Baroda

ITA 1755/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0937 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Loose papers; Document seized; Documents seized
• Section: 40A(3); 143(3); 37(1); 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, & SHRI MANISH BORA D, AM. ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR: 2009-10 CHIRAG HARMANBHAI PATEL, 101, MARUT SHARNAM, OPP. NANDBHUMI, VALLABH VIDYANAGAR ROAD, ANAND. VS. DCIT, CC-1, BARODA. APPELLANT RESPONDENT PAN ADUPP4390F APPELLANT BY SHRI MUKUND BAKSHI, AR RESPONDENT BY SHRI SANJAY KUMAR, DR DATE OF HEARING: 8/8/2016 DATE OF PRONOUNCEMENT: 10/8/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE TWO APPEALS BY THE ASSESSEE FOR ASST. YEAR 2 009-10 ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A) IV, AHMEDABAD DATED 1 ST MAY 2012. ITA NO.1755/AHD/2012 HITHERTO PASSED U/S 271AAA R.W.S. 274 OF THE IT ACT, 1961 (IN SHORT THE ACT) AND ITA NO.1756/AHD/2012 PASSED U/S 271(1)(C) R.W.S. 274 OF THE ACT RESPECTIVELY. SINCE BOTH THE APPEALS PERTAIN TO THE SAME ASSESSEE AND THE ISSUE ARE INTER-RELATED, THESE WERE HEARD T OGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 2 2. BRIEFLY STATED FACTS OF THE CASES ARE THAT ASSES SEE IS AN INDIVIDUAL. SEARCH U/S 132 OF THE ACT WAS CONDUCTED IN CHIRAG GROUP ON 19.1.2009. RETURN OF INCOME WAS FILED ON 31.8.20 09 AT AN INCOME OF RS.2,93,22,720/-. ASSESSMENT U/S 143(3) OF THE A CT WAS FRAMED ON 10/5/2010 AT AN ASSESSED INCOME OF RS.3,56,24,604/- AFTER MAKING CERTAIN ADDITIONS OF RS.63,01,884/-. AGAINST THE QU ANTUM ADDITION OF RS.63,01,884/- ASSESSEE DID NOT PREFER APPEAL BEFOR E LD. CIT(A). PENALTY PROCEEDINGS WERE INITIATED U/S 271AAA & 271 (1)(C) OF THE ACT. 3. AGAINST IMPOSITION OF PENALTY U/S 271AAA & 271( 10(C) OF THE ACT ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 4. FIRST WE TAKE UP ITA NO.1755/AHD/2012 RAISING GR OUNDS AGAINST THE ORDER OF LD. CIT(A) SUSTAINING PENALTY U/S 271A AA OF THE ACT AT RS.72,078/-, WHICH READS AS UNDER :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-IV, AHMEDABAD HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE PENALTY LEVIED U/S. 271AAA INITIA TED AND LEVIED BY THE LD. A.O. WITHOUT SPECIFYING THE CHARGE LEADING TO THE LEVY OF PENALT Y. THE LD. CIT(A)-IV, AHMEDABAD OUGHT TO HAVE CANCELLED THE PENALTY SO LEVIED. 2. THE LD. CIT(A)-IV, AHMEDABAD HAS ERRED IN LAW AN D IN FACTS IN CONFIRMING THE PENALTY U/S. 271AAA TO THE EXTENT OF RS. 72,078/- IN RESPECT OF THE ADDITIONS OF AN AMOUNT OF RS.7,20,288/- MADE IN THE ASSESSMENT REPRESENTING UNDISCLOSED ADV ANCES / EXPENDITURE. THE PENALTY LEVIED IS PRAYED TO BE CANCELLED. 3. THE APPELLANT CRAVES LIBERTY TO LEAVE, TO ADD, A MEND OR WITHDRAW OR GROUNDS OF APPEAL CONTAINED HERE-IN-ABOVE. 5. AT THE OUTSET LD. AR DID NOT PRESS THE GROUNDS O F THIS APPEAL AND HENCE THESE GROUNDS ARE DISMISSED AS NOT PRESSE D. ACCORDINGLY THIS APPEAL IS DISMISSED. ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 3 6. NOW WE TAKE ITA NO.1756/AHD/2012 WHEREIN FOLLOWI NG GROUNDS HAVE BEEN RAISED :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-LV, AHMEDABAD HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE PENALTY LEVIED U/S. 271(L)( C) INITIATED AND LEVIED BY THE LD. A.O. WITHOUT SPECIFYING THE CHARGE LEADING TO THE LEVY O F PENALTY. THE LD. CIT(A)-IV, AHMEDABAD OUGHT TO HAVE CANCELLED THE PENALTY LEVIE D IN AN AMOUNT OF RS. 8,50,000/-. 2. THE LD. CIT{A)-IV, AHMEDABAD HAS ERRED IN LAW AN D IN FACTS IN CONFIRMING THE PENALTY U/ S. 271{L)(C) IN RESPECT OF THE AMOUNT OF RS. 28,03, 449/- REPRESENTING THE AMOUNT OF CASH CREDIT HELD AS UNEXPLAINED DISREGARDING THE FACT TH AT IN THE ASSESSMENT AN AMOUNT OF RS.27,58,493/- IS DISALLOWED BEING 25% OF THE EXPEN SES CLAIMED AND HOLDING THE SAME AS UNVERIFIABLE. THE AMOUNT OF RS. 27,58,493/- OUGH T TO HAVE BEEN HELD AS AVAILABLE FOR TELESCOPING OF THE ADDITION MADE U/S. 68 AND THE PE NALTY IN RESPECT OF THE ADDITION OF RS.28,03,449/- WAS REQUIRED TO BE RESTRICTED TO THE DIFFERENCE OF RS. 44,956/-. THE APPELLANT PRAYS FOR SEEKING APPROPRIATE DIRECTIONS GRANTING RELIEF / REDUCTION OF THE PENALTY. 3. THE LD. CIT{A)-IV, AHMEDABAD HAS ERRED IN LAW AN D IN FACTS IN CONFIRMING THE PENALTY OF RS.8,50,000/- IN COMPLETE DISREGARD OF THE FACTS AN D LAW AND THAT THE PENALTY OF RS. 8,50,000/- MAY PLEASE BE DELETED. 4. THE APPELLANT CRAVES LIBERTY TO LEAVE, TO ADD, A MEND OR WITHDRAW OR SUBSTITUTE ANY OF THE GROUNDS OF APPEAL CONTAINED HERE-IN-ABOVE. 7. LD. ASSESSING OFFICER IMPOSED PENALTY OF RS.8,50 ,000/- U/S 271(1)(C) OF THE ACT TOWARDS ADDITION ON ACCOUNT UN EXPLAINED CASH CREDIT OF RS.28,03,493/-. ON APPEAL LD. CIT(A) CONF IRMED THE PENALTY. 8. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US. 9. LD. AR OF THE ASSESSEE SUBMITTED THAT REQUEST FO R TELESCOPING EFFECT WAS MADE BEFORE BOTH THE LOWER AUTHORITIES B UT THE SAME WAS NOT GRANTED, BECAUSE SPECIFIC DETAILS OF APPLICATIO N OF UNDISCLOSED INCOME OF RS.2,92,12,742/- WAS GIVEN ALONG WITH THE NAMES OF CASH CREDITS. LD. AR FURTHER SUBMITTED THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT DISALL OWANCE OUT OF ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 4 CASH EXPENSES FOR WANT OF VERIFICATION AT RS.20,90, 877/- AND AD HOC DISALLOWANCE OF 6,67,616/- IN TOTAL RS.27,58,493/- WAS MADE WHICH WAS SUBJECTED TO PENALTY U/S 271AAA OF THE ACT. LD. CIT(A) IN HIS ORDER DATED 1 ST MAY, 2012 HAS DELETED THE PENALTY U/S 271AAA ON TH IS IMPUGNED DISALLOWANCE OF RS.27,58,493/-. IT IS PERT INENT TO MENTION THAT ASSESSEE HAS NOT CHALLENGED AGAINST THE DISALL OWANCE OF RS.27,58,493/- AND, THEREFORE, THE BENEFIT OF TELES COPING EFFECT OUGHT TO BE GIVEN OF THE UNEXPLAINED CASH CREDIT OF RS. 2 8,23,099/- (RS.19650 + RS.28,03,449/-) AGAINST THE CONFIRMED A DDITION OF RS.27,58,493/-. 10. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE SUBSTANTIAL GROUND RAISED IN TH IS APPEAL IS AGAINST THE PENALTY CONFIRMED BY LD. CIT(A) U/S 271(1)(C) O F THE ACT AT RS.8,50,000/- ON THE UNEXPLAINED CASH CREDIT OF RS. 28,28,099/-. WE OBSERVE THAT QUANTUM ADDITION OF RS.28,28,099/- HAS NOT BEEN CHALLENGED BEFORE LD. CIT(A). THE ONLY LINE OF ARGU MENT MADE BY THE LD. AR IS THAT PURSUANT TO SEARCH OPERATION CARRIED OUT IN THE CASE OF ASSESSEE ON 19.1.2009 AN INCOME OF RS.2,93,22,720/- WAS DISCLOSED IN THE RETURN OF INCOME. DURING THE COURSE OF SEARC H PROCEEDINGS ASSESSEE MADE DISCLOSURE OF UNACCOUNTED INCOME OF R S.3.12 CRORES WHICH WAS SPREAD IN FOUR ASSESSMENT YEARS FROM ASST . YEAR 2006-07 TO ASST. YEAR 2009-10 AND INCLUDED UNDISCLOSED INCO ME/RECEIPTS AT RS.2,71,96,890/-. FURTHER LD. ASSESSING OFFICER MAD E ADDITION OF ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 5 RS.63,01,888/- OVER AND ABOVE THE RETURNED INCOME O F RS.2,93,72,301/- WHICH APART FROM OTHER ADDITION AL SO INCLUDED DISALLOWANCE OUT OF CASH EXPENSES OF RS.27,58,493/- AND ADDITION U/S 68 FOR UNEXPLAINED CASH CREDIT OF RS.28,23,099/-. 12. FURTHER WE FIND THAT PENALTY PROCEEDINGS INITI ATED U/S 271AAA OF THE ACT ON THE EXPENSES DISALLOWED OF RS.27,58,4 93/- HAS BEEN DROPPED BY LD. CIT(A) BY OBSERVING AS UNDER :- 8. SO FAR AS PENALTY LEVIED IN RESPECT OF DISALLOWANCE OF EXPENSES OF RS.20,90,877/- AND RS.6,76,616/- IS CONCERNED, IT I S TO BE ASCERTAINED AS TO WHETHER SUCH DISALLOWANCE OF EXPENSES WHICH ARE NOTED IN TH E SEIZED DOCUMENTS WILL BE COVERED WITHIN THE DOMAIN OF 'UNDISCLOSED INCOME'. ONLY IF SUCH DISALLOWANCE RESULTING INTO ADDITIONS ARE COVERED UNDER THE AMBIT OF 'UNDISCLOS ED INCOME', THE SAME CAN BE SUBJECTED TO PENALTY U/S 271AAA OF THE ACT. IT IS A N UNDISPUTED FACT THAT ENTIRE GROSS RECEIPTS BASED ON THE SEIZED PAPERS HAVE ACCEPTED BY THE ASSESSEE AND DISCLOSED. AGAINST SUCH GROSS RECEIPTS DEDUCTION HAS BEEN CL AIMED IN RESPECT OF THE EXPENSES AS NOTED IN THE SEIZED DOCUMENTS. THE GROSS RECEIPTS O F RS.3,55,60,400/- IS UNACCOUNTED RECEIPTS OF THE ASSESSEE. OUT OF WHICH THE EXPENSES / PAYMENTS AS RECORDED IN THE LOOSE PAPERS / DOCUMENTS AMOUNTING TO RS.83,63,510/- HAVE BEEN CLAIMED AS DEDUCTION AND NET AMOUNT OF UNDISCLOSED INCOME OF RS.2,71,96,890/ - HAS BEEN DISCLOSED IN THE RETURN OF INCOME FILED FOR THE PRESENT ASSESSMENT YEAR. SIMILARLY IN THE ASSESSMENT ORDER, OUT OF THE TOTAL UNACCOUNTED RECEIPTS OF RS .28,47,130/-, THERE ARE PAYMENTS OF EXPENDITURE OF RS.26.70,464/- WHICH ARE RECORDED IN THE SEIZED DOCUMENTS. THE NET AMOUNT OF RS. 1,76,666/- HAS BEEN ADDED AS UNDISCLO SED INCOME OF THE ASSESSEE WHICH HAS BEEN ACCEPTED BY THE ASSESSEE AND IS NOT FURTHE R DISPUTED. THE DISALLOWANCE OF EXPENSES @ 25% IS MADE BY THE AO ON ACCOUNT OF THE FACT THAT SUCH EXPENSES ARE COMPLETELY NOT VERIFIABLE FOLLOWING THE DECISION OF JURISDICTIONS! TRIBUNAL IN THE CASE OF N. K. PROTEINS LTD. VS. DCIT 83 TTJ 904. FIRST OF ALL, I AGREE WITH THE APPELLANT THAT THE FACTS OF THE PRESENT CASE ARE DIFFERENT FROM THE CASE OF N. K. PROTEINS LTD. IN THE SENSE THAT IN THE ABOVE CASE OF N. K. PROTEINS LTD., THE ISSUE IN VOLVED WAS RELATING TO BOGUS / INFLATED PURCHASES WHICH IS NOT IDENTICAL TO THE FACTS OF TH E PRESENT CASE. THEREFORE, THE .DECISION GIVEN IN THE CASE OF N. K. PROTEINS LTD. DOES NOT A PPLY TO THE FACTS OF THE PRESENT CASE. I FURTHER AGREE WITH THE APPELLANT THAT THE SEIZED MA TERIAL HAS TO BE ACCEPTED AS A WHOLE AND PART OF THE SAME CANNOT BE TREATED AS NON-GENUI NE. THE PROVISIONS OF SECTION 292C ALSO CONFIRM THIS LEGAL PRESUMPTION. IN THIS REGARD , IT WOULD BE RELEVANT TO QUOTE THE DECISION OF HON'BLE HIGH COURT IN THE CASE OF NAVJI VAN OIL MILLS [2002] '1.24 TAXMAN 392 (GUJ.) WHEREIN IT HAS BEEN HELD THAT '13. IT IS SETTLED LEGAL POSITION THAT THE SEIZED M ATERIAL HAS TO BE READ AND ACCEPTED AS A WHOLE AND IT IS NOT PERMISSIBLE TO PICK AND CHOOSE OR MAKE FURTHER ESTIMATES THEREFROM UNLESS AND UNTIL THERE IS COGENT MATERIAL IN SUPPOR T OF UNDERTAKING SUCH AN EXERCISE.' ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 6 FURTHER IN A DECISION OF HON'BLE ITAT, MUMBAI IN TH E CASE OF BIREN V. SAVLA [2006] 155 TAXMAN 271 (MUM.) (MAG.), THE HON'BLE ITAT HAS GIVE N A FINDING AFTER ANALYZING VARIOUS COURT DECISIONS INCLUDING THE ABOVE DECISIO N OF GUJARAT HIGH COURT AS UNDER: '33. FROM ALL THESE DECISIONS, WE INFER THAT: (I)A DOCUMENT SEIZED IN THE SEARCH SHOULD BE READ A S A WHOLE. (II)NO PARTY CAN PICK AND CHOOSE ONE PART OF DOCUME NT FOR ITS ADVANTAGE. (III)LF ANY EXPLANATION RELATING TO A TRANSACTION I S FOUND IN THE SEIZED MATERIAL, THE SAME HAS TO BE CONSIDERED. THE ONUS WILL SHIFT ON TO TH E DEPARTMENT TO ADDUCE, FURTHER MATERIAL TO SUPPORT ITS CONTENTION THAT OSTENSIBLE AS APPEARING FROM THE DOCUMENT IS NOT REAL, (IV)THE INITIAL BURDEN LYING ON THE ASSESSEE TO EXP LAIN THE TRANSACTIONS (IN THIS CASE, OUTGOINGS) CAN BE DISCHARGED EITHER FROM THE STATEM ENT RECORDED UNDER SECTION 132(4) OR FROM OTHER DOCUMENTS FOUND AND SEIZED IN THE SEA RCH. ONCE ONUS SHIFTED FROM THE ASSESSEE, IT IS FOR THE DEPARTMENT TO PROVE BY ADDU CING ADDITIONAL MATERIAL THAT THE STATEMENT SO GIVEN WAS FALSE OR NOT TRUE OR THAT CO RROBORATIVE ENTRIES FROM OTHER DOCUMENTS ARE FALSE OR NOT RELIABLE.' 9. IN VIEW OF THE ABOVE, THE EXPENSES CLAIMED BY TH E APPELLANT AS RECORDED IN THE SEIZED PAPERS HAS TO BE ACCEPTED AS TRUE WHEN THE GROSS RE CEIPTS -HAS-BEEN-ACCEPTED AS-TRUE AND CORRECT. THE DISALLOWANCE MADE BY THE AO IS ON THE BASIS OF THE FACT THAT NATURE OF EXPENSES IS NOT COMPLETELY VERIFIABLE SINCE THE ENT IRE EXPENDITURE HAS BEEN INCURRED IN CASH, THE SAME WILL NOT BE SUPPORTED BY BILLS ETC. I AGREE WITH THE APPELLANT THAT THE GENUINENESS; OF SUCH EXPENSES AS RECORDED IN THE SE IZED DOCUMENTS CANNOT BE DOUBTED AND, THEREFORE, ADHOC DISALLOWANCE MADE ON THE, PAR T OF THE AO DOES NOT APPEAR TO BE JUSTIFIED. THE, DISALLOWANCE COULD HAVE BEEN MADE O NLY ON THE BASIS OF NON-ALLOWABILITY OF EACH SPECIFIC ITEMS OF EXPENDITURE EXCLUSIVELY F OR THE PURPOSE OF BUSINESS U/S 37(1) OF THE ACT LIKE PERSONAL EXPENSES, CAPITAL EXPENSES ET C. ALTERNATIVELY, THE AO COULD HAVE MADE THE DISALLOWANCE U/S 40A(3) OF THE ACT AFTER N ECESSARY VERIFICATION BY RELYING ON THE DECISION OF THE HON'BLE HIGH COURT OF GUJARAT I N THE CASE OF HYNOUP FOOD ST OILLNDUSTRIES-PRTTD. 12006] 150 TAXMAN 194 (GUJ) W HERE IT HAS BEEN HELD THAT SECTION 40A(3) IS APPLICABLE IN RESPECT OF PAYMENTS WHICH WERE MADE DURING THE COURSE OF BUSINESS OUTSIDE THE BOOKS OVERRULING THE DECISION GIVEN IN THE SAME CASE [1994] 48 ITD 202 (AMD) BY THE HON'BLE TRIBUNAL, AHMEDABAD. 10. IN VIEW OF THE ABOVE SINCE THE ADDITION MADE BY TH E AO ON ACCOUNT OF DISALLOWANCE OF EXPENSES IS NOT FOUND TO BE ON SOUND FOOTING AND, TH EREFORE, IT CANNOT BE SAID THAT IT REPRESENTS THE 'INCOME' REPRESENTED BY THE UNDISCLOSED TRANSACTIONS. !T DOES NOT MAKE ANY DIFFERENCE IF THE ADDITION SO MADE ON ACCOUNT OF DISA LLOWANCE OF EXPENSES HAS NOT BEEN DISPUTED BY THE APPELLANT. THEREFORE, IT IS HELD THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXPENSES OF RS.20,90,877/- AND RS. 6,67,616/- CANNOT BE SAID TO BE PART OF THE 'UNDISCLOSED INCOME' AS DEFINED U/S 271AAA OF THE A CT AND, THEREFORE, PENALTY LEVIED IN RESPECT OF SUCH DISALLOWANCE OF EXPENSES CANNOT BE HE LD TO BE JUSTIFIED. ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 7 13. WE FURTHER OBSERVE THAT QUANTUM ADDITION FOR DI SALLOWANCE OF EXPENSES OF RS.27,58,493/- HAS BEEN ACCEPTED BY THE ASSESSEE AND NO DISPUTE WAS CARRIED ON BEFORE THE FIRST APPELLA TE AUTHORITY. LD. AR IS TRYING TO INDICATE THAT THE SUM OF RS.27,57,493/ - TOWARDS DISALLOWED EXPENSES ACCEPTED BY ASSESSEE LEAVES BEHIND CASH WI TH ASSESSEE WHICH COULD GET TELESCOPING BENEFIT AGAINST THE UNE XPLAINED CASH CREDIT OF RS.28,23,099/- WITH THE BASIS THAT THE CA SH SURPLUS GENERATED OUT OF DISALLOWED EXPENSES OF RS.27,58,49 3/- HAS BEEN UTILIZED IN THE BUSINESS IN THE FORM OF CASH CREDIT WHICH COULD NOT BE EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. 14. EXAMINING THE FACTS AND SUBMISSIONS IN THE LIGH T OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT, WE FIND SUBSTANCE IN THE ARGUMENT OF LD. AR FOR THE VERY REASON THAT ASSESSEE DISCLOSED UNACCOUNTED INCOME OF RS.3.12 CRORES DURING THE COURSE OF SEARC H AND HAS DECLARED THE SAME IN THE INCOME-TAX RETURN FILED AN D THE ADDITION OF RS.27,58,493/- ON ACCOUNT OF DISALLOWANCE OF EXPENS ES WAS ON JUST ESTIMATED BASIS WHICH COULD NOT STAND BEFORE THE FI RST APPELLATE AUTHORITY TOWARDS IMPOSITION OF PENALTY U/S 271AAA. EVEN THOUGH DISALLOWANCE OF RS.27,58,493/- WAS IN THE NATURE OF ESTIMATION STILL ASSESSEE HAS ACCEPTED IT BY NOT FILING APPEAL BEFOR E THE LD. CIT(A). IT TENTAMOUNTS TO BELIEVE THAT ASSESSEE HAS OFFERED AN ADDITIONAL INCOME OF RS.27,58,493/-. ON THE OTHER HAND, ASSESS EE HAS NO PLAUSIBLE REPLY FOR THE IDENTITY, GENUINENESS OR CR EDITWORTHINESS OF CASH CREDITS OF RS.28,29,099/-. ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 8 15. WE ALSO OBSERVE THAT BOTH THE PENALTIES IMPOSED ON THE ASSESSEE U/S 271AAA AND U/S 271(1)(C) OF THE ACT EM ANATES FOR THE SAME ASST. YEAR I.E. ASST. YEAR 2009-10. IT IS ALSO WELL SETTLED LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND WORK INDEPENDENTLY. ADDITION CONFIRMED IN THE CASE OF ASSESSMENT PROCEEDINGS AND ACCEPTED BY THE ASSESSEE BY NOT FIL ING FURTHER APPEAL BEFORE THE FIRST APPELLATE AUTHORITY IT DOES NOT STOP THE ASSESSEE FROM NOT RAISING OBJECTIONS IN THE COURSE OF PENALTY PROCEEDINGS. WE FIND THAT PENALTY U/S 271AAA OF THE ACT HAS BEEN DELETED BY LD. CIT(A) ON THE ACCEPTED ADDITION ON A CCOUNT OF DISALLOWANCE OF CASH EXPENDITURE FOR WANT OF VERIFI CATION AT RS.27,58,493/-. THIS ACCEPTANCE OF ADDITION OF RS.2 7,58,493/- AND DELETION OF PENALTY BY LD. CIT(A) GIVES WAY TO THE ASSESSEE TO CLAIM THAT THE CASH SURPLUS GENERATED OUT OF ACCEPTANCE O F DISALLOWANCE OF EXPENSES OF RS.27,58,493/- IS DEEMED TO HAVE BEEN U SED TOWARDS UNEXPLAINED SOURCE OF INCOME IN THE SHAPE OF UNEXPL AINED CASH CREDIT ON WHICH PENALTY HAS BEEN IMPOSED UNDER SECT ION 271(1)(C) OF THE ACT. 16. WE ARE, THEREFORE, OF THE VIEW THAT AGAINST THE DEEMED ADDITIONAL DISCLOSED INCOME OF RS.27,58,493/- ASSES SEE DESERVES TO GET TELESCOPING BENEFIT OF THE UNEXPLAINED CASH CRE DIT OF RS.28,23,099/- WHICH AFTER GIVING EFFECT WILL LEAVE BEHIND A SUM OF RS.64,603/- AS UNEXPLAINED CASH CREDIT (RS.28,23,09 9 RS.27,58,493/-) WHICH IS A MEAGER AMOUNT LOOKING TO THE INCOME SURRENDERED AND DISCLOSURE MADE. WE, THEREFORE, ARE OF THE VIEW THAT ASSESSEE SHOULD NOT BE VISITED WITH PENALTY U/S 271 (1)(C) OF THE ACT AT ITA NOS.1755 & 1756/AHD/2012 ASST. YEAR 2009-10 9 RS.8,50,000/-. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. THIS APPEAL IS PARTLY ALLOWED. 17. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.1755 /AHD/2012 IS DISMISSED AND ITA NO.1756/AHD/2012 IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 10/8/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 08/08/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 10/08/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 12/8/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: