Jignesh Poonambhai Patel, Nagpur V. Asstt.Commissioner of Income-Tax,Circle-8, Nagpur

ITA 192/NAG/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3155 (ITAT-NAGPUR)
• Duration Of Justice: 5 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Agreed addition; Onus to prove
• Section: 143(3)

Judgement Text

1 ITA NO. 192/NAG/2010 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 192/NAG/2010 ASSESSMENT YEAR : 2003 - 04. JIGNESH PUNAMBHAI PATEL ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CIRCLE - 8, NAGPUR. PAN AFEPP2519H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANOJ MORYANI. RESPONDENT : SMT. SUMAN MALIK. DATE OF HEARING : 18 - 11 - 2015 DATE OF PRONOUNCEMENT : 15 T H JANUARY, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY ASSESSEE EMANATING FROM THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 04 - 10 - 2010 . THE GROUNDS RAISED ARE REPRODUCED BELOW : 1. THAT PENALTY U/S 271(1)(C) IMPOSED IS ILLEGAL, INVALID AND BAD IN LAW. 2. THAT THE PENALTY IMPOSED IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(APPEALS) ERRED IN SUSTAINING THE PENALTY U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 T O THE EXTENT OF 100% TAX SOUGHT BE EVADED AND HENCE THE ORDERS OF THE A.O. AS WELL AS CIT(APPEALS) IN LEVYING PENALTY ARE ILLEGAL, INVALID AND BAD IN LAW. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THA T THE AO HAS DULY RECORDED SATISFACTION IN THE ASSESSMENT ORDER ITSELF IN RESPECT OF AMOUNT OF RS.5,50,000/ - ADDED BY THE AO ON ACCOUNT OF INFLATION OF THE EXPENSES WHEN IN FACT THERE IS NO SUCH SATISFACTION RECORDED BY THE AO IN THE 2 ITA NO. 192/NAG/2010 ASSESSMENT ORDER, ADDI TION MADE ARE UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 5. THE LEARNED AO AS WELL AS THE CIT(APPEALS) ERRED IN LEVYING PENALTY U/S 271(1)(C) IN RESPECT OF THE AMOUNT OF RS.5,39,688/ - ADDED BY THE AO ON ACCOUNT OF UNDER VALUATION OF STOCK WHEN THE ITAT ITSELF HA S ALLOWED THE SAID AMOUNT TO BE CONSIDERED AS OPENING STOCK FOR THE NEXT YEAR, HENCE THE ADDITION MADE ARE UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 6. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT SINCE THE ADDITIONS ARE CONFIRMED OR SUSTAINED BY THE APPELLAT E AUTHORITIES IS A SUFFICIENT GROUND FOR LEVY OF PENALTY OF CONCEALMENT U/S 271(1)(C) OF THE INCOME - TAX ACT. 7. THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON AGREED ADDITION/OR CONFIRMED BY APPELLATE FORUM WHEN SHE HERSELF HAS CANCELLED THE PENALTY U/S 271(1)(C) ON SUCH A GREED/CONFIRMED ADDITIONS UNDER THE SIMILAR FACS AND CIRCUMSTANCES OF THE CASE FOR THE SUBSEQUENT YEAR 2004 - 05 IN THE APPEAL NO. CIT(A) - II/18/08 - 09 VIDE HER ORDER DATED 27/09/2010 IN THE A SSESSEES OWN CASE. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) DATED 31 - 01 - 2006 AND THE PENALTY ORDER U/S 271(1)(C) DATED 13 - 03 - 2008 WERE THAT THE ASSESSEE AN I NDIVIDUAL IS IN THE BUSINESS OF CIVIL CONSTRUCTION. CONTRACT RECEIPTS FOR THE YEAR UNDER CONSIDERATION AMOUNT ED TO RS. 6,52,76,947/ - AND THE PURCHASES DEBITED TO P &L ACCOUNT AMOUNTED TO RS.2,91,66,485/ - . IN THE PAST THE APPELLANT HAD GONE UPTO THE STAGE OF THE TRIBUNAL AND THE ITAT, NAGPUR BENCH IN A CONSO LIDATED ORDER FOR ASSESSMENT YEARS 2003 - 04 AND 2004 - 05 BEARING ITA NOS. 191 & 192/NAG/2008 ORDER DATED 05 - 03 - 2009 HAS GRANTED PART RELIEF TO THE ASSESSEE. FOR THE ASSESSMENT YEAR 2003 - 04 I N RESPECT OF THE ADDITION PERTAINING TO VALUATION OF CLOSING STOCK A MOUNTING TO RS.5,39,668/ - THE SAME WAS CONFIRMED, HOWEVER, WITH A DIRECTION THAT THE ASSESSEE SHALL GET THE SET OFF OF VALUE OF THE CLOSING STOCK IN THE SUBSEQUENT YEAR BY ADOPTING THE SAME VALUE FOR OPENING STOCK. AT THIS JUNCTURE IT IS WORTH TO MENTION THAT THERE WAS ONE MORE ADDITION OF RS.5,50,000/ - WHICH PERTAINED TO THE EXPENDITURE DISALLOWED 3 ITA NO. 192/NAG/2010 BEING PAY MENT MADE THROUGH SELF CHEQUES, HOWEVER, NOT CHALLENGED BEFORE THE TRIBUNAL. 3. IN THE LIGHT OF THE ABOVE FACTUAL MATRIX IT IS HEREBY CLARIFIED THAT THE PENALTY IN RESPECT OF PURCHASES FROM MAFATLAL CHOUDHARI AMOUNTING TO RS.46,556/ - DID NOT SURVIVE AT TH IS STAGE OF APPEAL BECAUSE THE SAID ISSUE NOW STOOD RESTORED BACK TO THE FILE OF THE AO BY THE RESPECTED ITAT, NAGPUR. EVEN LEARNED CIT(APPEALS) VIDE PARA 3 HAS MENTIONED THAT THE ISSUE OF PENALTY IN RESPECT OF THE ADDITION OF RS.46,556 / - DID NOT SURVIVE AS THE ISSUE HAD BEEN RESTORED TO THE FILE OF THE AO BY HONBLE ITAT. THEREFORE, WE ARE LEFT WITH TWO ADDITIONS I.E. THE ADDITION OF RS.5,39,668/ - PERTAINING TO THE CLOSING STOCK AND THE SECOND ADDITION OF RS.5,50,000/ - PERTAINING TO THE ALLEGED INFLATED PU RCHASES MADE THROUGH SELF CHEQUES . IT IS FURTHER CLARIFIED THAT THE QUESTION OF INFLATED PURCHASES WAS NOT CONTESTED BEFORE THE ITAT, NAGPUR BENCH. 4. AS FAR AS THE QUESTION OF ADDITION OF CLOSING STOCK IS CONCERNED, WE HAVE NOTED THAT THE ASSESSEE HAD DECLARED THE VALUE OF THE CLOSING STOCK AND WORK IN PROGRESS AS ON 31 - 03 - 2003 AT RS.39,97,000/ - . THE BASIS OF THE SAID VALUATION WAS THE FIRST BILL RECEIVED DURING THE NEXT FINANCIAL YEAR. THE ASSESSEE HAS FURNISHED THE WORKING OF THE SAID VALUATION AS U NDER : PAYMENT VIDE CHEQUE NO. 172147 DATED 10 - 04 - 2003 FOR THE WORK OF WIDENING & CONSTRUCTION OF ROAD FROM KAMPTEE ROAD J - 2 TO MANKAPUR PART - I RS.44,01,809/ - LESS : GROSS PROFIT @ 11% RS. 4,84,198/ - -------------------- RS. 39,17,611/ - ADD: THE VALUE OF SUNDRY MATERIAL LIKE CEMENT AND STEEL APPROXIMATELY VALUED AT RS. 80,000/ - -------------------- VALUE OF CLOSING STOCK & W.I.P. RS. 39,97,611/ - -------------------- 4 ITA NO. 192/NAG/2010 4.1 THE AO WAS NOT CONVINCED AND CALCULATED THE VALUATION OF THE CLOSING STOCK A S UNDER : GROSS AMOUNT OF BILL RS. 50,07,492/ - LESS: GROSS PROFIT @ 11% RS. 5,50,874/ - --------------------- VALUE OF W.I.P. AS ON 31 - 03 - 2003 RS. 44,56,668/ - ADD: VALUE OF MATERIAL I.E. CLOSING STOCK ESTIMATED BY YOU RS. 80,000/ - -------------------- VALUE OF CLOSING STOCK & S.I.P. RS. 45,36,668/ - --------------------- 4.2 THEREAFTER THE AO HAS TAXED THE SAID VALUATION BY ASSIGNING THE FOLLOWING REASONS: THE GROSS AMOUNT OF BILL DATED 10 - 04 - 2003 (AS APPEARS FROM ANNEXURE TO TDS CERTIFICATE DATED 30 - 04 - 2004 ISSUED BY NAGPUR IMPROVEMENT TRUST) HAD BEEN TO RS.50,07,492/ - FROM WHICH THE GROSS PROFIT @ 11% (AS SHOWN BY THE ASSESSEE) SHOULD HAVE BEEN DEDUCTED TO ARRIVE AT THE VALUE OF W.I.P. AS ON 31 - 03 - 2003. HOWEVER THE ASSESSEE FIRST DEDUCTED THEREFROM THE DEDUCTION FOR SECURITY DEPOSIT, RETAINED AMOUNT, INCOME TAX AND WORK CONTRACT TAX ALSO. THIS IS NOT PERMISSIBLE AS IT AMOUNTS TO APPLICATION OF THE INCOME. ACCORDING TO THE METHOD FOLLOWED BY THE ASSESSEE TO VALUE THE W.I.P., THE AMOUNT OF GROSS PROFIT ONLY SHOULD HAVE BEEN DEDUCTED RIGHT FROM THE GROSS AMOUNT OF BILL WITHOUT ANY FURTHER DEDUCTION THEREFROM FOR SECURITY DEPOSIT ETC. IN THIS REGARD THE ASSESSE E IN HIS ANSWER TO Q. NO. 9 DEPOSED THAT OTHER DEDUCTION WERE ALSO MADE SINCE THESE AMOUNTS WERE NOT ACTUALLY RECEIVED BY THE ASSESSEE. HIS EXPLANATION IS WRONG. THE CORRECT VALUE OF W.I.P. AND C.S., THEREFORE, WORK OUT TO RS.45,36,668/ - AS POINTED OUT BY THE A.O. IN HIS Q. 9 AS REPRODUCED ABOVE. AS PER THIS WORKING AND AS PER METHOD FOLLOWED BY THE ASSESSEE HIMSELF THE CORRECT VALUE OF W.I.P. & C.S. WORKS OUT TO RS.45,36,668/ - AS AGAINST RS.39,97,000/ - AS DECLARED BY THE ASSESEE. FOR THIS REASON THE ADDITION OF RS.5,39,668/ - (RS.45,36,668 - 39,97,000) IS MADE TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S 271(1)(C) ARE SEPARATELY INITIATED. 5 ITA NO. 192/NAG/2010 5. AS FAR AS THE MERITS PERTAINING TO THE IMPUGNED ADDITION IS CONCERNED, WE HAVE ALREADY MENTIONED ABOVE THA T THE SAME IS CONFIRMED BY THE ITAT, NAGPUR BENCH. HOWEVER, THE PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS, HENCE WE HAVE EXAMINED THE VERDICT OF LEARNED CIT(APPEALS) WHILE DEALING WITH THIS ADDITION. ACCORDING TO THE LEARNED CIT(APPEALS) THE ASSESSE E HAD FAILED TO DISCHARGE THE ONUS TO PROVE THAT THERE WAS NO ELEMENT CONCEALMENT. IN HIS OPINION CLAUSE ( A ) TO EXPLANATION 1 TO SECTION 271(1)(C) WAS APPLICABLE. LEARNED CIT(APPEALS) HAS ALSO HELD THAT SINCE THE ADDITION HAD BEEN CONFIRMED BY THE HONBLE TRIBUNAL VIDE ORDER DATED 05 - 03 - 2009, THEREFORE, PENALTY WAS RIGHTLY IMPOSED. 5.1 REGARDING THE PURCHASES OF RS.5,50,000/ - , THE AO HAS HELD AS UNDER: THE FOLLOWING PAYMENTS AS CLAIMED BY THE ASSESSEE OTHERWISE THAN CROSSED CHEQUES HAVE BEEN DENIED BY THE RESPECTIVE PAYEES: - DATE CHEQUE NO. AMOUNT (RS.) NAME OF PAYEE NAME OF THE BANK. 16 - 12 - 02 163948 36,000 RADHE HUME PIPES NAGPUR MAHILA NAGRIK SAHAKARI BANK. 16 - 12 - 02 163947 44,000 MEHTA AUTOMOBILES. NAGPUR MAHILA NAGRIK SAHAKARI BANK. 16 - 12 - 02 163949 1,15,000 R.R. MAHAJAN NAGPUR MAHILA NAGRIK SAHAKARI BANK. 16 - 12 - 02 163950 3,55,000 SUPREME STARTECH P LTD. NAGPUR MAHILA NAGRIK SAHAKARI BANK. 5,50,000 THE PHOTOCOPIES OF AFORESAID ENCASHED CHEQUES WERE OBTAINED DIRECTLY FROM THE ASSESSEES BANK. ON THE REVERSE SIDE OF THESE CHEQUES, THE SIGNATURES OF THE RECIPIENTS OF CASH APPEAR. THESE COPIES OF CHEQUES WERE PROVIDED TO THE RESPECTIVE PAYEES REQUESTING TO FILE THEIR CONFIRMATIONS OR OTHERWISE REGARDING RECEIPT OF THE AMOUNT OF CHEQUES. THEY HAVE DENIED THE RECEIPT OF SUCH CHEQUES. THEIR DENIALS WERE 6 ITA NO. 192/NAG/2010 COMMUNICATED TO THE ASSESSEE AND WAS ASKED WHETHER HE WANTED TO CROSS - EXAMINE THESE PAYEES. THE ASSESSEE VIDE HIS LETTERS DATED 09 - 092005 AND 17 - 11 - 2005 STATED THAT HE FOREGOES HIS RIGHT TO CROSS EXAMINE THE CONCERNED PAYEES. FURTHER, THE ASSESSEES REPLY AS MENTIONED ABOVE IN PARA 14.1 TO SHOW CAUSE NOTICE DATED 20.12.2005 HAS ALSO BEEN DULY CONSIDERED. IT IS, THUS, OBVIOUS THAT THE ASSESSEE DID NOT MAKE ANY PAYMENT TO THE PAYEES. THE ASSESSEE AT TEMPTED TO INFLATE THE EXPENSES TO THAT EXTENT. THEREFORE A DISALLOWANCE OF RS.5,50,000/ - OUT OF EXPENSES IS MADE. PROCEEDING U/S 271(1)(C) ARE SEPARATELY INITIATED. 5.2 WHEN THE MATTER WAS CARRIED BEFORE THE LEARNED CIT(APPEALS) HE HAS MADE AN OBSERVATI ON THAT THE SAME WAS NOT CONTESTED BEFORE THE TRIBUNAL. HENCE THE ASSESSEE HAD ACCEPTED THE REASON FOR WHICH THE IMPUGNED ADDITION WAS MADE. THEREFORE, THE AO HAD NO OPTION BUT TO IMPOSE THE PENALTY ON THE SAID AMOUNT. LEARNED CIT(APPEALS) HAS HELD THAT TH E PURCHASES WERE BOGUS IN NATURE, HENCE RIGHTLY TAXED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. THE FINDINGS RECORDED IN THE QUANTUM APPEAL WERE RELEVANT WHILE DECIDING THE QUESTION OF LEVY OF PENALTY, HENCE HELD THAT THE PENALTY WAS RIGHTLY IMPO SED. 6. IN THE LIGHT OF THE ABOVE BACKGROUND, WE HAVE HEARD BOTH THE SIDES. FROM THE SIDE OF THE APPELLANT, LEARNED A.R. MR. MANOJ MORYANI APPEARED AND PLEADED THAT THE QUESTION OF VALUATION ADDITION WAS TAX NEUTRAL BECAUSE THE HONBLE TRIBUNAL HAS GIVEN THE DIRECTION TO GIVE THE BENEFIT OF THE VALUE OF THE CLOSING STOCK WHILE COMPUTING THE VALUE OF OPENING STOCK OF THE IMMEDIATE NEXT ASSESSMENT YEAR. LIKEWISE NO PENALTY SHOULD BE LEVIED IN RESPECT OF THE DISALLOWANCE OF PURCHASES BECAUSE OF THE REASON T HAT THE REVENUE AUTHORITIES HAVE NOT DENIED THIS FACT THAT ON THE REVERSE OF THE BEARER CHEQUES THERE WAS THE SIGN OF THE PERSONS WHO HAVE WITHDRAWN THE AMOUNT . IN SUPPORT OF HIS ARGUMENTS, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS : 1. K.C. BUILDERS V S. ADD. COMMISSIONER OF INCOME - TAX (2004) 265 ITR 562 (SC). 2. T. ASHOK PAI VS. CIT (2004) 292 ITR 11 (SC). 7 ITA NO. 192/NAG/2010 3. CIT VS. K.R. CHINNI KRISHNA CHETTY (2000) 246 ITR 121 (MAD.). 4. CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158 (SC). 5. CIT VS. AJAIB SINGH & CO. (2002) 253 ITR 630 (P&H). 6. ITO VS. RAJYALAKSHMI MAHAL (1994) 48 ITD 248 (HYD.). 7. ITO VS. RAM DAS DEOKINANDAN PRASAD (1985) 14 ITD 155 (ALL.) 7. FROM THE SIDE OF THE REVENUE, LEARNED D.R., SMT. SUMAN MALIK, APPEARED AND SUPPORTED THE VIEW TAKEN BY THE REVENUE AUTHORITIES. HER MAIN T H RUST OF ARGUMENT WAS THAT IN RESPECT OF BOTH THE ADDITIONS THE MATTER STOOD CONFIRMED BY THE TRIBUNAL. HENCE THE AS SESSEE HAD NO SCOPE OF ADVANCING ANY FURTHER EXPLANATION. FACTS OF THE CASE HAVE CLEARLY REVEALED THAT THE ASSESSEE HAS DE LIBERATELY CONCEALED THE INCOME, SHE HAS PLEADED. 8. IN OUR CONSIDERED OPINION, ALTHOUGH THE ADDITION OF RS.5,39,668/ - WAS CONFIRMED BY THE TRIBUNAL AND THE ADDITION OF RS.5,50,000/ - WAS NOT CONTESTED BY THE ASSESSEE; BUT STILL WHILE DEALING WITH THE QUESTION OF IMPOSITION OF CONCEALMENT PENALTY THE LEGAL AS WELL AS FACTUAL ASPECT OUGHT TO HAVE BEEN DEALT WITH INDEPENDENTLY. IMPOSITION OF PENALTY IS NOT AN AUTOMATIC CONSEQUENCE THAT ONCE THE ADDITION IS CONFIRMED THEN AUTOMATICALLY PENALTY SHOULD BE LEVIED. 8.1 IN RESPECT OF THE PENALTY PERTAINING TO THE CLOSING STOCK F ROM THE RECORDS WE HAVE FOUND THAT UNDISPUTEDLY THE ASSESSEE HAS DISCLOSED THE VALUE OF THE CLOSING STOCK AT RS.39,97,000/ - . THE ASSESSEE HAS ALSO INFORMED THE AO THE BASIS ON WHICH THE SAID VALUATION WAS ADOPTED IN THE BOOKS OF ACCOUNTS. T HE CALCULATION OF THE ASSESSEE FOR ARRIVING AT THE VALUE OF THE CLOSING STOCK HAS ALREADY BEEN REPRODUCED ABOVE. THE AO HAS NOT ALLEGED THAT IT WAS A MALAFIDE OR FALSE CALCULATION. THE AO HAS SIMPLY MENTIONED THAT HE WAS NOT CONVINCED WITH THE BASIS OF CAL CULATION BECAUSE OF THE REASON THAT IN HIS OPINION THE VALUATION OF WORK IN PROGRESS SHOULD HAVE BEEN DONE ON THE BASIS OF THE GROSS AMOUNT OF THE BILL. IN SUCH SITUATION WHEN THE AO HAS NOT DOUBTED THE GENUINENESS OF THE VALUATION BUT BECAUSE OF DIFFERENC E OF OPINION HE HAS ADOPTED A DIFFERENT METHOD OF VALUATION, THEN IN OUR CONSIDERED OPINION, THIS IS 8 ITA NO. 192/NAG/2010 NOT A CASE WHERE THE CONCEALMENT PENALTY COULD BE LEVIED. IT HAS ALSO BEEN NOTED THAT THE MATERIAL FACTS WERE DULY DISCLOSED BY THE ASSESSEE, HENCE THERE W AS NO ALLEGATION THAT THE ASSESSEE HAD CONCEALED THE FACTS. IT BEING NOT A CASE WHERE PENALTY WAS IMPOSED BECAUSE OF THE FALSITY OF EXPLANATION, HENCE THE ORDER IMPOSING PENALTY DO NOT SURVIVE IN THE EYES OF LAW. OTHERWISE ALSO IN ACCORDANCE WITH THE EXPLA NATION 1(A) OF SECTION 271(1)(C), AS MENTIONED BY LEARNED CIT(APPEALS), WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OR TOTAL INCOME OF ANY PERSON AND SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO TO BE FALSE THEN THE AMOUNTS SO ADDED OR DISALLOWED SHOULD BE DEEMED TO REPRESENT THE CONCEALED INCOME. IN OTHER WORDS, THE EXPLANATION SHOULD BE A FALSE EXPLANATION FOR THE PURPOSE OF LEVY OF PENALTY. HOWEVER, IN THIS CASE THERE WAS NO SUCH ALLEGATION THAT THE EXPLANATION OF THE ASSESSEE WAS FALSE OR UNTRUE. WE, THEREFORE, HOLD THAT ON THE AMOUNT OF ALLEGED UNDER VALUATION OF CLOSING STOCK NO PENALTY SHOULD BE LEVIED. 9. IN RESPECT OF THE ADDITION PERTAINING TO THE PURCHASES OF RS.5,50,000/ - THERE W ERE FEW FACTS WHICH WERE NOT DISPUTED EVEN IN THE REMAND REPORT THAT THE ASSESSEE ISSUED BEARER CHEQUES. THE PERSONS WHO HAVE WITHDRAWN THE AMOUNT HAVE A CKNOWLEDGED BEFORE THE AO THE SIGNATURES MADE BY THEM AT THE REVERSE OF THE CHEQUES. ALTHOUGH THE ASSE SSEE HAS NOT CROSS EXAMINED THOSE PERSONS BUT BY THE P RESENCE; OF THE SIGNATURES OF THOSE PERSONS OTHER THAN THE ASSESSEE , HAVE MADE THE QUESTION OF BOGUS PURCHASES DOUBTFUL. IN PENALTY PROCEEDINGS AS NOTED ABOVE THE FACTUAL MATRIX IS REQUIRED TO BE CONSIDERED AFRESH FROM AN ANGLE DIFFERENT FROM ASSESSMENT PROCEEDINGS. SO E VEN IN THIS SITUATION WHEN THE ASSESSEE HAS FURNISHED AN EVIDENCE THAT SOME THIRD PARTY HAD ENCASHED THE CHEQUES AND THE ASSESSEE WAS NOT INVOL VED IN SUCH ENCASHMENT, HENCE IN OUR HUMBLE OPINION A DOUBT HAD BEEN CREATED ABOUT THE CORRECTNESS OF THE IMPOSITION OF PENALTY. THE CORRECTNESS OF THE PURCHASES, THEREFORE, COULD BE 9 ITA NO. 192/NAG/2010 VIEWED FROM BOTH THE ANGLES. SUSPICION HOWSOEVER STRONG CANNOT TAKE THE PLACE OR THE FACTS OR THE PROOF ON RECORD. THEREFORE, THIS IS NOT A CASE WHERE THE AO HAS ESTABLISHED THE INACCURACY OF THE PARTICULARS OF INCOME WHICH HAD THE INGREDIENT OF CONCEALMENT OF INCOME. IN THE ABSENCE OF ANY DEFINITE FINDING THAT THE ASSESSEE HA D DELIBERATELY CONCEALED THE FACTS OR FURNISHED INACCURATE PARTICULARS WITH THE INTENTION TO CONCEAL THE INCOME, WE HEREBY HOLD THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. FOR THE PROPOSITION AS DISCUSSED HEREIN ABOVE, WE HEREBY PLACE RELIANCE ON THE CASE LAWS AS REFERRED ABOVE. 10. UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE VIEW EXPRESSED HEREIN ABOVE, WE HEREBY HOLD THAT IN RESPECT OF BOTH THE ADDITIONS, NO PENALTY SHOULD HAVE BEEN LEVIED. WE HOLD ACCORDINGLY. GROUNDS RAI SED ARE ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JANUARY, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 15 TH JANUARY, 2016. 10 ITA NO. 192/NAG/2010 COPY FORWARDED TO : 1. JIGNESH PUNAMBHAI PATEL, C/O MANOJ G. MORYANI, ADVOCATE, 1 ST FLOOR, SUDAMA BHAWAN, NEAR SUT MARKET, GANDHIBAGH, NAGPUR - 440002. 2. A .C.I.T., CIRCLE - 8, NAGPUR. 3. COMMISSIONER OF INCOME - TAX - , NAGPUR. 4. CIT(APPEALS) - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.