M/s Daksh Kanya Cold Storage (P) Ltd., Agra V. D.C.I.T., Circle-4(1), Agra

ITA 216/AGR/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0771 (ITAT-AGRA)
• Duration Of Justice: 4 year(s) 8 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 19-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P N AGRAWAL
• Keywords: Gift; Initiation of penalty proceedings; Wrong claim; Capital receipt; Revised return
• Section: 271(1)(c); 250; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI A. D. JAIN JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER ITA NO. 216 /AGR/201 4 ASSESSMENT YEAR: 20 08 - 09 M/S DAKSH KANYA COLD STORAGE (P) LTD. VILLAGE KAHRAI, POST PRATAP PURA, AGRA. VS. D CIT 4(1), AGRA . PAN: AACCD4551E APPELLANT RESPONDENT ASSESSEE BY: SHRI P. N. AGRAWAL, ADV. REVENUE BY: SHRI WASEEM ARSHAD, SR. DR. DATE OF HEARING: 27 /10/2016 DATE OF PRONOUNCEMENT: 30 /1 1 /2016 ORDER PER, DR. MITHA LAL MEENA, AM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT( A ) - II AGRA , DATED 21.11.2 013 FOR ASSESSMENT YEAR 2008 - 09, CHALLENGING CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961 LEVIED BY DCIT, CIRCLE 4(1) AGRA. ITA NO. 216/AGR/2014 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF RUNNING COLD STORAGE AT VILLAGE KAHARAI POST PRATAP PURA, AGRA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH DETAI LS REGARDING CASH LOAN CREDITORS VIDE ORDER SHEET ENTRY DATED 25.08.2010. THE AO HAS ALSO CALLED FOR DETAILS REGARDING RETURN OF INCOME, BANK ACCOUNTS, PAN NO. ETC, OF ALL THE CASH CREDITORS WHO HAS GIVEN UNSECURED LOAN OF RS.10.50 LACS TO THE ASSESSEE. TH E ASSESSEE HAS RECEIVED UNSECURED CASH LOAN OF MORE THAN RS.5 0 ,000/ - PER PERSON FROM EIGHTEEN OUT OF 30 LOAN CREDITORS CONSTITUTING TOTAL UNSECURED LOAN OF RS.10.50 LACS . 3. THE AO HAS STATED IN THE PENALTY ORDER THAT THE FACTS AS REGARD TO ASSESSEES VOLUNTARY SURRENDER OF THE UNSECURED LOAN OF RS.10.50 LACS IS FACTUAL LY INCORRECT BECAUSE THE ASSESSEE WAS REQUIRED TO FURNISH THE COPY OF ACCOUNT OF ALL THE PERSONS FROM WHOM UNSECURED LOANS HAVE BEEN TAKEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE ANNEXURE TO NOTICE U/S 142 ( 1 ) OF THE IT ACT, 1961 DATED 10.05.2010 . T HE AO FURTHER DISCUSSED THAT THE ASSESSEE WAS REQUIRED TO SUBMIT FURTHER DETAILS SUCH AS PAN, COMPUTATION OF INCOME, ROI, AND BANK ACCOUNT OF THESE PERSONS TO VERIFY THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS IN RESPECT OF UNSECURED LOANS . HOWEVER, THE ASSESSEE COULD NOT FURNISH C OMPLETE DETAILS AS REQUIRED BY AO AND THE ASSESSEE V IDE ORDER SHEET ENTRY DATED ITA NO. 216/AGR/2014 3 27.09.2010 AGREED THAT REQUIRED DETAILS CANNOT BE FURNISH ED SO HE OFFERED THE AMOUNT FOR TAXATION , IN CONTINUATION OF ITS REPLY DATED 23.06.2010 AND 31.08.2010. 4 . THE AO HELD THAT THE ASSESSEE HAS SURRENDERED RS.10.50 LACS VIDE LETTERS DATED 27.09.2010 AGAINST UNSECURED LOAN SUBSEQUENT TO ITS EARLIER WRITTEN REPLY DATED 23.6.2010 AND 31.08.2010 WAS BEING SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREFORE IT CANNOT BE HELD A S VOLUNTARY DISCLOSURE. 5. THE ASSESSEE HAS NO SPECIFIC DETAILS I N POSSESSION PERTAINING TO THE THIR TY SIX PERSONS FROM WHOM UNSECURED LOANS HAVE BEEN SHOWN, AND SURRENDERED UNDISCLOSED INCOME RS.10.50 LACS. THE AO HELD THAT IT IS QUITE EVIDENT THAT THE AMOUNT SHOWN IN THE BALANCE SHEET, IN THE SHAPE OF UNSECURED LOAN WAS OFFERED FOR TAXATION ONLY , WHEN IT HAD BECOME ABUNDANTLY CLEAR TO THE ASSESSEE THAT IT COULD NOT PROVE AND JUSTIF Y THE GENUINENESS OF THESE LOANS AND HENCE ASSESSEE CAN NOT ABSOLVE MERELY BY GIVING LETTER THAT INCOME WA S BEING OFFERED FOR TAXATION SUBJECT TO SPECIFIC CONDITION THAT NO PE NALTY BE IMPOSED. TH E AO RELIED UPON T HE FOLLOWING CASE LAWS: 1. DELITE CINEMA VS. MCD & ANT. (DEL) 172 ITR 208 2. UOP VS. GODFREY PHILIPS INDIA LTD. (SC) 158 ITR 574 6. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) - II, AGRA WHO HAS CONFIRMED THE PENALTY ORDER WITH THE FOLLOWING OBSERVATION: ITA NO. 216/AGR/2014 4 5.1 I HAVE CONSIDERED THE ARGUMENTS OF THE LD. AR AS PRODUCED BY HIM IN THE WRITTEN SUBMISSION FILED BEFORE US AS DISCUSSED ABOVE. WE HAVE ALSO CONSIDERED THE FACTS AND CIRCUMSTANCES AS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER AS WELL AS THE DOCUMENTS AVAILABLE ON THE CASE RECORD SHOWING FACTS AND CIRCUMSTANCES UNDER WHICH, THE ASSESSEE (APPELLANT) HAD TO SURRENDER THE UNSECURED LOAN AS ITS INCOME AMOUNTING TO RS.1 0,50,000/ - I HAVE ALSO PERUSED THE CASE LAWS CITED BY THE LD.AR AS WELL AS DISCUSSED BY THE AO IN THE PENALTY ORDER. IN ALL THE CASE LAWS CITED BY THE LD.AR, THE COURTS HAVE HELD THAT BEFORE LEVYING OF PENALTY U/S 271 (1 )(C ), MENS REA HAS TO BE ESTABLISHED AND IT HAS TO BE SHOWN THAT ASSESSEE HAS DELIBERATELY AND CONSCIOUSLY CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME, HOWEVER, NOW AFTER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DHARMEND RA TEXTILE PROCESSORS, IT HAS BEEN HELD AFTER QUOTING FROM SECTION 271 THAT SINCE SECTION 271(1)(C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN, THERE WAS NO NECESSI TY OF MENS REA. IN THIS DECISION, THE COURT WENT ON TO HOLD THAT THE OBJECTIVE BEHIND ENACTMENT OF SECTION 271 (1)(C) READ WITH EXPLANATIONS INDICATED WITH THE SAID SECTION FOR PROVIDING REMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY A ND, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C OF THE ACT. THOUGH NOW, AS PER THE DECISION OF THE ITA NO. 216/AGR/2014 5 HON'BLE SUPREME COURT IN CASE OF DHARMENDRA TEXTILE PROCESSORS, MENS REA NEED NOT TO BE ESTABLISHED, IT MUST BE SHOWN THAT THE CONDITIONS U/S 271 (1)(C) EXIST BEFORE THE PENALTY IS IMPOSED, AND THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF THE INCOME WOULD DEPEND U PON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME AND WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. THIS PRINCIPLE HAS BEEN LAID DOWN BY HON'BLE SUPREME COURT FURTHER IN ANOTHER DECISION IN CASE OF COMMISSIONER OF INCOME TAX VS . RELIANCE PETROPRODUCTS (P) LTD. REPORTED IN [2010]322 ITR 158 AND IN THIS DECISION, IT HAS ALSO BEEN HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NO T ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THA T BY ITSELF WOULD N O T ATTRACT PENALTY UNDER SECTION 271 (1 )(C). 5 . 2 A F TER THE ABOVE PRINCIPLE OF LEVY OF PENALTY AS LAID DOWN BY THE HON'BLE SUPREME COUR T IN THE TWO DECISIONS AS REFERRED ABOVE , I FIND ON THE FACTS OF THE PRESENT CASE THAT IN PRESENT CASE THERE IS NO NECESSITY FOR ESTABLISHING THE MENS REA AS I T WAS REQUIRED IN THE CASE LAWS REFERRED BY THE LD . AR WHICH WERE DELIVERED BEFORE THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSERS (SUPRA). THE PLAIN AND SIMPLE FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED CERTAIN AMOUNTS AS UNSECURED LOANS AND AS PER THE REQUIREMENTS OF THE ACT, IT WAS VERY CLEAR TO THE ASSESSEE THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WOULD B E REQUIRED TO ESTABLISH IDENTITY , CREDITWORTHINESS OF THE CREDITORS AS ITA NO. 216/AGR/2014 6 WELL AS GENUINENESS OF THE TRANSACTION WITH RESPECT TO THE UNSECURED LOANS SHOWN BY IT AND THEREFORE , IT WAS EXPECTED FROM THE ASSESSEE THAT THE REQUIRED DOCUMENTS IN ORDER TO ESTABLISH THE GENUINENESS OF UNSECURED LOAN SHOULD HAVE BEEN COLLECTED BY HIM FROM THE CREDITORS, HAD THESE CASH CREDITS BEEN GENUINE IN NATURE. HOWEVER, NO SUCH DOCUMENTS WERE AVAILABLE WITH THE ASSESSEE (APPELLANT) TO ESTABLISH THE IDENTITY OF THE CREDITORS AS WE LL AS THE CREDITWORTHINESS OF THESE CREDITORS . THEREFORE, WHEN THE AO REQUIRED THE ASSESSEE (APPELLANT) TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THESE CREDITORS , IT HAD NO OPTION BUT TO SURRENDER THIS AMOUNT. HOWEVER KNOWING VERY WELL THAT IT WAS NOT IN A POSITION TO ESTABLISH THE GENUINENESS OF SUCH CASH CREDIT AMOUNTS, IT MADE THE SUR R ENDER BY PUTTING A CONDITION FOR NON INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) . IN FACT , AS PER THE PROVISION OF THE ACT , THERE IS NO IMMUNITY PROVIDED UNDER THE ACT FROM PENALTY IN CASE ANY SURRENDER IS MADE BY THE ASSESSEE BEFORE THE AO AND THIS POSITION OF THE ACT HAS BEEN CLARIFIED BY THE HON'BLE SUPREME COURT IN A RECENT D ECISION IN THE CASE OF MAK DATA (P.) LTD. V. COMMISSIONER OF INCOME TAX - II, REPORTED IN [2013J 38 TAXMAN.COM 448 (SC). IN THIS DECISION, THE SUPREME COURT HAS HELD THAT THE ASSESSING OFFICER SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE ' VOLUNTARY D I SCLOSURE ', ' BUY PEACE' , 'AVOID LITIGATION', 'AMICABLE SETTLEMENT ' , ETC TO EXPL AIN AWAY ITS CONDUCT . IN THAT CASE ALSO, THE ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM WITH A VIEW TO AVOID LITIGATION , BUY P EACE AND TO CHANNEL I ZE THE ENERGY AND R ESOURCES ITA NO. 216/AGR/2014 7 TOWARDS PRODUCTIVE WORK AND TO M AKE AMICABLE SETTLEMEN T WITH THE INCOME TAX DEPARTMENT . THE SUPREME COURT HELD THAT THE STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENSE UNDER THE EXPLANATION 1 TO SECTION 271 (1)(C) OF THE ACT AND IT IS FURTHER CLARIFIED THAT IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES N OT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS U/S 271 (1 ) (C) AND THEREFORE, ALSO HELD IN THIS DECISION THAT THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAD TO BE ABSOLVED FROM PEN ALTY . 6. KEEPING IN VIEW THE ABOVE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT, IT IS CLEAR THAT THE ASSESSEE CANNOT SAVE ITSELF FROM THE CLUTCHES OF THE PENAL PROCEEDINGS TAKING THE PLEA THAT THE SURRENDER OF CASH CREDITS AMOUNT HAS BEEN MADE BY HIM SUBJECT TO CONDITION OF NON INITIATION OF PENAL PROCEEDING U/S 271 (1 ) (C). THE CLAIM OF THE ASSESSEE THAT SUCH SURRENDER WAS VOLUNTARY CAN ALSO NOT BE ACCEPTED BECAUSE IF THE ASSESSEE WANTED TO MAKE VOLUNTARY SURRENDER, HE COULD HAVE MADE THIS SURRENDER ON ISSUING O F FIRST NOTICE BY THE AO U/S 143(2) WHEN THE AO STARTED THE SCRUTINY ASSESSMENT AS IT HAPPENED IN THE CASE LAWS REFERRED BY THE ASSESSEE (APPELLANT) IN THE CASE OF CIT VS HAMARAIN OF HON'BLE DELHI HIGH COURT IN WHICH THE GIFT WAS SURRENDERED BY THE ASSESSEE AFTER ISSUANCE OF FIRST QUESTIONNAIRE. HOWEVER, IN THE INSTANT CASE UNDER APPEAL, NO SURRENDER WAS MADE BY THE ASSESSEE WHEN THE FIRST QUESTIONNAIRE WAS SENT TO HIM. THE SURRENDER WAS MADE ONLY WHEN THE AO INSISTED FOR ESTABLISHING THE IDENTITY AND ITA NO. 216/AGR/2014 8 CREDITWORTHINESS OF THE CREDITORS THEREFORE, I AGREE WITH THE AO THAT THE ASSESSEE (APPELLANT) SURRENDERED THE UNSECURED LOANS AS INCOME ONLY WHEN THE AO HAD STARTED INVESTIGATION TO FIND OUT THE GENUINENESS OF UN SECURED LOAN BECAUSE THE ASSESSEE KNEW THAT IT WOULD NOT BE IN A POSITION TO SUBSTANTIATE THE GENUINENESS OF THE LOAN. I ALSO FIND FORCE IN THE ARGUMENTS OF THE AO THAT INITIALLY THE ASSESSEE HAD FALSELY SHOWN ITS OWN UNDISCLOSED INCOME IN THE SHAPE OF UNS ECURED LOANS FROM FARMERS SO THAT IT MAY GET AWAY WITHOUT PAYING ANY TAXES THEREON AND HE SURRENDERED THIS AMOUNT DURING THE SCRUTINY PROCEEDINGS ONLY WHEN HE REALIZED THAT HE HAD NO ALTERNATIVE BUT TO SURRENDER BECAUSE THE AO WAS INSISTING UPON TO ESTABLI SH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS VERY CLEAR THAT THE SURRENDER MADE BY THE ASSESSEE IS NOT VOLUNTARY. THE ANOTHER DECISION CITED BY THE ASSESSEE OF NATIONAL TEXTILES VS. COMMISSIONER OF INCOME TAX(SUPRA) WOULD ALSO NOT BE APPLICABLE IN THE PRESENT CASE BECAUSE IN THE ABOVE CITED CASE, NO VOLUNTARY SURRENDER WAS MADE BY THE ASSESSEE AND WITH THE FACTS AVAILABLE WITH THE ASSESSEE IN THAT CASE, THE GENUINENESS OF CASH CREDITS SHOWN BY IT HAS BEEN TRIED TO BE JUSTIFIED BUT SUCH EVIDENCES PRODUCED BY THE THAT ASSESSEE HAS NOT BEEN FOUND TO BE SUFFICIENT BY THE REVENUE AND THEREFORE, THE ADDITION WAS MADE. THEREFORE, WHILE DELETING THE PENALTY LEVIED ON SUCH ADDITION, THE HON'BLE HIGH COURT HAS HELD THAT THE DEPARTMENT WAS JUSTIFIED IN TREATING THE CASH CREDIT AS INCOME OF THE ASSESSEE BUT MERELY ON THAT BASIS BY RECOURSE TO EXPLANATION 1, PENALTY U/S 271 (1 )(C) COULD NOT ITA NO. 216/AGR/2014 9 HAVE BEEN IMPOSED. IN ANOTHER DECISION CITED BY THE LD. AR IN CASE OF CIT VS. PRADEEP KUMAR BY HIGH COURT OF JAMMU AND KASMIR( 2001) 1 J&K LAW REPORTER 318 ( I. T. REF NO. 1/1985 DATED 11.05.2000) ALSO, THE PENALTY WAS DELETED BECAUSE REVISED RETURN WAS FILED BEFORE CONCEALMENT WAS DETECTED BY THE DEPARTMENT AND IN THIS DECI SION ALSO, WHILE DELETING THE PENALTY, THE COURT HAS HELD THAT PENALTY IS QUASI CRIMINAL PROCEEDING BUT NOW, THE SUPREME COURT HAS HELD THAT PENALTY IS CIVIL LIABILITY AS I HAVE ALREADY DISCUSSED AND HENCE, THIS CASE LAW WOULD ALSO NOT APPLY IN CASE OF THE ASSESSEE. CONTRARY TO THE FACTS OF THE CASE LAWS CITED BY THE LD. AR , IN THE PRESENT CASE, SINCE THE CASH CREDIT AMOUNT WAS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AFTER REQUIRED DETAILS AND EVIDENCES CALLED FOR BY THE AO COULD NOT BE FURNISHED, THERE WAS NOTHING FURTHER FOR THE DEPARTMENT TO ESTABLISH THAT SUCH CASH CREDIT AMOUNT WAS NOT GENUINE AND THE ASSESSEE (APPELLANT) ALSO DURING THE PENALTY PROCEEDINGS COULD NOT OFFER ANY EXPLANATION FOR SHOWING SUCH CASH CREDIT AMOUNT AS BEING GENUINE WHICH IN FACT WAS ITS OWN INCOME SHOWN AS UNSECURED LOAN WITHOUT HAVING SUPPORTING DOCUMENTS AS REQUIRED UNDER THE INCOME TAX ACT, THEREFORE, IN CASE OF THE PRESENT ASSESSEE (APPELLANT), EXPLANATION 1 IS VERY MUCH APPLICABLE. AFTER CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE WHICH ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE LAWS CITED BY THE ASSESSEE AND ALSO AFTER RELYING ON THE RECENT DECISIONS OF THE HON'BLE S UPREME COURT IN CASE OF D HARMENDRA TEXTILE PROCESSORS, RELIANCE PETROPRODUCTS (P.) ITA NO. 216/AGR/2014 10 LTD, AND MAK DATA (P.) LTD., I FIND THAT THE ASSESSEE (APPELLANT) IS VERY MUCH LIABLE FOR PENALTY U/S 271 (1)(C) FOR CONCEALING THE PARTICULARS OF INCOME BECAUSE IT HAS INCREASED ITS LOSS BY AN AMOU NT OF RS.10,50,000/ - BY SHOWING ITS OWN INCOME IN FORM OF UNSECURED LOANS AND ALSO FURNISHING OF INACCURATE PARTICULARS OF THE INCOME BY SHOWING ITS OWN INCOME BEING REVENUE RECEIPT IN NATURE IN FORM OF UNSECURED LOANS AS CAPITAL RECEIPT AND HENCE, I HOLD THAT THE AO IS CORRECT IN LEVYING OF PENALTY U/S 271 (1) (C) AND ACCORDINGLY, I CONFIRM THE MINIMUM PENALTY OF RS.3,24,450/ - IMPOSED BY THE AO ON THE ASSESSEE (APPELLANT) AND ACCORDINGLY, ALL THE GROUNDS TAKEN IN APPEAL CHALLENGING THE LEVYING OF PENALTY U /S 271(1)(C) ARE DISMISSED. 7 . TH E LD. AR SUBMITTED THAT ASSESSEE HAS VOLUNTARILY SURRENDERED RS.10,50,000/ - DURING THE COURSE OF ASSESSMENT PROCEEDING AGAINST 36 AGRICULTURISTS. THE LD. AR CONTENDED THAT NO MATERIAL TO SUBSTANTIATE THAT THE MONEY BELONGS TO ASSESSEE AND N O T TO THE CASH CRED ITORS BROUGHT ON RECORD BY THE AO. HE HAS PLACE RELIANCE ON THE DECISION OF RELIANCE PETRO BESIDE A SET OF OTHER JUDGMENT OF THE CASE WHERE PENALTY LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE CASE LA W RELIED BY LD. AR ARE LISTED BELOW: I. CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158 (SC) II. DILIP N. SHROFF VS JOINT COMMISSIONER OF INCOME TAX AND ANOTHER 291 IT R 519 (SC) III. DEPUTY CIT VS ARUN TOWER (P) LTD. SL P (C) NO. 18038 OF 2008 DISMISSE D (2008) ITA NO. 216/AGR/2014 11 IV. CIT VS. SEWAK ICE AND COLD STORAGE (P). LTD. 369 ITR316 (ALL) V. DHARNI DEVELOPERS VS. AAC (ITAT, MUMBAI) 40 ITR (TRIB) 720 VI. NEW SORTHIA ENGG. CO. VS. CIT 282 ITR 642 (GUJRAT HIGH COURT) VII. ACIT - 3 MATHURA VS. M/S VINAYAK PROPERTIES & DEVELOPERS ITA NO. 598/AG/2008 A.Y. 2005 - 06 8 . THE LD. AR FURTHER SUBMITTED THAT THER E WA S NO CLINCHING EVIDENCE WITH THE AO WHICH WOULD HAVE ENABLE D HIM TO PROVE THAT THE MONEY ACTUALLY BELONGED TO NONE BUT THE ASSESSEE COMPANY. THE LEARNED AO DID NOT MAD E ANY EFFORT TO COLLECT CONTRARY EVIDENCE WHICH MAY LEAD TO THE CONCLUSION THAT THE AMOUNT OF SMALL CREDITORS REPRESENTS THE INCOME OF THE ASSESSEE COMPANY RELYING ON THE FOLLOWING JUDGMENTS. I. CIT VS. PUNJAB TYRES 162 ITR 517 (M.P.) (HC) I I . SHREE NIRMAL COMMERCIAL LTD. VS CIT 218 CTR 581 (BOMBAY HIGH COURT) III . CIT VS. AGGARWAL PIPE CO. 240 ITR 881 (DEL) IV. CIT VS. DEEWAN TOURISM LTD. 218 TAXMAN 123 (ALLAHABAD HIGH COURT) V. CIT VS. S.L.N. TRADERS 341 ITR 235 (KAR) VI. CIT VS. SARAN KHANDSARI SUG AR WORKS 246 ITR 216 (ALL) VII. CIT VS. SMT.VINAY SHARMA (DELHI HIGH COURT ) ITA 187/2014 DATED 02.05.2014 PAGES NO. 92 TO 94 VIII. PCIT VS. CONTROL AND SWITCH GEAR CONTRACTORS LTD. ITA 2 90/2015 DATED 24.08.2015 (DEL) ITA NO. 216/AGR/2014 12 IX. PUNJAB RISE MILLS VS. CIT & ANOTHE R 250 CTR 201 (ALL) X. CIT VS. SUBHASH KUMAR JAIN 335 ITR 364 (PUNJAB & HARYANA HIGH COURT) 9 . THE LD. SR. DR PLACED STRONG RELIANCE ON THE ORDER OF CIT(A). HE CONTENDED THAT THE ASSESSEE WAS UNDER LEGAL OBLIGATION TO DISCHARGE ITS ONUS TO SUBMIT PROOF OF IDENTITY, SOURCE AND CREDITWORTHINESS OF THE UNSECURED CASH LOAN RECEIVED FROM THE CASH CREDITORS. HE FURTHER STATED THAT IT IS EVIDENCE FROM THE DISCUSSION ON PAGE NO. 3 TO 4 OF THE PENALTY ORDER THAT THE ASSESSEE SURRENDERED UNSECURED LOAN AS INCOME ONL Y WHEN THE INVESTIGATION WAS STARTED BY AO BY CALLING FOR DETAILS SUCH AS BANK A/C , PAN NO., RETURN OF INCOME, COMPUTATION OF INCOME, WHICH THE ASSESSEE FAILED TO FURNISH. THUS, THE SURRENDERED OF RS.10,50,000/ - WAS COME TO COVER UP ITS UNSECURED LOANS FA LSELY SHOWN IN BALANCE SHEET ITS UNDISCLOSED INCOME. THE LD. DR SUBMITTED THAT AS PER SECTION 68 OF IT ACT, THE ASSESSEE IS REQUIRED TO PROVE THE IDENTITY SOURCE AND CREDITWORTHINESS OF THE CASH CREDITORS BECAUSE HE HAS SPECIAL KNOWLEDGE ABOUT HOW A PARTI CULAR CASH CREDIT WAS RAISED AS PER INVESTMENT THEREIN WAS MADE. SUCH PROOF UNDER PROOF OF IDENTITY OF THE PERSON WHO ACCORDING TO THE ASSESSEE TO PROVIDE THE SOURCE, CAPACITY TO ADVANCE SUCH MONEY AND LASTLY THE GENUINESS OF THE TRANSACTION. 10. LD. DR HA S SUBMITTED THAT CASE LAW RELIED UPON BY THE ASSESSEE /APPELLANT ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF ASSESSEE, THE LD. DR HAS BEEN ITA NO. 216/AGR/2014 13 DISTINGUISHED THE CASES ON FACTS AS THAT I N THE CASE OF ASSESSEE NO DETAILS OF THE FARMERS SUCH ADDRESS, PAN, ROI, BANK A/C ETC THAT IT IS A CASE OF CONCEALMENT OF INCOME WHEREAS THE CASES RELIED UPON BY LD. AR W ERE PERTAINING TO WRONG CLAIMS AS FILING OF INACCURATE PARTICULARS OF INCOME ADDRESS AND THAT I N THIS CASE PENALTY OF CONCEALMENT IS L EVIED WHEREAS IN CITED CASE PENDING FOR FILING INACCURATE PARTICULARS OF INCOME LEVIED. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD THE PLAIN FACTS OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED CERTAIN AMOUNTS AS UNSECURED L OANS AND AS PER THE REQUIREMENT OF THE IT ACT, THE ASSESSEE WAS REQUIRED TO ESTABLISH IDENTITY, CREDITWORTHINESS OF THE CREDITORS AS WELL AS GENUINENESS OF THE TRANSACTIONS WITH RESPECT TO THE UNSECURED LOANS SHOWN BY IT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS . T HEREFORE, THE ASSESSEE WAS REQUIRED TO SUBMIT THE DOCUMENTS IN ORDER TO ESTABLISH THE GENUINENESS OF UNSECURED LOANS. THE LD. DR CONTENDED THAT NO SUCH DOCUMENT WERE AVAILABLE WITH THE ASSESSEE TO ESTABLISH THE IDENTITY AS WELL AS THE CREDITWORT HINESS OF THE CREDITORS. HE FURTHER SUBMITTED THAT HAD THESE CREDITS BEING GENUINE IN NATURE DOCUMENTARY DETAILS REQUIRED COULD HAVE BEEN PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSEE. 1 2 . THE LD. CIT(A) HAS FOUND THAT THE SURRENDER CAN ALSO NOT BE ACCEPTED AS VOLUNTARY BECAUSE IF THE ASSESSEE WANTED TO MAKE VOLUNTARY SURRENDER, HE COULD ITA NO. 216/AGR/2014 14 HAVE MADE THE SURRENDER ON ISSUING OF FIRST NOTICE BY THE AO U/S 143(2) WHEN AO STARTED THE SCRUTINY ASSESSMENT AS IT HAPPENED IN CASE LAW REFERRED BY THE ASSESSEE ITSELF BEFORE LD. CIT(A), IN THE CASE OF CIT VS. HA RN ARAI N OF HONBLE DELHI HIGH COURT THE GIFT WAS SURRENDERED THE GIFT WAS SURRENDERED BY THE ASSESSEE AFTER ISSUANCE OF FIRST QUESTIONNAIRE. HOWEVER, IN THE INSTANT CASE UNDER APPEAL, NO SURRENDER WAS MADE BY THE ASSESSEE WHEN THE FIRST QUESTIONNAIRE WAS SENT TO HIM. THE SURRENDER WAS MADE ONLY WHEN THE AO INSISTED FOR ESTABLISHING THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND HE CONFIRMED THE PENALTY HOLDING THAT THE SURRENDERED OF UNSECURED LOANS AS INCOME ONLY WHEN THE AO STARTED INVESTIGATION TO FIND OUT THE GENUINENESS OF UNSECURED LOANS BECAUSE THE ASSESSEE KNEW THAT IT WOULD NOT BE IN A POSITION TO SUBSTANTIATE THE GENUINENESS OF THE LOAN. 1 3 . THE LD. CIT(A ) HAS SPECIFICALLY E NDORSED THE FACTS OF CONCEALMENT OF INCOME AS DISCUSSED BY THE AO , THAT THE ASSESSEE FALSELY SHOWN AS UNDISCLOSED INCOME IN THE SHAPE OF UNSECURED LOANS FROM FARMERS SO THAT IT MAY GET AWAY WITHOUT PAYING ANY TAXES THEREON AND HE SURREN DERED THIS AMOUNT DURING THE SCRUTINY PROCEEDINGS ONLY WHEN HE REALIZED THAT HE HAD NO ALTERNATIVE BUT TO SURRENDER BECAUSE THE AO WAS INSISTING UPON TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS. 1 4 . THE LD. AR CONTENDED THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE MONEY SURRENDERED RS.10.50 LACS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AGAINST 36 AGRICULTURISTS BELONGS TO ASSESSEE AND NOT TO THE ITA NO. 216/AGR/2014 15 CASH CREDITORS. 1 5 . THE LD. AR FURTHER SUBMITTED THAT THE DECISION RELIED UPON BY THE AO AND LD. CIT(A) ARE NOT APPLICABLE TO HIS CASE PLACING RELIANCE ON THE DECISION OF RELIANCE PETRO PRODUCTS (P.) LTD. BESIDES A SET OF OTHER JUDGMENTS LISTED AS ABOVE. 1 6 . ALL THE ABOVE FACTS WERE DULY TAKEN INTO ACCOUNT BY LD. CIT(A) WHILE CONFIRMING THE PENALTY LEVIED BY AO U/S 171(1)(C) OF THE I.T. ACT. IT REMAINS UNDISPUTED FACT AS CORRECTLY CONSIDERED BY LD. CIT(A), THAT THE AMOUNT HAS SHOWN WERE NOT EXPLAIN ED BY THE AS SESSEE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS; THAT TO ESTABLISH IDENTITY, CREDITWORTHINESS OF THE CREDITORS AS WELL AS GENUINENESS OF THE TRANSACTION OF THE UNSECURED LOAN SHOWN , I T WAS REQUIRED TO COLLECT DOCUMENTS THAT TO ESTABLISH GENUINENES S OF U NSECURED LOANS BY CREDITORS , HAD THESE CASH CREDITS BEING GENUINE IN NATURE. T HE LD. CIT(A) HAS AGREE D WITH THE AO THAT ASSESSEE SURRENDERED THE UNSECURED LOANS AS INCOME ONLY WHEN THE AO STARTED INVESTIGATION TO FIND OUT THE GENUINENESS OF UNSECURED LOANS BECAUSE THE ASSESSEE KNEW THAT IT WOULD NOT BE IN A POSITION TO SUBSTANTIATE THE GENUINENESS OF THE L OAN. 1 7 . WE FIND THAT THE ASSESSEES CONTENTION IN RESPECT OF NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE THAT THE MONEY BELONGS TO ASSESSEE IS CONTRARY TO THE FACTS OF THE CASE AS DISCUSSED IN ORDER OF AO AND LD. CIT(A) SINCE ASSESSE E FAILS TO DISCHARGE ITS PRIMARY ONUS, BY NOT FURNISHING ADDRESS ES , BANK A/C, PAN NO. RETURN OF INCOME ETC. OF CREDITORS TO PROVE IDENTITY , CREDITWORTHINESS AND ITA NO. 216/AGR/2014 16 GENUINENESS OF TRANSACTION S . WE HAVE ALSO CONSIDERED THE CITATION RELIED UPON BY THE LD. AR . TH E JUDGMENT RELIED UPON BY LD. AR ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE , BECAUSE T HE AO HAS LEVIED PENALTY FOR CONCEALMENT OF INCOME WHEREAS THE CITATION RELIED UPON INVOLVED THE CASES OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR WRONG CLAIM OF EXPENSES. 1 8 . IN VIEW OF THE ABOVE DISCUSSION, WE FIND THAT THERE IS NO ERROR IN THE ORDER OF THE LD. CIT (A) AND SAME IS HEREBY CONFIRMED. 19 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 /1 1 /2016. SD/ - SD/ - (A. D. JAIN) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 /1 1 /2016 A.K.V. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR