M/s. Royal Times Traders, Jammu V. The Commissioner of Income-tax, Jammu

ITA 220/ASR/2012

• Counselvise Citation: 22020914 RSA 2012
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Opportunity of being heard; Capital receipt
• Section: 143(3); 27; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 220(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN :AAIFR0450R M/S. ROYAL TIMES TRADERS, VS. COMMISSIONER OF INCOM E-TAX, JAMMU. JAMMU. (APPELLANT) (RESPONDENT) I.T.A. NO. 221(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN :AAIFR0450R M/S. ROYAL TIMES TRADERS, VS. ADDL. COMMR OF INCOME -TAX, JAMMU. CIRCLE-1, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. R.K. GUPTA, CA RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING:31.07.2012 DATE OF PRONOUNCEMENT:09/08/2012 ORDER PER BENCH ; THE APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE COMMISSIONER OF INCOME TAX (J&K), JAMMU, DATED 30.03.2012 PASSE D UNDER SECTION 263 ITA NOS. 220 & 221(ASR)/2012 2 OF THE INCOME-TAX ACT, 1961 ( IN SHORT, THE ACT) FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS ALSO FILED AN APPEAL IN ITA NO. 221(ASR)/2012 WHICH ARISES FROM THE ORDER OF THE CIT(A), JAMMU, DATED 0 2.03.2012 FOR THE ASSESSMENT YEAR 2007-08. 3. SINCE THE ISSUES IN BOTH THE APPEALS ARE INTER-R ELATED AND THEREFORE, FOR THE SAKE OF CONVENIENCE BOTH THE APPEALS ARE BEING DECIDED BY THIS CONSOLIDATED ORDER. 4. THE ASSESSEE IN ITA NO.220(ASR(/2012 HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT IS NOT JUSTIFIED ON LAW AS WELL AS ON FACTS IN CANCELING THE ASSESSMENT ORDER OF THE A.O. WHICH HAS BEEN PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961. THE ORDER OF THE LD. AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE IN TERMS OF SECTION 263 OF THE INCOME-T AX ACT, 1961. IT IS PRAYED THAT THE ORDER OF CIT PASSED U/S 263 OF THE INCOME TAX ACT, 1961 MAY PLEASE BE ANNULLED. 2. THE APPELLANT CRAVES, LEAVES TO ALTER AND ADD TO SUBSTITUTE ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING. 5. THE ASSESSEE IN ITA NO.221(ASR)/2012 HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A) IS NOT JUSTIFIED ON FACT S IN CONFIRMING THE ACTION OF THE LD. A.O. FOR IMPOSING PENALTY UND ER SEC. 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THAT THE APPELLANT CRAVES, LEAVES TO ALTER AND A DD TO SUBSTITUTE ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARI NG. ITA NOS. 220 & 221(ASR)/2012 3 6. FIRST OF ALL, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO.220(ASR)/2012 WITH REGARD TO THE ORDER UNDER SEC TION 263 OF THE ACT, PASSED BY THE LD. CIT, JAMMU. THE BRIEF FACTS ARE T HAT THE ORDER UNDER SECTION 143(3) OF THE ACT, WAS PASSED BY THE A.O. O N 31.12.2009 WHERE ADDITION OF RS.10,28,400/- WAS MADE ON ACCOUNT OF A MOUNT FOUND CREDITED IN THE BOOKS OF ASSESSEE-FIRM IN THE NAME OF THE PARTN ERS. IN FACT, THE ASSESSEE HAD RECEIVED FRESH CAPITAL DURING THE IMPUGNED YEAR AMOUNTING TO RS.20,88,200/- I.E. RS.10,28,400/- FROM THE PARTNER MR. NARINDER ANAND AND RS.10,59,800/- FROM THE PARTNER SMT. KAMLESH ANAND . THE LD. CIT VIDE HIS ORDER DATED 30.03.2012 AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE WAS OF THE VIEW THAT THE AO DID NOT MAKE THE ENQUIRY WITH REGA RD TO THE CREDIT OF CAPITAL BY SMT. KAMLESH ANAND IN THE BOOKS OF THE FIRM AND THEREFORE, HE FORMED THE VIEW THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THEREFORE, CANC ELLED THE ORDER OF THE AO PASSED UNDER SECTION 143(3) OF THE ACT, DATED 31.12 .2009 WITH THE DIRECTION THAT FRESH ASSESSMENT BE FRAMED AFTER PROVIDING REA SONABLE OPPORTUNITY OF BEING HEARD. 7. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE , MR. R.K. GUPTA, CA, ARGUED THAT THE AO HAD MADE THE COMPLETE ENQUIRIES WITH REGARD TO THE INTRODUCTION OF THE CAPITAL BY THE PARTNERS MR.NARI NDER ANAND AND SMT. ITA NOS. 220 & 221(ASR)/2012 4 KAMLESH ANAND. THE SOURCES AVAILABLE WITH MR. NARIN DER ANAND AND SMT. KAMLESH ANAND HAD BEEN SUBMITTED BEFORE THE A.O. VI DE LETTER AVAILABLE AT PB-11 ALONGWITH CERTIFICATE OF CONFIRMATION OF GIFT HAVING BEEN RECEIVED FROM THE SONS AND DAUGHTER IN LAWS, WHICH IS EVIDEN T FROM THE LETTER SUBMITTED TO THE DCIT, CIR.1, JAMMU AVAILABLE AT PB -5 TO 8 & 11. THE CONFIRMATIONS OF THE GIFTS RECEIVED BY THE SAID PAR TNERS FROM THE SONS AND DAUGHTER-IN-LAW WAS ALSO FILED WHICH ARE PART OF TH E PAPER BOOK. ALL THE DONORS ARE INCOME-TAX ASSESSEES AND INCOME-TAX PART ICULARS WERE FILED BEFORE THE AO ALONGWITH BANK ACCOUNT OF THE DONORS FROM WERE THE CASH HAD BEEN WITHDRAWN AND GIFTED TO THE PARTNERS IS ALSO P ART OF THE PAPER BOOK. AS A MATTER OF FACT, THE AO BEING SATISFIED WITH THE CA SH WITHDRAWAL OF RS.8,06,000/- BY MS. MANISHA ANAND, THE DONOR AND R S.10,61,000/- BY MR. RAJAT ANAND, THE DONOR, WHEREAS MANISHA ANAND HAD G IVEN GIFT OF RS.6,59,800/- AND MR. RAJAT ANAND HAD GIVEN A GIFT OF RS.4,00,000/- OUT OF THE SAID CASH WITHDRAWALS TO MRS. KAMLESH ANAND, TH E PARTNER AND THEREFORE, AO DID NOT MAKE ANY ADDITION IN THE HANDS OF MRS. K AMLESH ANAND. THE AO DID NOT CONSIDER THE GIFTS HAVING BEEN RECEIVED BY THE OTHER DONORS I.E.MR. GAUTAM ANAND AND MR. MANU ANAND FROM MS. MA NISHA ANAND AND MR. RAJAT ANAND FOR WHICH NECESSARY CONFIRMATION OF THE GIFTS WERE PLACED ON RECORD BEFORE THE AO. THIS IS HOW THE AO NOT BEI NG SATISFIED WITH THE ITA NOS. 220 & 221(ASR)/2012 5 GIFTS MADE BY MR. GAUTAM ANAND AND MR. MANU ANAND LED THE AO FOR MAKING THE ADDITION IN HIS ORDER U/S 143(3) DATED 3 1.12.2009. THE AO CONSIDERED ONLY RS.1 LAC HAVING BEEN WITHDRAWN BY MR. GAUTAM ANAND AND RS.1.21 LAC HAVING BEEN WITHDRAWN BY MR. MANU A NAND AND NOT THE GIFTS RECEIVED FROM RAJAT ANAND AND MS. MANISHA ANA ND. THEREFORE, ALL THE DETAILS WERE SUBMITTED BEFORE THE AO WHO HAVING BEE N SATISFIED AND WITH A CONSCIOUS DECISION DID NOT MAKE ANY ADDITION OF RS. 10,59,800/- BEING THE CAPITAL RECEIPT BY SMT. KAMLESH ANAND. AFTER DETAIL ED ENQUIRY, THIS POSITION WAS EXPLAINED TO THE LD. CIT(A) AND THE LETTER OF T HE ASSESSEE IS AVAILABLE AT PAGES 2 TO 5 OF HIS ORDER. THEREFORE, THE ORDER OF THE AO CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. IT WAS ALSO ARGUED BY THE LD. COUNSEL FOR THE ASSESSE THAT IN FACT, NO AD DITION IN THE HANDS OF THE ASSESSEE-FIRM ON ACCOUNT OF CAPITAL INTRODUCED BY T HE PARTNERS CAN BE MADE IN THE PRESENT. ONCE, THE PARTNERS HAVE DECLARED TH EIR INVESTMENT IN THEIR RETURN OF INCOME, WHO ARE REGULARLY ASSESSED TO TAX IS NOT UNDER DISPUTE. THE LD. COUNSEL FOR THE ASSESSEE, MR. R.K. GUPTA, CA RE LIED UPON VARIOUS DECISIONS OF THE HONBLE PUNJAB & HARYANA HIGH COUR T AS UNDER: I) C.I.T. VS. METAL & METAL OF INDIA (2007) 208 CT R 457 (P&H) II) C.I.T. VS. BURMA ELECTRO CORPORATION (2001) 252 ITR 344 (P&H). III) C.I.T. VS. RAMESHWAR DASS SURESH PAL CHEEKA (2007) 208 CTR 459 (P&H) ITA NOS. 220 & 221(ASR)/2012 6 7.1 THE COPIES OF ALL THE DECISIONS OF THE HONBLE PUNJAB & HARYANA HIGH COURTS HAVE BEEN PLACED AT PAGES 16, 18, 23 & 27, W HERE IT HAS BEEN HELD THAT PARTNERS HAVING ADMITTED OF MAKING THE DEPOSIT WITH THE ASSESSEE-FIRM, EVEN IF THE CLAIM OF GIFT RECEIVED BY SUCH PARTNERS IS REJECTED, IT IS THE PARTNER WHO IS LIABLE TO BE TAXED BY TREATING THE SAID AMOU NT AS UNDISCLOSED INCOME AND FIRM CANNOT BE SUBJECTED TO TAX ON THAT GROUND , HAS BEEN HELD IN THE CASE OF CIT VS. METAL & METAL OF INDIA (SUPRA). SIMILAR RATIO HAS BEEN LAID DOWN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN OTHER CASES CITED HEREINABOVE. 7.2. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSES SEE THAT SECTION 263 OF THE ACT, DOES NOT VISUALIZE SUBSTITUTION OF JUDGME NT OF CIT FOR THAT OF THE AO, UNLESS THE DECISION IS HELD TO BE ERRONEOUS AND ORDER IS ERRONEOUS WHEN IT IS NOT IN ACCORDANCE WITH LAW AND IS PREJUDICIAL WHEN IT HAS CAUSED LOSS TO THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE, REL IED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GA BRIAL INDIA LTD. 203 ITR 108 (BOM.), DECISION OF ITAT DELHI BENCH IN THE CASE OF JAGJIT INDUSTRIES VS. ACIT (1997) 60 ITD (DEL) 295 AND DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ARVIND JE WELLERS (2003) 259 ITR 502 (GU). ITA NOS. 220 & 221(ASR)/2012 7 8. THE LD. DCIT(DR), SH. TARSEM LAL, ON THE OTHER H AND, RELIED AT THE OUTSET ON THE ORDER OF THE CIT, JAMMU DATED 30.03.2 012 AND HAS ARGUED THAT THE ASSESSEE HAD MADE A CONFESSION BY NOT MAKING T HE APPEAL AFTER ADDITION OF RS.10,28,400/-. THE AO HAS NOT TOUCHED THE ADDIT ION OF RS.10,59,800/- RECEIVED FROM THE PARTNER SMT. KAMLESH ANAND, AS CA PITAL CONTRIBUTION. THE LD. DCIT(DR), MR. TARSEM LAL, READ THE ORDER OF THE LD. CIT IN PARA 6.4, 6.5, 6.6, 7 AND ARGUED THAT THE AO HAS NOT MADE ANY INQUIRY ABOUT THE SAID AMOUNT OF RS.10,59,800/-. THE JUDGMENTS RELIED UPON BY THE LD. COUNSEL ARE NOT APPLICABLE IN THE PRESENT CASE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD SUBMITTED THE DETAILS WITH REGARD TO THE CAPITAL CONTRIBUTION OF RS.10,28 ,400/- BY MR. NARINDER ANAND AND RS.10,59,800/- BY SMT. KAMLESH ANAND, WHI CH IS EVIDENT FROM THE EXPLANATION GIVEN BY THE ASSESSEE IN HIS LETTER AVAILABLE AT PB-5, 9 & 11. THE CONFIRMATIONS OF THE GIFTS FROM THEIR OWN SONS AND DAUGHTER IN LAW WERE ALSO EXPLAINED IN THE SAID LETTER, WHICH ARE AVAIL ABLE ON RECORD. IN FACT, THE AO HAVING EXAMINED THE WITHDRAWALS OF RS.8,06,000/- IN THE CASE OF MS. MANISHA ANAND AND RS.10,61,000/- OF MR. RAJAT ANAND , WAS SATISFIED. THE GIFTS IN FACT WERE GIVEN OF RS. 4 LACS BY SH. RAJAT ANAND OUT OF WITHDRAWAL OF RS.10,61,000/- AND RS.6,59,800/- BY MS. MANISHA ANAND OUT OF ITA NOS. 220 & 221(ASR)/2012 8 WITHDRAWALS OF RS.8,06,000/- O MRS. KAMLESH ANAND, THE PARTNER. THE AO DID NOT TAKE INTO CONSIDERATION THE GIFT GIVEN BY M R. RAJAT ANAND TO MR.GAUTAM ANAND AND GIFTS GIVEN BY MS. MANISH ANAND AND MR. RAJAT ANAND TO MANU ANAND AND ACCORDINGLY HE MADE THE AD DITION OF THE CAPITAL INTRODUCED BY MR. NARINDER ANAND OF AN AMOUNT OF R S.10,28,400/-. IN FACT, WE ARE CONVINCED WITH THE ARGUMENTS MADE BY THE LD . COUNSEL FOR THE ASSESSEE THAT THE AO WAS NOT REQUIRED TO MAKE ANY A DDITION IN THE HANDS OF THE ASSESSEE-FIRM WHEN THE PARTNERS HAVING ADMITTED OF CONTRIBUTING THE CAPITAL TO THE ASSESSEE-FIRM AND PARTNERS THEMSELV ES ARE ASSESSED TO TAX AND HAD DECLARED THE SAID INVESTMENT IN THEIR RETURNS OF INCOME, IS NOT UNDER DISPUTE AND IS A MATTER OF RECORD AND AS PER THE F INDINGS OF THE LD. CIT UNDER SECTION 263 IN PARA 6.1 TO 7 OF HIS ORDER. TH IS POSITION OF HAVING ACCEPTED THE GIFT WAS ALSO EXPLAINED BEFORE THE LD. CIT, WHICH IS AVAILABLE IN THE ORDER OF THE LD. CIT IN PARAS 6.1 TO 7 OF HIS O RDER WHICH IS CLARIFIED AS UNDER: CAPITAL CONTRIBUTED BY MR. NARINDER ANAND RS.10, 28,400/- I) OUT OF GIFT FROM GAUTAM ANAND RS.5,28,400 WHO HAD THE SOURCES AS UNDER: A) SELF CASH WITHDRAWAL RS.1,00,000 B) GIFT FROM RAJAT ANAND RS.4,28,400 II) OUT OF GIFT FROM MANU ANAND RS.5,00,000 ITA NOS. 220 & 221(ASR)/2012 9 WHO HAD THE SOURCES AS UNDER: A) SELF CASH WITHDRAWAL RS.1,21,000 B) GIFT FROM MANISHA ANAND RS.1,46,200 C) GIFT FROM RAJAT ANAND RS.2,32,600 RS.10,28,400/- CAPITAL CONTRIBUTED BY MRS. KAMLESH ANAND RS.10,5 9,800/- I) OUT OF GIFT FROM RAJAT ANAND RS.4,00,000 II) OUT OF GIFT FROM MANISH ANAND RS.6,59,800 RS.10,59,800/- ALTERNATIVELY GIFTS GIVEN BY I) RAJAT ANAND OUT OF CASH WITHDRAWALS OF RS.10, 61,000/- TO MRS. KAMLESH ANAND RS.4,00,000 TO GAUTAM ANAND RS.4,28,400 TO MANU ANAND RS.2,32,600 II) MANISH ANAND OUT OF CASH WITHDRAWALS OF RS.8,06,000/- TO MRS. KAMLESH ANAND RS.6,59,800 TO MR. MANU ANAND RS.1,46,200 THEREFORE, IT CANNOT BE SAID THAT THE AO HAS NOT C ONDUCTED THE INQUIRY BEFORE ARRIVING AT A CONCLUSION. IN FACT, THE AO SH OULD NOT HAVE EVEN MADE THE ADDITION OF RS.10,28,400/- IN VIEW OF DECISIONS OF VARIOUS COURTS OF LAW AND OUR FINDINGS HEREINABOVE. UNDER SECTION 263 OF THE ACT, THE LD. CIT CANNOT BE GIVEN THE POWER TO SUBSTITUTE HIS OWN JUD GMENT FOR THAT OF THE AO. IN THE PRESENT CASE, THE ORDER PASSED BY THE AO IS NOT ERRONEOUS AND HAS BEEN PASSED BY APPLYING THE MIND THOUGH THE ADDITI ON OF SAID AMOUNT OF RS.10,28,400/- ALSO SHOULD NOT HAVE BEEN MADE , FO R WHICH THE ASSESSEE HAD SUBMITTED THE EXPLANATION. THE RELIANCE PLACED BY T HE LD. COUNSEL FOR THE ITA NOS. 220 & 221(ASR)/2012 10 ASSESSEE IN THE CASE OF CIT VS. GABRIAL INDIA LTD. 203 ITR 108 (BOM.), IN THE CASE OF CIT VS. ARVIND JEWELLERS 259 ITR 502 (G UJ.) AND IN THE CASE OF JAGJIT INDUSTRIES VS. ACIT 60 ITD (DEL) 295 (SUPRA) SUPPORTS OUR VIEWS. IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT HAS NO AUT HORITY TO INITIATE PROCEEDINGS FOR REVISION AND EXERCISE OF POWER OF S UO MOTU REVISION WILL AMOUNT ARBITRARY EXERCISE OF POWER AND THERE IS NO MATERIAL AVAILABLE WITH THE LD. CIT(A) TO COME AT THE CONCLUSION FOR REVISI NG THE ASSESSMENT OR CANCELING THE ASSESSMENT. THEREFORE, THE ORDER OF T HE LD. CIT IS BAD IN LAW AND THEREFORE, THE ORDER OF THE LD. CIT PASSED U/S 263 OF THE ACT IS SET ASIDE. 10. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO.221(ASR)/2012 WITH REGARD TO THE LEVY OF PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT, WHICH ACTION OF THE AO HAS BEEN CONFIRMED BY THE LD. CIT (A). 10.1. THE FACTS, AS STATED HEREINABOVE ARE THAT THE AO IN THE ASSESSMENT MADE UNDER SECTION 143(3) DATED 31.12.2009 MADE AN ADDITION OF RS.10,28,400/- BEING A CAPITAL CONTRIBUTED BY SH. N ARINDER ANAND, THE PARTNER OF THE ASSESSEE-FIRM, SINCE THE ASSESSEE HA D FAILED TO FURNISH PROPER EXPLANATION FOR THE CREDIT ENTRIES IN THE BOOKS OF THE ASSESSEE. THE ASSESSEE DID NOT FILE THE APPEAL AGAINST THE SAID ADDITION IS ALSO A MATTER OF RECORD. THE AO VIDE ORDER DATED 30.06.2010 LEVIED THE PENAL TY UNDER SECTION ITA NOS. 220 & 221(ASR)/2012 11 271(1)(C) OF THE ACT, AFTER CONSIDERING THE EXPLANA TION OF THE ASSESSEE VIDE LETTER DATED 15.06.2010, WHICH WAS CONFIRMED BY THE LD. CIT(A). 11. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSES SEE THAT THE ASSESSEE HAD SUBMITTED THE EXPLANATION VIDE LETTER WHICH IS AVAI LABLE AT PB 5 TO 10 & 11 IN ITA NO.220(ASR)/2012 ALONGWITH CONFIRMATION OF THE PERSON WHO HAD GIVEN THE GIFTS TO THE PARTNERS. THE ASSESSMENT PARTICULA RS OF THE DONORS AND ALL THE PARTNERS AND THE SOURCES WHICH WERE ALL SUBMITTED B EFORE THE AO. THE AO WAS NOT SATISFIED WITH THE EXPLANATION SINCE THE DO NORS MR. GAUTAM ANAND AND MR. MANU ANAND HAD WITHDRAWN RS. 1 LAC AND RS.1.21 LAC ON DIFFERENT DATES AND IT WAS ONLY SOURCE AVAILABLE WI TH THEM AS PER AO WHO DID NOT TAKEN INTO ACCOUNT THE GIFT RECEIVED FROM M R. RAJAT ANAND AND MANISHA ANAND FOR WHICH NECESSARY CONFIRMATIONS OF THE GIFTS AND THE BANK ACCOUNTS OF THE DONORS WERE SUBMITTED BEFORE THE A O DURING ASSESSMENT PROCEEDINGS. IT WAS ALSO ARGUED BY THE LD. COUNSEL THAT THE ADDITION IN THE HANDS OF THE ASSESSEE-FIRM CANNOT BE MADE WHEN THE PARTNERS HAVING ACCEPTED THE SAID INVESTMENT WHO HAD DECLARED IN TH E RETURN OF INCOME, WHICH IS NOT A MATTER OF DISPUTE, IN VIEW OF VARIOU S DECISIONS OF HONBLE PUNJAB & HARYANA HIGH COURT REFERRED TO HEREINABOVE . THE ASSESSEE HAD SUBMITTED THE EXPLANATION WHICH IS ALSO A MATTER OF RECORD AND THE A.O. IN ITS PENALTY ORDER HAS REPRODUCED THE EXPLANATION SU BMITTED BY THE ASSESSEE. ITA NOS. 220 & 221(ASR)/2012 12 THE PENALTY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND, THEREFORE, IT CAN NOT BE SAID THAT THE ASSESSEE HAS NOT SUBMITTED ANY EXPLANATION, SINCE THE EXPLANATION HA S BEEN SUBMITTED DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING PENALTY PR OCEEDINGS. IT WAS ARGUED THAT THE ASSESSEE WAS HAVING LOSS OF RS.35,27,953/- AND THERE WAS NO NEED TO SUPPORT THE LOSS BY FURTHER INTRODUCING THE CAPITAL OF RS.10,28,400/- BY MR. NARINDER ANAND PARTNER AND RS.10,59,800/- BY SMT. K AMLESH ANAND, THE PARTNER. NOT FILING OF THE APPEAL BY THE ASSESSEE D OES NOT TANTAMOUNT TO THE ACCEPTANCE OF THE CONCEALMENT OF INCOME. AS A MATTE R OF FACT, IT WAS ON THE WRONG ADVICE OF THE LD. COUNSEL APPEARING BEFORE TH E AO THAT ON THE LOSS OF RS.35,27,953/-, THE ASSESSEE IS NOT GOING TO LOOSE ANYTHING EVEN IF NO APPEAL IS MADE. THEREFORE, THE ASSESSEE HAVING SUBMITTED T HE EXPLANATION BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS AND IN THE PENALTY PROCEEDINGS CANNOT BE SAID TO HAVE CONCEALED THE INCOME OR CANNOT BE SAI D TO HAVE FURNISHED THE INACCURATE PARTICULARS WITH RESPECT TO SUCH INCOME. 12. THE LD. DR, ON THE OTHER HAND, ARGUED THAT THE ASSESSEE HAD NOT FILED THE APPEAL BEFORE THE LD. CIT(A) WITH RESPECT TO TH E ADDITION OF R.10,28,400/- BEING CAPITAL CONTRIBUTION BY MR. NAR INDER ANAND, PARTNER OF THE ASSESSEE-FIRM AND THEREFORE, THIS IS A CONFESS ION MADE BY THE ASSESSEE ITA NOS. 220 & 221(ASR)/2012 13 FOR ACCEPTING THE CONCEALMENT OF INCOME AND THE ASS ESSEE HAS NOT SUBMITTED ANY EXPLANATION TO THE SATISFACTION OF THE AO IS A MATTER OF RECORD. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AS SUBMITTED THE EXPLANATION WITH REGARD TO THE ADDITION OF RS.10,2 8,400/-. THE PARTNER SH. NARINDER ANAND HAD CONTRIBUTED THE CAPITAL IN THE A SSESSEEFIRM. THE PARTNER SH. NARINDER ANAND IS THE INCOME-TAX ASSESSEE IS NO T UNDER DISPUTE AND HE HAS ACCEPTED HAVING CONTRIBUTED THE SAID CAPITAL I N THE ASSESSEE-FIRM. FIRST OF ALL, THE SAID ADDITION SHOULD NOT HAVE BEEN MADE IN VIEW OF THE DECISIONS OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF C.I.T. VS. METAL & METAL OF INDIA (2007) 208 CTR 457 (P&H), IN THE C ASE OF C.I.T. VS. BURMA ELECTRO CORPORATION (2001) 252 ITR 344 (P&H) AND IN THE CASE OF C.I.T. VS. RAMESHWAR DASS SURESH PAL CHEEKA (2007) 208 CTR 459 (P&H). THE ASSESSEE HAD SUBMITTED THE EXPLANATION IS ALSO A MATTER OF RECORD, AS MENTIONED HEREINABOVE, IN OUR DECISION UNDER SECTIO N 263 AS WELL AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE.. THE ASSESSEE IS HAVING A LOSS OF RS.35,27,953/- IS ALSO A MATTER OF RECORD. THE ARGU MENTS MADE BY THE LD. COUNSEL APPEARING BEFORE US ON BEHALF OF THE ASSESS EE FOUND TO BE CONVINCING THAT THE LD. COUNSEL APPEARING BEFORE THE AO DID N OT FILE THE APPEAL FOR THE REASON THAT THE ASSESSEE IS HAVING A LOSS OF RS.35, 27,953/-. NOT FILING OF THE ITA NOS. 220 & 221(ASR)/2012 14 APPEAL BEFORE THE LD. CIT(A) FOR ANY ADDITION MADE DOES NOT TANTAMOUNT THAT THE ASSESSEE HAD MADE CONFESSION OR ACCEPTED T HE CONCEALMENT OF INCOME OR FURNISHED INACCURATE PARTICULARS WITH RES PECT TO SUCH INCOME. THE ASSESSEE HAVING SUBMITTED THE EXPLANATION ALONGWITH PARTICULARS OF INCOME AND ALSO SOURCE OF SOURCE HAVING BEEN EXPLAINED, IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED ANY INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME. THEREFORE, NO PENALTY UNDER SECTION 271(1) (C) OF THE ACT CAN BE LEVIED. THE PENALTY SO CONFIRMED BY THE LD. CIT(A) IS DIRECTED TO BE CANCELLED. ACCORDINGLY, ALL THE GROUNDS OF THE ASSE SSEE ARE ALLOWED. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IN ITA NO.220(ASR)/2012 & ITA NO.221(ASR)/2012 ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 9TH AUGUST, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 9TH AUGUST, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:/S. ROYAL TIMES TRADERS, JAMMU 2. THE DCIT, CIR.1, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER