C.S.Projects (I) Pvt Ltd., Erode V. ITO Ward 1(1), Erode

ITA 3240/CHNY/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9209 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G CHANDRABABU
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Unexplained cash credit; Invalid notice; Principle of natural justice; Initiation of penalty proceedings; Condonation of delay; Set aside
• Section: 271(1)(c); 274; 13; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , $ BEFORE SHRI V.DURGA RAO,JUDICIAL MEMBER AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.3240/CHNY/2017 ( / ASSESSMENT YEAR: 2012-13) M/S.I.C.I PROJECTS INDIA PVT.LTD (FORMERLY KNOWN AS M/S. C.S.PROJECTS INDIA PVT.LTD. ) 5/1, VETERINARY HOSPITAL ROAD, ERODE-638 001. VS INCOME TAX OFFICER, WARD-1(1), ERODE. PAN: AADCC 8560H ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.B.RAMAKRISHNAN, FCA /RESPONDENT BY : MR.G.CHANDRABABU, ADDL.CIT /DATE OF HEARING : 23.02.2021 /DATE OF PRONOUNCEMENT : 19.03.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(A) -3, COIMBATORE DATED 18.08. 2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- AGAINST ORDER OF CIT (A)-ILI, PASSED UNDER SEC 271 (1) (C) OF THE ACT (STATED AS ORDER UNDER SEC. 143(3)) COIMBATORE. IN I.TA. NO. 268/15-L6(A)1 DATED 18.8.16. 1. THE ORDER OF THE COMMISSIONER OR INCOME TAX (A PPEALS) IN AS MUCH AS HE HAS HELD AGAINST THE APPELLANT BY UPH OLDING THE LEVY OF PENALTY UNDER SEC 271(1)(C) OF THE ACT IS O PPOSED TO LAW AND TO PRINCIPLES OF NATURAL JUSTICE AND THE LIABLE TO BE CANCELLED. 2 ITA NO.3240/CHNY/2017 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE GROUNDS OF APPEAL IN PROPER PERSPEC TIVE. THE SUBMISSIONS OF APPELLANT HAS NOT BEEN BROUGHT OUT A ND CONSIDERED IN DETAILED MANNER. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY R LEVIED BY THE ASSESSING AU THORITY AND FAILED TO TAKEN INTO CONSIDERATION THAT ASSESSING O FFICER HAS NOT RECORDED THE REQUISITE SATISFACTION IN THE BODY OF ASSESSMENT ORDER FOR LEVYING PENALTY UNDER SEC 271(L) (C) OF T HE ACT. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSING AUTHORITY HAVING FAI LED TO. COMPLY WITH THE PROVISIONS OF SEC 271(1) (C) OF THE ACT WITH REGARD TO INITIATION OF PENALTY PROCEEDINGS, THE PR OCEEDINGS ARE VITIATED AND CONSEQUENTLY THE PENALTY ORDER PASSED WAS INVALID. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE FACT THAT PENALTY PROCEEDINGS ART IN DEPENDENT FROM THAT OF THE ASSESSMENT PROCEEDINGS AND OUGHT T O HAVE CONSIDERED SUBMISSIONS OF APPELLANT ON MERITS OF TH E MAILER BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN NOT NOTING THAT THE APPELLANT HAD NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME TO WARR ANT LEVY OF PENALTY UNDER THE ACT. THE PENALTY LEVIED OUGHT TO BE CANCELLED. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT T O HAVE APPRECIATED THE FACT THAT MERE ADDITIONS OR DISALLO WANCE MADE IN THE ASSESSMENT PROCEEDING WOULD NOT AUTOMATICALL Y RESULT IN LEVY OF PENALTY UNDER SEC 271(1) (C) OF THE ACT WHE N THERE WAS NO PROOF WITH REGARD TO CONCEALMENT OF INCOME OF T HE APPELLANT OR FURNISHING OF INACCURATE PARTICULARS BY THE APPE LLANT AND PENALTY IS LIABLE TO BE CANCELLED. 8. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN IGNORING THE FACT THE ASSESSING AUTHORITY HAS IS SUED NOTICE WITHOUT PROPER APPLICATION OF MIND UNDER SEC 271(1) (C) RWS 274 OF ACT WITHOUT SPECIFYING THE REASONS FOR INITIATIO N OF PENALTY AS 3 ITA NO.3240/CHNY/2017 TO WHETHER IT RELATES TO CONCEALMENT OF INCOME OR F OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. CONSEQUENTLY O RDER OF PENALTY PASSED ON THE BASIS OF INVALID NOTICE IS VO ID AND DESERVES TO BE DELETED. THIS STAND OF THE APPELLANT IS SUPPORTED BY VARIOUS JUDICIAL PRONOUNCEMENTS. 9. THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO NOTE THAT THE APPELLANT HAD NOT CONTESTED THE ASSESSMENT PROCEEDINGS AND MERE ADMISSION OF ADDITION TO AVOID FURTHER LITIGATION AND PAYMENT OF TAX DOES AMOUNT TO CONCEA LMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME AS HELD BY IN VARIOUS JUDICIAL PRONOUNCEMENTS. 10. THE LEVY OF PENALTY IS EXCESSIVE, ARBITRARY AND LIABLE TO BE DELETED IN TOTO. 11. THE APPELLANT CONTESTS ALL THE FINDINGS OF FACT AND LAW MADE BY THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE APPELLANT. 12. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL G ROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 13. ANY OTHER GROUND THAT MAY BE RAISED AT THE LIME OF PERSONAL HEARING. 3. AT THE TIME OF HEARING, LEARNED AR FOR THE ASSE SSEE SUBMITTED THAT THERE IS A DELAY IN FILING OF APPEAL FOR WHICH NECESSARY PETITION FOR CONDONATION OF DELAY ALONG W ITH AFFIDAVIT HAS BEEN FILED EXPLAINING THE REASONS FOR THE DELAY IN FILING APPEAL. ACCORDING TO THE LEARNED AR FOR THE ASSESS EE, THE ASSESSEE HAS FILED APPEAL WITHIN THE SPECIFIED TIME LIMIT ALLOWED UNDER THE ACT, BUT THE TRIBUNAL HAS CONSIDERED DELA Y ON THE 4 ITA NO.3240/CHNY/2017 BASIS OF CHALLAN FOR PAYMENT OF APPEAL FEE ON 20.0 4.2017 WHICH RESULTED IN DELAY OF 164 DAYS FROM EXPIRY OF TIME LIMIT PRESCRIBED FOR FILING APPEAL. BUT, FACT REMAINS THA T THE ASSESSEE AFTER RECEIPT OF DEFECT NOTICE FROM THE TRIBUNAL ON 17.11.2016, HAD REMITTED APPEAL FEES ON 22.11.2016, HOWEVER, TH E SAME WAS COMMUNICATED TO TRIBUNAL ON 20.04.217. IF THE D ATE OF FILING APPEAL IS CONSIDERED, THERE IS NO DELAY IN FILING THE APPEAL AND IF THE DATE OF PAYMENT OF APPEAL FEE IS CONSIDE RED, THEN THERE IS A DELAY OF 10 DAYS IN FILING THE APPEAL. H E FURTHER SUBMITTED THAT, BE THAT AS IT MAY, BUT FACT REMAINS THAT THERE IS INADVERTENT ERROR IN NOT PAYING APPEAL FEES BEFORE FILING THE APPEAL DUE TO MISTAKE OF A PERSON, WHO WAS HANDLING PAPERS, BUT THERE IS NO WILLFUL NEGLIGENCE ON THE PART OF THE ASSESSEE NOT TO FILE APPEAL WITHIN THE TIME ALLOWED UNDER TH E ACT. THEREFORE, CONSIDERING THE FACT THAT THE ASSESSEE H AS SHOWN INTEREST IN FILING APPEAL WITHIN THE DUE DATE SPECI FIED UNDER THE ACT, MARGINAL DELAY OF TEN DAYS MAY BE CONDONED IN THE INTEREST OF ADVANCEMENT OF SUBSTANTIAL JUSTICE . 4. THE LEARNED DR, ON THE OTHER HAND, FAIRLY AGREED THAT DELAY MAY BE CONDONED IN THE INTEREST OF JUSTICE. 5 ITA NO.3240/CHNY/2017 5. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED PE TITION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY ALO NG WITH REASONS GIVEN FOR NOT FILING APPEAL WITHIN DUE DATE SPECIFIED UNDER THE ACT . ADMITTEDLY, THE ASSESSEE HAS FILED APPEAL ON 08.11.2016, WHICH IS WELL WITHIN THE DUE DATE SPECI FIED UNDER THE ACT, BUT, THE TRIBUNAL HAS NOT CONSIDERED APPEA L FILED BY ASSESSEE ON 08.11.2016 FOR THE REASON THAT APPEAL PAPERS DID NOT HAVE CHALLAN FOR PAYMENT OF APPEAL FEE AND HENC E, CONSIDERED THE DATE OF FILING OF APPEAL WHEN THE A SSESSEE HAS COMMUNICATED CHALLAN FOR PAYMENT OF APPEAL FEE ON 20.04.2017. IF THE DATE OF COMMUNICATION OF CHALLA N FOR PAYMENT OF APPEAL FEE IS CONSIDERED I.E 20.04.2017, THEN THERE IS A DELAY OF 164 DAYS IN FILING APPEAL. IF THE DAT E OF FILING THE APPEAL WITHOUT CHALLAN FOR PAYMENT OF FEES IS CONSI DERED, THERE IS NO DELAY. THE ASSESSEE EXPLAINED THE REASONS F OR NOT ATTACHING CHALLAN FOR PAYMENT OF APPEAL FEE AND FUR THER, IMMEDIATELY AFTER RECEIPT OF DEFECT MEMO, PAYMENT O F FEES HAS BEEN REMITTED ON 22.11.2016. IF THE DATE OF PAYMENT OF APPEAL FEE IS CONSIDERED, THEN THERE IS A MARGINAL DELAY OF TEN DAYS IN FILING APPEAL. THEREFORE, CONSIDERING THE FACT THA T THE ASSESSEE 6 ITA NO.3240/CHNY/2017 HAS EXPLAINED HIS BONAFIDE IN FILING APPEAL WITHIN DUE DATE AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO FACT THAT ASSESSEE HAS PAID APPEAL FEES IMMEDIATELY ON RECEIPT OF DEFECT MEMO, WE DEEM IT APPROPRIATE TO CONDONE THE DELAY IN FILING APPEAL IN THE INTEREST OF ADVANCEMENT OF SUBSTANTIAL JUSTICE. HENCE, THE DELAY IN FILING THE APPEAL IS C ONDONED AND ADMIT THE APPEAL FOR HEARING. 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF PROJECT CONSULTANT AND R ENDERING MAP DRAWING WORKS IN ENGINEERING FIELD FILED ITS RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 24.05.2013 DE CLARING TOTAL INCOME OF ` 29,88,480/-. THE ASSESSMENT FOR IMPUGNED ASSESSMENT YEAR HAS BEEN COMPLETED U/S.143(3) OF THE INCOME TAX ACT, 1961, ON 31.03.2015 DETERMINING TO TAL INCOME AT ` 80,04,299/- AFTER MAKING ADDITIONS TOWARDS UNPROV ED LIABILITIES / CESSATION OF LIABILITY AND UNEXPLAIN ED CASH CREDIT U/S. 68 OF THE ACT FOR THE REASON THAT THE ASSESSEE HAS FAILED TO PROVE LIABILITY SHOWN UNDER THE HEAD MAP DRAWING CH ARGES AND HAS ALSO FAILED TO PROVE UNSECURED LOAN TAKEN FROM MR.KARUR RAMASAMY AMOUNTING TO ` 13,00,000/-. 7 ITA NO.3240/CHNY/2017 7. THEREAFTER, PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WAS INITIATED BY ISSUE OF NOTICE U/S.274 R.W.S 271( 1)(C) OF THE ACT. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT HA S NEITHER CONCEALED PARTICULARS OF INCOME NOR FURNISHED INACC URATE PARTICULARS OF INCOME, IN RESPECT OF ADDITIONS MADE TOWARDS UNPROVED LIABILITY, BECAUSE, THE ASSESSEE HAS FURNI SHED NECESSARY EVIDENCES TO PROVE LIABILITY AND ALSO PE RSONS, WHO RECEIVED PAYMENT FROM THE COMPANY HAS ADMITTED THE FACT THAT THEY HAVE RENDERED SERVICES IN CONNECTION MAP DRAWI NG WORK AND HAS ALSO RECEIVED PAYMENT IN FULL. BUT, THE AS SESSING OFFICER HAS DISREGARDED ALL EVIDENCES FILED BY THE ASSESSEE AND HAS MADE ADDITIONS ONLY ON THE BASIS OF FIELD REPOR T RECEIVED FROM INSPECTOR OF INCOME TAX, WHERE HE HAS STATED T HAT PERSONS HAVE STATED THAT THEY DO NOT HAVE ANY OUTST ANDING AS ON 31.3.2012. SIMILARLY, IN RESPECT OF UNSECURED LO AN RECEIVED FROM MR.KARUR RAMASAMY, THE ASSESSEE HAS FILED CONF IRMATION FROM PARTIES, BUT THE ASSESSING OFFICER HAS MADE A DDITION ONLY ON THE GROUND THAT NO PROPER EXPLANATION WAS FURNIS HED TO EXPLAIN UNSECURED LOAN SHOWN IN THE NAME OF MR.KAR UR RAMASAMY. THEREFORE, WHEN THE ASSESSEE HAS FURNISHE D 8 ITA NO.3240/CHNY/2017 NECESSARY EVIDENCES IN RESPECT OF CERTAIN PAYMENTS , MERELY FOR THE REASON THAT SAID PAYMENT HAS NOT BEEN SUBSTANT IATED TO THE SATISFACTION OF THE ASSESSING OFFICER, THE SAME CA NNOT BE CONSIDERED AS WILLFUL ATTEMPT MADE FOR CONCEALMENT OF PARTICULARS OF INCOME TO EVADE PAYMENT OF TAXES WHICH WARRANTS PENALTY U/S. 271(1)(C) OF THE ACT. 8. THE ASSESSING OFFICER HOWEVER, WAS NOT CONVIN CED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE AND ACC ORDING TO HIM, THE ASSESSEE HAS FAILED TO EXPLAIN OUTSTANDIN G LIABILITY SHOWN UNDER THE HEAD MAP DRAWING CHARGES WITH NECES SARY EVIDENCES. THE ASSESSING OFFICER FURTHER OBSERVED THAT EVEN IN RESPECT OF UNSECURED LOAN, THE ASSESSEE COMPANY HAS NOT FILED ANY EVIDENCES TO EXPLAIN LOAN TAKEN FROM THE PART Y. THEREFORE, HE OPINED THAT MERE PAYMENT OF AMOUNT BY CHEQUE IS NOT SUFFICIENT ENOUGH TO PROVE LIABILITY AND FILING CO NFIRMATION LETTER IS NOT ENOUGH TO PROVE ONUS CAST UPON THE ASSESSEE U/S.68 OF THE ACT. ACCORDINGLY, HE OPINED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN RES PECT OF UNPROVED LIABILITY AND UNEXPLAINED CASH CREDITS AN D HENCE, BY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF 9 ITA NO.3240/CHNY/2017 UOI VS. DHARMENDRA TEXTILE PROCESSORS (2008) 116 T AXMAN 65(SC) LEVIED PENALTY OF ` 15,49,889/- WHICH IS EQUIVALENT TO 100% OF TAX ON THE CONCEALED INCOME. 9. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE PREFERRED AN APPEAL BEFORE LEARNED CIT(A). BEFORE T HE LEARNED CIT(A), THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER TO ARGUE THAT IT HAS FURNISHED NECESSARY EVIDENCES IN RESPECT OF LIABILITY SHOWN U NDER THE HEAD MAP DRAWING CHARGES AND FURTHER RECIPIENT OF P AYMENT HAS BEEN CONFIRMED BEFORE THE INSPECTOR THAT THEY HAVE RECEIVED PAYMENT FOR RENDERING SERVICES. THEREFORE, MERELY FOR THE REASON THAT PARTIES HAVE NOT CONFIRMED DATE OF PAYMENT OF MONEY, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST TH E ASSESSEE THAT LIABILITY IS UNPROVED SO AS TO IMPO SE PENALTY U/S.271(1)(C) OF THE ACT. AS REGARDS UNEXPLAINED CA SH CREDIT BEING LOAN TAKEN FROM MR. KARUR RAMASAMY, THE ASSES SEE HAS DISCHARGED ITS ONUS BY FILING CONFIRMATION LETTERS , THEREFORE, THE SAME CANNOT BE CONSIDERED AS UNPROVED CREDITORS SO AS TO LEVY PENALTY U/S.271(1)(C) OF THE ACT. THE LEARNED CIT(A ), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE HE LD THAT THE 10 ITA NO.3240/CHNY/2017 FACTS BROUGHT BY THE ASSESSING OFFICER CLEARLY IND ICATE THAT THE ASSESSEE HAD CONCEALED INCOME IN RESPECT OF UNPROVE D LIABILITY REFLECTED AS SUNDRY CREDITORS AND HAS ALSO AGREED F OR ADDITION DURING THE ASSESSMENT PROCEEDINGS. THEREFORE, HE O PINED THAT IT IS A CLEAR CASE OF CONCEALMENT OF INCOME FALLING WITHIN THE AMBIT OF SECTION 271(1)(C) OF THE ACT, ACCORDINGLY, REJECTED ARGUMENTS TAKEN BY THE ASSESSEE AND CONFIRMED PENAL TY LEVIED U/S.271(1)(C) OF THE ACT. AGGRIEVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 10. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FA CT IN LIGHT OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT BEFORE C ONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER IN RESPECT OF ADDITIONS TOWARDS UNPROVED LIABILITIES AND UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT, BECAUSE ANY CLAIM OF EXPENDITURE WHICH WAS NOT SUBSTANTIATED BEFORE THE ASSESSING OFFICER CANNO T AUTOMATICALLY LEAD TO CONCLUSION THAT ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. THE LEARNED AR FURTHER SUBMITTED THAT THE A SSESSEE HAS FILED ALL EVIDENCES IN RESPECT OF UNPROVED LIAB ILITY TOWARDS 11 ITA NO.3240/CHNY/2017 MAP DRAWING CHARGES AND FURTHER PARTIES TO WHOM PA YMENT WAS MADE WERE ALSO CONFIRMED RECEIPT OF PAYMENT, BU T ONLY POINT WHICH WAS CONSIDERED BY THE ASSESSING OFFICE R IS STATEMENT OF PARTIES REGARDING DATE OF PAYMENT OF L IABILITY, OTHERWISE ALL THE PARTIES HAVE ACCEPTED THE FACT TH AT THEY HAVE RENDERED SERVICES TO THE COMPANY AND HAS ALSO RECEI VED PAYMENT IN CASH. THEREFORE, WHEN THE ASSESSEE HAS FILED ALL THOSE EVIDENCES, THE ASSESSING OFFICER HAS ERRED I N COMING TO THE CONCLUSION THAT LIABILITY IS UNPROVED. FURTHER, WHEN A CLAIM IS MADE TOWARDS EXPENDITURE WITH NECESSARY EVIDENCE, B UT THE SAME COULD NOT BE SUBSTANTIATED TO THE SATISFACTION OF THE ASSESSING OFFICER CANNOT BE CONSIDERED AS WILLFUL FURNISHING OF INACCURATE PARTICULARS INCOME SO AS TO EVADE PAYMEN T OF TAXES. THE LEARNED AR FURTHER SUBMITTED THAT INSOFAR AS UN SECURED LOAN RECEIVED FROM KARUR RAMASAMY, IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT IDENTITY OF PARTY WAS NOT P ROVED. IN FACT, THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM T HE PARTIES. THEREFORE, THE ASSESSING OFFICER HAS ERRED IN COMI NG TO THE CONCLUSION THAT UNSECURED LOAN TAKEN FROM PARTY BE COME UNEXPLAINED CREDIT IS LIABLE TO BE TAXED U/S.68 OF THE ACT AND 12 ITA NO.3240/CHNY/2017 FURTHER, WHICH AMOUNTS TO WILLFUL CONCEALMENT OF PA RTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF T HE ACT. IN THIS REGARD, HE HAS RELIED UPON THE DECISION OF CO- ORDINATE BENCH OF TRIBUNAL IN THE CASE OF LATA HOSPITALS PVT .LTD. VS.DCIT, VISAKHAPATNAM IN ITA NO. 649/VIZAG/2014 V IDE ORDER DATED 09.09.2016 AND ALSO THE DECISION OF HON'BLE S UPREME COURT IN THE CASE OF CIT VS.RELIANCE PETRO PRODUCT S PVT.LTD. 322 ITR 150. 13. THE LEARNED DR, ON THE OTHER HAND, SUPPORTING T HE ORDER OF LEARNED CIT(A) SUBMITTED THAT IT IS A FACT ON RE CORD THAT THE ASSESSEE HAS FAILED TO PROVE UNPAID EXPENSES AND UNEXPLAINED CASH CREDIT IN RESPECT OF LOAN TAKEN F ROM KARUR RAMASAMY, WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSING OFFICER HAS BROUGHT OUT CLEAR FACTS IN RESPECT OF B OTH THE ADDITIONS, WHERE NO EVIDENCE HAS BEEN FILED TO PROV E UNPAID LIABILITY. FURTHER, THE REPORT OF INSPECTOR OF IN COME TAX CLEARLY PROVES THAT THERE WAS NO OUTSTANDING PAYMENT AS ON 31.3.2012 IN RESPECT OF UNPAID LIABILITY. THEREFORE, IT IS IN CORRECT ON THE PART OF THE LEARNED AR FOR THE ASSESSEE TO ARGUE THAT IT HAS FURNISHED ALL THE DETAILS IN RESPECT OF UNPAID LIAB ILITY AND 13 ITA NO.3240/CHNY/2017 UNEXPLAINED CASH CREDIT. THE ASSESSING OFFICER AS WELL AS LEARNED CIT(A) HAS RIGHTLY HELD THAT ASSESSEE HAS C ONCEALED PARTICULARS OF INCOME, WHICH ATTRACTS PENALTY U/S. 271(1)(C) OF THE ACT. 12. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIA LS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW ALONG WITH CASE LAWS CITED BY THE LEARNED CO UNSEL FOR THE ASSESSEE. THE ASSESSING OFFICER HAS LEVIED PENALTY IN RESPECT OF TWO ADDITIONS I.E, I)UNPROVED LIABILITY IN RES PECT OF MAP DRAWING CHARGES, & II) UNEXPLAINED CASH CREDIT IN R ESPECT OF UNSECURED LOAN TAKEN FROM MR. KARUR RAMASAMY U/S.68 OF THE ACT. AS REGARDS UNPROVED LIABILITY, THE ONLY REASON GIVEN BY THE ASSESSING OFFICER TO MAKE ADDITION IS THAT RECIPIE NT OF PAYMENT HAS STATED THAT THERE IS NO OUTSTANDING AS ON 31.3. 2012, EXCEPT THIS, THE ASSESSING OFFICER HAS NOT DOUBTED THE FA CT OF RENDERING SERVICES BY THE PARTIES AND PAYMENT RECEI VED AGAINST SUCH SERVICES. UNDER THESE FACTS, ON EXAMINING THE REASONS GIVEN BY THE ASSESSING OFFICER FOR LEVY OF PENALT Y U/S.271(1)(C) OF THE ACT, WE FIND THAT THE REASONS GIVEN FOR LEVY OF PENALTY IS NOT ON SOUND FOOTING, BECAUSE THE SOLE BASIS FOR M AKING 14 ITA NO.3240/CHNY/2017 ADDITION IS REPORT OF INSPECTOR OF INCOME TAX, WHIC H WAS TAKEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH WAS IN THE YEAR 2015, WHEREAS, PAYMENT AGAINST SERVICES HA S BEEN MADE IN THE YEAR 2011 AND 2012. THEREFORE, OBVIOUS LY IT IS VERY DIFFICULT FOR THE RECIPIENT OF PAYMENT TO CONFIRM E XACT DATE OF RECEIPT OF MONEY. THEREFORE, FOR THAT REASON ALONE, IT CANNOT BE INFERRED THAT LIABILITY SHOWN IN THE BOOKS OF ACCO UNT IS UNEXPLAINED. MOREOVER, THE ASSESSING OFFICER HAS N OT DISPUTED THE FACT THAT THE ASSESSEE HAS FURNISHED ALL EVIDEN CES IN RESPECT OF UNPROVED LIABILITY. IN FACT, RECIPIENT O F PAYMENT HAS CONFIRMED RENDERING OF SERVICES AS WELL AS RECEIPT OF MONEY. THEREFORE, AT BEST, THE CASE CAN BE CONSIDERED AS C LAIM OF EXPENDITURE WITH NECESSARY EVIDENCE, BUT UNSUBSTANT IATED TO THE SATISFACTION OF THE ASSESSING OFFICER. IT IS A WELL SETTLED PRINCIPLE OF LAW BY THE DECISION OF THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS.RELIANCE PETRO PRODUCTS PVT.L TD (SUPRA) THAT MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WOULD NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING INCOME OF THE ASSESSEE. THEREFORE, WE ARE OF THE 15 ITA NO.3240/CHNY/2017 CONSIDERED VIEW THAT ON THIS ADDITION, PENALTY U/S .271(1)(C) CANNOT BE LEVIED. 13. AS REGARDS, ADDITIONS MADE TOWARDS UNEXPLAINED CASH CREDIT BEING UNSECURED LOAN TAKEN FROM MR. KARUR RA MASAMY AMOUNTING TO ` 13,00,000/-, IT WAS THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT PARTY HA S CONFIRMED LOAN GIVEN TO THE ASSESSEE. ONCE THE ASSESSEE HAS F URNISHED CONFIRMATION LETTERS TO PROVE IDENTITY OF THE PARTI ES, THEN INITIAL BURDEN CAST UPON THE ASSESSEE WAS SUCCESSFULLY DISC HARGED. NO DOUBT, THE ASSESSING OFFICER MAY NOT ACCEPT THE EXPLANATION FURNISHED BY THE ASSESSEE WITH REGARD TO SOURCE AND NATURE OF CREDIT, BUT THAT BY ITSELF WOULD NOT BE A GROUND TO REJECT EXPLANATION FURNISHED BY THE ASSESSE, WHEN THE ASSE SSEE GENUINELY EXPLAINS THE CREDITS FOUND IN BOOKS OF AC COUNT DISCLOSING ALL NECESSARY FACTS. THEREFORE, MERELY FOR THE REASON THAT THE ASSESSING OFFICER HAS NOT SATISFIED WITH T HE EXPLANATION FURNISHED BY THE ASSESSE, IT CANNOT BE SAID THAT TH E ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE REFORE, ON THIS COUNT ALSO, PENALTY LEVIED BY THE ASSESSING OF FICER U/S.271(1)(C) OF THE ACT IS INCORRECT. THEREFORE, CONSIDERING THE 16 ITA NO.3240/CHNY/2017 FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS ERRED IN LEVYIN G PENALTY U/S.271(1)(C) OF THE ACT IN RESPECT OF THE TWO ADDI TIONS. THE LEARNED CIT(A), WITHOUT APPRECIATING THE FACTS HAS SIMPLY CONFIRMED PENALTY LEVIED BY THE ASSESSING OFFICER, HENCE, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AN D DIRECT THE ASSESSING OFFICER TO DELETE PENALTY LEVIED U/S.271( 1)(C) OF THE ACT. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA ) ' % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER ' /CHENNAI, ( / DATED 19 TH MARCH, 2021 DS *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .