Shri Ravindrasinh N.Gohil, Bhavnagar V. Income Tax Office,Ward-1(1), Bhavnagar

ITA 3344/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0721 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 03-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI
• Keywords: Reopening of assessment; Unexplained cash credit; Principle of natural justice; Peak credit; Reason to believe; Reassessment proceedings
• Section: 271(1)(c); 143(3); 143(1); 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NOS. 3343 & 3344/AHD/2015 (ASSESSMENT YEARS : 2010-11 & 2008-09) SHRI RAVINDRASINH N. GOHIL, BLOCK NO.906, 5 TH FLOOR, B WING, MADHAV HILL, WAGHWADI ROAD, BHAVNAGAR. VS. INCOME TAX OFFICER, WARD 1(1), BHAVNAGAR. [PAN NO. AJPPG 8467 L] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI TUSHAR HEMANI, A.R. RESPONDENT BY : MS. RICHA RASTOGI, SR. D.R. DATE OF HEARING 07.08.2019 DATE OF PRONOUNCEMENT 04.09.2019 O R D E R PER MS. MADHUMITA ROY - JM: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)- 6, AHMEDABAD BOTH DATED 31.08.2015 UNDER SECTION 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) ARISING OUT OF THE ORDER DATED 21.03.2014 PASSED BY THE ITO, WARD-1(1), BHAVNAGAR AND UNDER S ECTION 271(1)(C) OF THE ACT ARISING OUT OF THE ORDER DATED 28.03.2014 PASSE D BY THE ITO, WARD-1(1), BHAVNAGAR FOR THE ASSESSMENT YEARS 2010-11 & 2008-0 9 RESPECTIVELY. SINCE BOTH THE APPEALS RELATE TO THE SAME ASSESSEE, THE SAME ARE HEARD ANALOGOUSLY AND ARE BEING DISPOSED OF BY A COMMON O RDER. ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 2 - ITA NO. 3343/AHD/2015 FOR A.Y. 2010-11: 2. THE ASSESSEE ENGAGED IN THE BUSINESS AS AN AGENT OF IDEA CELLULAR SERVICES, FILED ITS RETURN OF INCOME ON 30.03.2012 DECLARING TOTAL INCOME AT RS.1,74,630/- THROUGH ELECTRONIC MEDIA. ON THE BASI S OF AIR DETAILS FROM ITD TO THIS EFFECT THAT THE ASSESSEE HAS DEPOSITED CASH EXCEEDING RS.10,00,000/- WITH HIS SAVING BANK ACCOUNT, THE DETAILS WHEREOF W ERE CALLED FOR FROM HIS BANKERS, WHEREUPON TOTAL AMOUNT TO THE TUNE OF RS.2 2,99,411/- WERE FOUND TO HAVE BEEN DEPOSITED BY THE ASSESSEE INTO BANK ACCOU NTS LYING WITH ICICI AND HDFC BANKS. HE WAS, THEREFORE, OF THE REASONABLE BE LIEVE THAT THE SAID INCOME TO THE EXTENT OF RS.22,99,411/- ESCAPED ASSESSMENT FOR THE A.Y. 2010-11 WITHIN THE MEANING OF SECTION 147 OF THE ACT. RESULTANTLY, THE CASE WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 19.04.2 012 UPON THE ASSESSEE. IN APPEAL, THE ISSUE OF REOPENING WAS CHALLENGED BY TH E ASSESSEE ALONG WITH OTHER GROUNDS THAT SUCH PROCEEDING WAS WRONGLY INITIATED BY THE ASSESSING OFFICER. FURTHER THAT, NO REASONS FOR SUCH REOPENING HAS BEE N PROVIDED TO THE APPELLANT BY THE LEARNED AO THEREBY VIOLATED THE BASIC PRINCI PLE OF NATURAL JUSTICE AND THUS, THE ENTIRE PROCEEDING IS LIABLE TO BE QUASHED . HOWEVER, THE CONTENTION MADE BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE AND T HE LEARNED CIT(A) FOUND SUCH REOPENING OF ASSESSMENT U/S 148 OF THE ACT JUS TIFIED AND UPHELD THE SAME. HENCE, THE INSTANT APPEAL BEFORE US. APART FROM THAT THE ASSESSEE HAS FURTHER CHALLENGED THE ORDER PASSED BY THE LEARNED CIT(A) IN HOLDING THAT THE A.Y. 2009-10 AND 2010-11 WERE SIMILAR AND IN DIRECTING THE LEARNED AO TO APPLY TH E PEAK THEORY FOR A.Y. 2010-11 AS WELL WHEREAS SUCH BENEFIT OF PEAK THEORY WAS NOT CLAIMED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 3 - 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE REASONS SO RECORDED BY THE ASSESSING OFFICER WAS NOT PROVIDED TO THE ASSES SEE AT ANY STAGE. FURTHER THAT, THE FACT AND/OR INFORMATION WHICH HAS BEEN RE LIED UPON BY THE ASSESSING OFFICER WHILE REOPENING THE CASE OF THE ASSESSEE TH AT THE ASSESSEE HAS MADE DEPOSITS IN HIS TWO BANK ACCOUNTS LYING WITH ICICI AND HDFC DOES NOT SUGGESTS ESCAPEMENT OF INCOME; NEITHER MERE DEPOSIT IN BANK CAN LEAD TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. HE, THUS, RELIED UPON THE JUDGMENT PASSED BY THE HONBLE TRIBUNAL IN THE CASE OF MARIYAM ISMAIL RAJWANI IN ITA NO.676/AHD/2016 WHEREIN ON THE BASIS OF THE RATIO LAID DOWN BY THE DIVISION BENCH IN THE CASE OF BIR BAHADUR SI NGH SIJWALI-VS-ITO REPORTED IN [(2015) 68 SOT 197 URO (DEL) THE LEARNED TRIBUNA L QUASHED SUCH REASSESSMENT PROCEEDING AND THE REASSESSMENT ORDER THEREOF. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIE D UPON THE ORDER PASSED BY AUTHORITIES BELOW WHEREBY AND WHEREUNDER THE REO PENING U/S 147 OF THE ACT HAS BEEN CONFIRMED. 4. HEARD THE RESPECTIVE PARTIES PERUSED THE RELEVAN T MATERIALS AVAILABLE ON RECORD. IT APPEARS THAT THE ASSESSEE WAS SERVED WIT H THE NOTICE U/S 148 OF THE ACT ON 19.04.2012, IN RESPONSE WHEREOF THE ASSESSEE SUBMITTED THE ORIGINAL RETURN OF INCOME AND FURTHER REQUESTED TO PROVIDE T HE REASONS RECORDED BY THE LEARNED AO FOR SUCH REOPENING. HOWEVER, SUCH REASON S RECORDED, WAS NOT PROVIDED TO THE ASSESSEE. THE ASSESSEES CASE IS TH AT THE PRINCIPLE OF NATURAL JUSTICE HAS BEEN VIOLATED BY THE LEARNED AO BY NOT PROVIDING THE REASON RECORDED FOR REOPENING AND THEREBY NOT AFFORDING AN OPPORTUNITY TO THE ASSESSEE TO MAKE AN EFFECTIVE DEFENCE RENDERS THE ENTIRE PRO CEEDING VITIATED AND THUS THE SAME IS LIABLE TO BE QUASHED. ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 4 - SUBSEQUENTLY, PURSUANT TO THE APPLICATION DATED 10. 10.2018 THE REVENUE HAS SUPPLIED THE COPY OF THE REASONS RECORDED BY TH E ACIT(OSD), WARD 1(1), BHAVNAGAR DATED 19.04.2012 BY AND UNDER A FORWARDIN G LETTER DATED 16.10.2018. A COPY WHEREOF HAS BEEN FURNISHED TO US . THE RELEVANT PORTION OF THE SAID REASON SO RECORDED BY THE LEARNED AO IS AS FOLLOWS: IT IS NOT CLEAR AS TO WHETHER THE ABOVE CASH/CHEQ UE/TRANSFER DEPOSITS IN THE ABOVE BANK ACCOUNT HAVE BEEN ACCOUNTED FOR O R NOT IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE APART FROM THAT, IT IS A FACT ON RECORD THAT THOUGH THE ASSESSEE HAS REQUESTED FOR THE REASON TO BE SUPPLIED THE SAME WA S NEVER FURNISHED BY THE AUTHORITIES BELOW, HENCE THE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE WAS ADMITTEDLY DENIED. THOUGH THE LEARNED AO WAS BOUND TO FURNISH THE REAS ON WITHIN THE REASONABLE TIME IN ORDER TO ENABLE THE ASSESSEE TO FILE OBJECTION TO THE ISSUANCE OF NOTICE AND FURTHER THAT IN THE SECOND PHASE IT I S THE DUTY INCUMBENT UPON ASSESSING OFFICER TO DISPOSE OF SUCH OBJECTION RAIS ED BY THE ASSESSEE, IF ANY, AGAINST SUCH REOPENING BY WAY OF A SPEAKING ORDER B EFORE PROCEEDING WITH THE REASSESSMENT; ADMITTEDLY SUCH PROCESS LAID DOWN BY THE STATUTE HAS NOT BEEN FOLLOWED IN ITS PROPER PROSPECTIVE BY THE LEARNED A SSESSING OFFICER. THE PRECONDITION, SINCE FAILED TO BE FULFILLED BY STATU TORY AUTHORITY THE ASSESSMENT INITIATED AGAINST THE ASSESSEE IS LIABLE TO BE QUAS HED. 5. MORE SO, WE FIND THAT NO NEXUS BETWEEN THE MATER IAL COMING TO THE NOTICE OF THE ITO AND THE FORMATION OF BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE IN THAT PARTICULAR YEAR BECA USE OF HIS FAILURE TO DISCLOSE ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 5 - FULLY OR TRULY ALL MATERIAL FACTS HAS BEEN SHOWN BY THE LEARNED ASSESSING OFFICER WHILE REOPENING THE CASE OF THE ASSESSEE. M ERE CASH DEPOSITS IN THE BANK ACCOUNT CANNOT JUSTIFY SUCH BELIEF OR INFERENC E OF ESCAPING ASSESSMENT. IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQU IRED TO READ AS THEY WERE RECORDED BY THE LEARNED AO. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NEITHER ANY ADDITION CAN BE MADE, NOR ANY INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF REASONS NOT RECORDED. THE LEA RNED AO NEEDS TO SPEAK THROUGH THE REASONS ONLY. BUT IT APPEARS THAT THE ITO HIMSELF IS NOT OF THE F IRM BELIEF AS TO WHETHER THE IMPUGNED CASH/CHEQUE OR TRANSFER DEPOSITS IN TH E BANK ACCOUNT HAVE BEEN ACCOUNTED FOR OR NOT IN THE REGULAR BOOKS OF ACCOUN TS OF THE ASSESSEE OR THERE IS NO SUCH REASON RECORDED THAT THERE WAS A ESCAPEMENT OF INCOME BY THE ASSESSEE. THE ASSESSING OFFICER, THUS PROCEEDED ON THE WRONG PREMISE UPON DRAWING AN INFERENCE THAT THE BANK DEPOSITS CONSTIT UTED UNDISCLOSED INCOME, OVERLOOKING THE FACT THAT SOURCE OF DEPOSIT NEED NO T NECESSARILY BE THE INCOME OF THE ASSESSEE. THE REASON, THEREFORE, RECORDED WH EN IS NOT SUFFICIENT ENOUGH TO GIVE TO A DEFINITE CONCLUSION LEADING TO THE BEL IEF THAT THERE WAS ESCAPEMENT OF INCOME BY THE ASSESSEE, REOPENING ON THE BASIS O F SUCH REASONS CANNOT BE SET TO BE JUSTIFIED. IN THIS REGARD WE TAKE INSPIRATION FROM THE JUDGMEN T RELIED UPON BY THE LEARNED AR PASSED BY THE CO-ORDINATE BENCH IN ITA N O.676/AHD/2016 FOR A.Y. 2006-07 IN THE MATTER OF MARIYAM ISMAIL RAJWAN I-VS-ITO WHERE A JUDGMENT PASSED BY THE HONBLE ITAT, DELHI BENCH IN THE MATTER OF BIR BAHADUR SINGH SIJWALI-VS-ITO REPORTED IN [2015] 68 SOT 197 (DELHI-TRIB) (URO). THE RELEVANT PORTION OF THE SAME IS AS FOLLO WS: ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 6 - 6. A PLAIN LOOK AT THE REASONS FOR REOPENING THE ASSE SSMENT, AS PRODUCED BEFORE US, SHOW THAT THESE REASONS WERE RECORDED AF TER THE NOTICE WAS SERVED ON 14TH SEPTEMBER 2009 AS A MENTION ABOUT THE FACT OF SERVICE OF NOTICE IS SET OUT IN THE RECORDED REASONS ITSELF. IT IS ONLY ELEM ENTARY THAT THE REASONS ARE TO BE RECORDED BEFORE ISSUANCE OF NOTICE, AND IN THE A BSENCE OF ANY REASONS FOR REOPENING HAVING BEEN RECORDED PRIOR TO REOPENING O F ASSESSMENT, THE REASSESSMENT PROCEEDINGS FAIL FOR THIS SHORT REASON ALONE. HON'BLE BOMBAY HIGH COURT, IN THE CASE OF PRASHANT S. JOSHI V. ITO [2010] 324 ITR 154/189 TAXMANN 1 HAS OBSERVED: 'THE AO MUST HAVE REASONS TO BELIEVE THAT SUCH IS THE CASE (I.E. ANY INCOME CHARGEABLE TO TAX HAS ESC APED ASSESSMENT FOR A PARTICULAR YEAR) BEFORE HE PROCEEDS TO ISSUE NOTICE UNDER S. 147'. IN OTHER WORDS, WHEN NO REASONS ARE RECORDED FOR REOPENING T HE ASSESSMENT PRIOR TO ISSUANCE OF NOTICE, THE REASSESSMENT PROCEEDINGS MU ST FAIL FOR THAT REASON ALONE. HOWEVER, FOR THE REASONS WE WILL SET OUT NOW , THE CONCLUSIONS WILL BE NO DIFFERENT EVEN IF IT IS PRESUMED THAT THIS COMMU NICATION, EXTRACTS FROM WHICH ARE REPRODUCED BEFORE, ONLY CONVEYS THE REASO NS ALREADY RECORDED PRIOR TO ISSUANCE OF NOTICE. 7. IT IS WELL SETTLED IN LAW THAT REASONS, AS RECORDE D FOR REOPENING THE REASSESSMENT, ARE TO BE EXAMINED ON A STANDALONE BA SIS. NOTHING CAN BE ADDED TO THE REASONS SO RECORDED, NOR ANYTHING CAN BE DELETED FROM THE REASONS SO RECORDED. HON'BLE BOMBAY HIGH COURT, IN THE CASE OF HINDUSTAN LEVER LTD. V. R.B. WADKAR [2004] 268 ITR 332/137 TA XMANN 479 , HAS, INTER ALIA, OBSERVED THAT '.IT IS NEEDLESS TO MENTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE AO . NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MADE T O THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS O F REASONS NOT RECORDED. IT IS FOR THE AO TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH THE REASONS.' THEIR LO RDSHIPS ADDED THAT 'THE REASONS RECORDED SHOULD BE SELF-EXPLANATORY AND SHO ULD NOT KEEP THE ASSESSEE GUESSING FOR REASONS. REASONS PROVIDE LINK BETWEEN CONCLUSION AND THE EVIDENCE.'. THEREFORE, THE REASONS ARE TO BE EXAMI NED ONLY ON THE BASIS OF THE REASONS AS RECORDED. THE NEXT IMPORTANT POINT I S THAT EVEN THOUGH REASONS, AS RECORDED, MAY NOT NECESSARILY PROVE ESCAPEMENT O F INCOME AT THE STAGE OF RECORDING THE REASONS, SUCH REASONS MUST POINT OUT TO AN INCOME ESCAPING ASSESSMENT AND NOT MERELY NEED OF AN INQUIRY WHICH MAY RESULT IN DETECTION OF AN INCOME ESCAPING ASSESSMENT. UNDOUBTEDLY, AT THE STAGE OF RECORDING THE REASONS FOR REOPENING THE ASSESSMENT, ALL THAT IS N ECESSARY IS THE FORMATION OF PRIMA FACIE BELIEF THAT AN INCOME HAS ESCAPED TH E ASSESSMENT AND IT IS NOT NECESSARY THAT THE FACT OF INCOME HAVING ESCAPED AS SESSMENT IS PROVED TO THE HILT. WHAT IS, HOWEVER, NECESSARY IS THAT THERE MUS T BE SOMETHING WHICH INDICATES, EVEN IF NOT ESTABLISHES, THE ESCAPEMENT OF INCOME FROM ASSESSMENT. IT IS ONLY ON THIS BASIS THAT THE ASSESSING OFFICER CAN FORM THE BELIEF THAT AN INCOME HAS ESCAPED ASSESSMENT. MERELY BECAUSE SOME FURTHER INVESTIGATIONS HAVE NOT BEEN CARRIED OUT, WHICH, IF MADE, COULD HA VE LED TO DETECTION TO AN ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 7 - INCOME ESCAPING ASSESSMENT, CANNOT BE REASON ENOUGH TO HOLD THE VIEW THAT INCOME HAS ESCAPED ASSESSMENT. IT IS ALSO IMPORTANT TO BEAR IN MIND THE SUBTLE BUT IMPORTANT DISTINCTION BETWEEN FACTORS WHICH IND ICATE AN INCOME ESCAPING THE ASSESSMENTS AND THE FACTORS WHICH INDICATE A LE GITIMATE SUSPICION ABOUT INCOME ESCAPING THE ASSESSMENT. THE FORMER CATEGORY CONSISTS OF THE FACTS WHICH, IF ESTABLISHED TO BE CORRECT, WILL HAVE A CA USE AND EFFECT RELATIONSHIP WITH THE INCOME ESCAPING THE ASSESSMENT. THE LATTER CATEGORY CONSISTS OF THE FACTS, WHICH, IF ESTABLISHED TO BE CORRECT, COULD L EGITIMATELY LEAD TO FURTHER INQUIRIES WHICH MAY LEAD TO DETECTION OF AN INCOME WHICH HAS ESCAPED ASSESSMENT. THERE HAS TO BE SOME KIND OF A CAUSE AN D EFFECT RELATIONSHIP BETWEEN REASONS RECORDED AND THE INCOME ESCAPING AS SESSMENT. WHILE DEALING WITH THIS ASPECT OF THE MATTER, IT IS USEFUL TO BEA R IN MIND THE FOLLOWING OBSERVATIONS MADE BY HON'BLE SUPREME COURT IN THE C ASE OF ITO V. LAKHMANI MEWAL DAS [1976] 103 ITR 437 , ' THE REASONS FOR THE FORMATION OF THE BELIEF MUST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATIO N OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF T HE ITO AND THE FORMATION OF THIS BELIEF THAT THERE HAS BEEN ESCAPE MENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE COURT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ITO ON T HE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT . AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY M ATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE AND FARFETC HED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESC APEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT.' 8. LET US, IN THE LIGHT OF THIS LEGAL POSITION, REVER T TO THE FACTS OF THE CASE BEFORE US. ALL THAT THE REASONS RECORDED FOR REOPEN ING INDICATE IS THAT CASH DEPOSITS AGGREGATING TO RS 10,24,100 HAVE BEEN MADE IN THE BANK ACCOUNT OF THE ASSESSEE, BUT THE MERE FACT THAT THESE DEPOSITS HAVE BEEN MADE IN A BANK ACCOUNT DOES NOT INDICATE THAT THESE DEPOSITS CONST ITUTE AN INCOME WHICH HAS ESCAPED ASSESSMENT. THE REASONS RECORDED FOR REOPEN ING THE ASSESSMENT DONOT MAKE OUT A CASE THAT THE ASSESSEE WAS ENGAGED IN SOME BUSINESS AND THE INCOME FROM SUCH A BUSINESS HAS NOT BEEN RETURN ED BY THE ASSESSEE. AS WE DONOT HAVE THE LIBERTY TO EXAMINE THESE REASONS ON THE BASIS OF ANY OTHER MATERIAL OR FACT, OTHER THAN THE FACTS SET OUT IN T HE REASONS SO RECORDED, IT IS NOT OPEN TO US TO DEAL WITH THE QUESTION AS TO WHET HER THE ASSESSEE COULD BE SAID TO BE ENGAGED IN ANY BUSINESS; ALL THAT IS TO BE EXAMINED IS WHETHER THE FACT OF THE DEPOSITS, PER SE, IN THE BANK ACCOUNT O F THE ASSESSEE COULD BE BASIS OF HOLDING THE VIEW THAT THE INCOME HAS ESCAPED ASS ESSMENT. THE ANSWER, IN OUR HUMBLE UNDERSTANDING, IS IN NEGATIVE. THE ASSES SING OFFICER HAS OPINED THAT AN INCOME OF RS 10,24,100 HAS ESCAPED ASSESSME NT OF INCOME BECAUSE THE ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 8 - ASSESSEE HAS RS 10,24,100 IN HIS BANK ACCOUNT BUT T HEN SUCH AN OPINION PROCEEDS ON THE FALLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTE UNDISCLOSED INCOME, AND OVERLOOKS THE FACT THAT THE SOURCES OF DEPOSIT NEED NOT NECESSARILY BE INCOME OF THE ASSESSEE. OF COURS E, IT MAY BE DESIRABLE, FROM THE POINT OF VIEW OF REVENUE AUTHORITIES, TO EXAMIN E THE MATTER IN DETAIL, BUT THEN REASSESSMENT PROCEEDINGS CANNOT BE RESORTED TO ONLY TO EXAMINE THE FACTS OF A CASE, NO MATTER HOW DESIRABLE THAT BE, UNLESS THERE IS A REASON TO BELIEVE, RATHER THAN SUSPECT, THAT AN INCOME HAS ESCAPED ASS ESSMENT. 9. LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED T O A NUMBER OF JUDICIAL PRECEDENTS IN SUPPORT OF HER STAND THAT EVEN DEPOSI TS IN THE BANK ACCOUNT, AS HAVING COME TO THE NOTICE OF THE ASSESSING OFFICER THROUGH AIR, CAN BE REASON ENOUGH FOR HOLDING THE BELIEF THAT INCOME HAS ESCAP ED ASSESSMENT. SHE HAS RELIED UPON THE DECISIONS IN THE CASES OF CIT V. NO VA PROMOTERS & FINLEASE (P.) LTD [2012]342 ITR 169/206 TAXMANN 207/18 TAXMA NN.COM 217 (DELHI) BUT THEN NONE OF THE QUESTIONS BEFORE HONBLE HIGH COURT HAD ANYTHING TO DO WITH REOPENING OF ASSESSMENT AND THIS DECISIO N CAN NOT, THEREFORE, BE TAKEN AS AN AUTHORITY ON THE LEGAL ISSUE WHICH DID NOT EVEN COME UP FOR SPECIFIC ADJUDICATION BEFORE THEIR LORDSHIPS. AS FO R HER RELIANCE ON HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF PHOOL CHAND BAJRANG LAL V. ITO [1993] 203 ITR 456/69 TAXMANN 627 , THAT WAS CASE IN WHICH THEIR LORDSHIPS CONCLUDED THAT THE AO 'RIGHTLY INITIATED THE REASSESSMENT PROCEEDINGS ON THE BASIS OF SUBSEQUENT INFORMATION, WHICH WAS SPECIFIC RELEVANT AND RELIABLE, AND AFTER RECORDING THE REAS ONS FOR FORMATION OF HIS OWN BELIEF THAT IN THE ORIGINAL ASSESSMENT PROCEEDI NGS, THE ASSESSEE HAD NOT DISCLOSED THE MATERIAL FACTS TRULY AND FULLY AND, T HEREFORE, INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT' AND WE ARE UNABLE TO SEE ANYTHING ON THE FACTS OF THE PRESENT CASE WHICH ARE MATERIALLY SIMILAR TO THE FACTS OF THE SAID CASE. AS REGARDS HER RELIANCE ON THE DECISION OF A COORDI NATE BENCH IN THE CASE OF MITHILA CREDIT SERVICES LTD. V. ITO [IT APPEAL N O. 1078/DELHI OF 2013; DATED 23.5.2014], IT IS IMPORTANT TO BEAR IN MIND T HE FACT THAT IT WAS A CASE IN WHICH THE ASSESSING OFFICER HAD REOPENED THE ASSESS MENT ON THE BASIS OF RECEIPT OF INFORMATION FROM DIRECTORATE OF INVESTIG ATION, AND, AS NOTED BY THE ASSESSING OFFICER IN THE REASONS RECORDED FOR REOPE NING THE ASSESSMENT, 'THE NAME OF THE ASSESSEE FIGURES AS ONE OF THE BENEFICI ARIES OF THESE ALLEGED BOGUS TRANSACTIONS' IN THE INFORMATION GIVEN BY THE DIREC TORATE. IF THE ASSESSEE WAS A BENEFICIARY OF SUCH A SCAM, THE INCOME WAS INDEED T O HAVE BEEN TAXED IN ITS HANDS BUT THEN IN THE CASE BEFORE US THE ONLY REASO N FOR REASSESSMENT PROCEEDINGS WAS THE FACT OF DEPOSIT OF BANK ACCOUNT WHICH BY ITSELF DOES NOT LEAD TO INCOME BEING TAXED IN THE HANDS OF THE ASSE SSEE. LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO SEVERAL OTHER JUDICIAL PRECEDENTS IN SUPPORT OF THE PROPOSITION THAT AT THE STAGE OF INITIATION OF REASSESSMENT PROCEEDINGS, ALL THAT IS TO BE SEEN AS EXISTENCE, R ATHER THAN ADEQUACY, OF THE MATERIAL TO COME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. TO US, THERE CANNOT BE ANY, AND THERE IS NO, DOUBT ON THE CORRECTNESS OF THIS ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 9 - PROPOSITION BUT THEN, AS WE HAVE ELABORATELY EXPLAI NED EARLIER IN THIS ORDER, THE MATERIAL MUST INDICATE INCOME ESCAPING ASSESSME NT RATHER THAN DESIRABILITY OF FURTHER PROBE IN THE MATTER WHICH M AY OR MAY NOT LEAD TO INCOME ESCAPING THE ASSESSMENT. ON THE BASIS OF REA SONS AS RECORDED IN THIS CASE, SUCH AN INFERENCE ABOUT INCOME ESCAPING ASSES SMENT, IN OUR HUMBLE UNDERSTANDING, CANNOT BE DRAWN. 10 . IN VIEW OF THE REASONS SET OUT ABOVE, AS ALSO BEA RING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE RE ASONS RECORDED BY THE ASSESSING OFFICER, AS SET OUT EARLIER, WERE NOT SUF FICIENT REASONS FOR REOPENING THE ASSESSMENT PROCEEDINGS. WE, THEREFORE, QUASH TH E REASSESSMENT PROCEEDINGS. AS THE REASSESSMENT ITSELF IS QUASHED, ALL OTHER ISSUES ON MERITS OF THE ADDITIONS, IN THE IMPUGNED ASSESSMENT PROCEE DINGS, ARE RENDERED ACADEMIC AND INFRUCTUOUS. IN THE JUDGMENT PASSED BY THE LEARNED TRIBUNAL IN I TA NO.676/AHD/2016 IDENTICAL FACTS WAS CONSIDERED WHER EIN A CASH DEPOSIT OF RS.12,76,000/- WAS MADE BY THE ASSESSEE ON WHICH RE -OPENING OF ASSESSMENT WAS DONE BY HOLDING THE BELIEF THAT INCOME HAS ESCA PED ASSESSMENT. SINCE MERE CASH DEPOSIT IN THE BANK ACCOUNT CANNOT JUSTIF Y SUCH BELIEF OR INTERFERENCE THE CO-ORDINATE BENCH WAS PLEASED TO QUASH THE ENTI RE PROCEEDING FOLLOWING THE JUDGMENT PASSED IN THE MATTER OF BIR BAHADUR SI NGH SIJWALI-VS-ITO (SUPRA). THE RELEVANT PORTION WHEREOF IS AS FOLLOWS : 6. IN THE PRESENT CASE ALSO, THERE IS NOTHING MORE THAN CASH DEPOSIT OF R.12,76,000/- IN THE BANK ACCOUNT TO JUSTIFY THE RE OPENING OF ASSESSMENT BY HOLDING THE BELIEF THAT INCOME HAS ESCAPED ASSESSME NT. A MERE CASH DEPOSIT IN THE BANK ACCOUNT, HOWEVER, CANNOT JUSTIFY SUCH A BE LIEF OR INFERENCE. IN THIS VIEW OF THE MATTER, AND RESPECTFULLY FOLLOWING THE DIVISION BENCH ORDER IN THE CASE OF BIR BAHADUR SINGH SIJWALI (SUPRA), I HOLD T HAT THE VERY INITIATION OF REASSESSMENT PROCEEDINGS, ON THE FACTS OF THIS CASE , WERE UNSUSTAINABLE IN LAW. I, THEREFORE, QUASH THE REASSESSMENT PROCEEDIN GS AND THE IMPUGNED REASSESSMENT ORDER. AS THE REASSESSMENT ITSELF STAN DS QUASHED, ALL OTHER ISSUE RAISED IN THE APPEAL ARE RENDERED INFRUCTUOUS AND D O NOT CALL FOR ANY ADJUDICATION. ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 10 - MORE SO, THE FACT WHICH WAS CONSIDERED BY THE LEARN ED TRIBUNAL IN THE ABOVE MATTER IS ALSO IDENTICAL TO THAT OF THE CASE BEFORE US. NOTHING MORE THAN THE CASH DEPOSIT OF RS.22,99,411/- IN THE BANK ACCO UNT OF THE ASSESSEE IS AVAILABLE TO JUSTIFY THE REOPENING OF ASSESSMENT ON APPREHENSION THAT INCOME HAS ESCAPED ASSESSMENT. IN THAT EVENT WE HAVE NO OT HER ALTERNATIVE BUT TO RELY UPON THE RATIO LAID DOWN BY THE HONBLE TRIBUNAL RE LYING UPON THE JUDGMENT PASSED BY THE DIVISION BENCH IN THE CASE OF BIR BAH ADUR SINGH SIJWALI (SUPRA) AND TO QUASH THE REOPENING OF ASSESSMENT MADE BY TH E ASSESSING OFFICER AND THE ASSESSMENT ORDER THEREOF. WE ORDER ACCORDINGLY. SINCE THE ASSESSMENT PROCEEDING ITSELF HAS BEEN QUA SHED THE OTHER ISSUES RAISED IN THE APPEAL BY THE APPELLANT RENDERED INFR UCTUOUS AND NO ORDER NEED BE PASSED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA NO.3344/AHD/2015 FOR A.Y. 2008-09: SINCE THERE WAS A DELAY OF 3 DAYS IN PREFERRING THE INSTANT APPEAL AN AFFIDAVIT HAS BEEN AFFIRMED AND FILED BY THE ASSESS EE EXPLAINING SUCH DELAY WHICH SEEMS TO BE GENUINE. HENCE, DELAY IS CONDONED . 7. THE APPELLANT ENGAGED IN THE BUSINESS OF AGENCY OF IDEA CELLULAR SERVICES AND TRADING OF SCRAPE, FILED ITS RETURN OF INCOME ON 27.10.2008 DECLARING TOTAL INCOME AT RS.2,01,565/-, WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 30.04.2009. DURING THE ASSESSMENT PROCEEDING , IT APPEARS FROM THE RECORDS THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 17,72,200/- IN HIS SAVING BANK ACCOUNT LYING WITH THE ICICI BANK, BHAVNAGAR B RANCH. BHAVNAGAR. IT WAS ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 11 - FURTHER SEEN THAT THE ASSESSEE HAS DEPOSITED RS.5,4 3,326/- IN THE SAID ACCOUNT BY WAY OF CLEARING TRANSFER. THE ASSESSEE FAILED TO SUBSTANTIATE THESE DEPOSITS BY CASH AND BY CLEARING/TRANSFER IN THE ABOVE BANK ACCOUNT DURING THE COURSE OF PROCEEDING AND THUS SHOW-CAUSE WAS ISSUED BY THE AS SESSING OFFICER AS TO WHY THE SAID AMOUNT TOTALLING TO RS.23,15,526/- SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 AND ADDED TO THE TOT AL INCOME OF THE ASSESSEE WHICH WAS ULTIMATELY ORDERED BY THE LEARNED ASSESSI NG OFFICER IN THE ABSENCE OF ANY EXPLANATION FURNISHED BY THE ASSESSEE. SIMIL ARLY ADDITION OF RS.18,79,183/- IN RESPECT OF DEPOSIT IN THE ACCOUNT S OF THE ASSESSEE LYING WITH THE SBI, NILAMBAUGH BRANCH, BHAVNAGAR AND RS.8,000/ - TOWARDS DEPOSIT IN THE ACCOUNT OF THE ASSESSEE LYING WITH ICICI BANK ALONG WITH 20% OF THE TOTAL EXPENSES TO THE TUNE OF RS.45,990/- WAS MADE BY THE ASSESSING OFFICER. THE PENALTY PROCEEDING WAS ALSO INITIATED U/S 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ADDITION MADE U/S 68 OF THE ACT BY THE LEARNED AO TO THE TUNE OF RS.42,02,709/- WAS MODIFI ED BY THE LEARNED CIT(A) BY DIRECTING THE LEARNED AO TO RESTRICT SUCH ADDITION TO PEAK BALANCE AS A RESULT WHEREOF, RS.8,95,166/- AS WORKED OUT PE AK WAS FINALLY ADDED BY THE LEARNED ACIT(OSD), WARD-1(1), BHAVNAGAR BY AND UNDE R THE ORDER DATED 23.04.2012 AS IT APPEARS AT PAGE 27 OF THE PAPER BO OK FILED BEFORE US BY THE ASSESSEE. FINALLY THE REVISED TOTAL INCOME OF THE A SSESSEE HAS BEEN MODIFIED TO RS.11.42,720/- UPON CONSIDERING THE RECTIFICATION A PPLICATION U/S 154 OF THE ACT PREFERRED BY THE ASSESSEE. IN THE PENALTY PROCEEDING, ON THE BASIS OF SUCH PEA K BALANCE OF RS.8,95,166/- PENALTY OF RS.3,15,890/- WAS LEVIED, WHICH WAS IN TURN CONFIRMED BY THE LEARNED CIT(A). HENCE, INSTANT APP EAL BEFORE US. ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 12 - 8. AT THE TIME OF HEARING OF THE APPEAL, THE LEARNE D COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE PENALTY H AS BEEN LEVIED ON THE BASIS OF THE ADDITION MADE BY VIRTUE OF SECTION 68 OF THE ACT BEING A DEEMING FICTION CREATED BY THE LEGISLATURE AS PER WHICH, CERTAIN SU M IS DEEMED TO BE INCOME OF THE ASSESSEE. ACCORDING TO THE LEARNED COUNSEL, MER E OPERATION OF THE FICTION IN THE QUANTUM PROCEEDING DOES NOT BY ITSELF JUSTIF Y LEVY OF PENALTY. FURTHER THAT PENALTY ON THE GROUND OF FURNISHING OF INACCUR ATE PARTICULARS OR CONCEALMENT OF INCOME CAN BE IMPOSED ONLY IF THERE IS A CONSCIOUS OR DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE. IN THIS PARTICULAR CASE, ONLY THE FICTIONAL ADDITION HAS BEEN TREATED AS INCOME OF TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION. SINCE IT IS A SETTLED PRINCIPLE OF L AW THAT FICTION CREATED U/S 68 CANNOT BE EXTENDED TO PENALTY PROCEEDING TO RAISE A PRESUMPTION ABOUT CONCEALMENT OF SUCH INCOME, PENALTY CANNOT BE LEVIE D AGAINST THE ASSESSEE AS ALSO SUBMITTED BY THE LEARNED AR APPEARING FOR THE ASSESSEE. IN THIS ISSUE THE LEARNED AR RELIED UPON THE JUDGMENT PASSED IN THE M ATTER OF CIT-VS-BARODA TIN WORKS. FURTHER RELIANCE WERE ALSO MADE ON THE O RDER PASSED BY THE HONBLE ITAT IN THE MATTER OF M/S. DISHMAN PHARMACE UTICAL AND CHEMICALS LTD-VS.-ACIT IN ITA NO.1138/AHD/2011. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BEL OW. 9. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD. IT APPEARS FROM THE RECORDS THAT DURING THE QUANTUM APPEAL THE DETAILS OF THE ENTIRE DEPOSITS IN RESPECT OF THE BANK ACCOU NTS WAS PROVIDED BY THE ASSESSEE BEFORE FIRST APPELLATE AUTHORITY. THE ORDE R PASSED BY THE LEARNED AO RESTRICTING THE ADDITION TO RS.7,42,283/- FROM RS. 18,79,183/- TOWARDS DEPOSIT MADE TO THE SBI ACCOUNT IN TERMS OF THE APPLICATION U/S 154 OF THE ACT PREFERRED BY THE ASSESSEE WAS ALSO MADE KNOWN TO TH E LEARNED CIT(A). THE ENTIRE TRANSACTION MADE BY THE ASSESSEE TOWARDS SUC H DEPOSIT WAS EXPLAINED ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 13 - VIS--VIS TRANSACTION REFLECTED IN THE STATEMENT OF ACCOUNT LYING WITH THE SAID BANK TOWARDS WITHDRAWAL AND DEPOSIT WERE ALSO CLARI FIED WHICH WAS TAKEN INTO CONSIDERATION IN ITS PROPER PROSPECTIVE BY THE LEAR NED CIT(A) AND ONLY UPON WHICH THE PEAK CREDIT OF THOSE ACCOUNTS WERE DIRECT ED TO BE ADDED BY THE LEARNED AO BY THE FIRST APPELLATE AUTHORITY AS IT A PPEARS FROM THE ORDER PASSED IN THE QUANTUM APPEAL AVAILABLE AT PAGE 20 TO 26 OF THE PAPER BOOK FILED BEFORE US. THE DETAILS FURNISHED BY THE ASSESSEE HAS NOT B EEN ALLEGED TO BE FALSE AND/OR VAGUE AND/OR INACCURATE AND/OR INSUFFICIENT BY THE LEARNED CIT(A). THE EXPLANATION RENDERED BY THE ASSESSEE AS IT APPEARS FROM THE RECORDS BEFORE US WAS ACCEPTED BY THE AUTHORITIES BELOW. THE LEARNED CIT(A) NEVER WHISPERED ABOUT FURNISHING OF INACCURATE PARTICULARS OF INCOM E NEITHER CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. IT IS ALSO A FA CT AS IT APPEARS FROM THE RECORDS THAT THE PENALTY HAS BEEN LEVIED BY THE ASS ESSING OFFICER BY VIRTUE OF THE PROVISION LAID DOWN U/S 68 WHICH IS NOTHING BUT A DEEMING FICTION CREATED BY THE LEGISLATURE AS PER WHICH CERTAIN SUM IS DEEM ED TO BE THE INCOME OF AN ASSESSEE AS RIGHTLY POINTED OUT BY THE LEARNED AR B EFORE US. WE MUST NOTE THAT THE QUANTUM PROCEEDINGS AND THE PENALTY PROCEEDINGS ARE DIFFERENT IN NATURE. SECTION 68 CREATES A LEGAL FICTION WHEREBY CASH CRE DIT RECEIVED ARE DEEMED TO BE UNEXPLAINED FOR WANT OF NECESSARY EVIDENCES AND CONSEQUENTLY ADDITION IS MADE U/S 68 OF THE ACT. HOWEVER, PENALTY DOES NOT F OLLOW AS A NATURAL COROLLARY TO AN ADDITION ESPECIALLY WHEN SUCH ADDIT ION HAS BEEN MADE BY INVOKING LEGAL FICTION AS IN THE CASE BEFORE US. TH EREFORE, THE FINDING IN THE ASSESSMENT PROCEEDING, HOWSOEVER RELEVANT AND GOOD MAY NOT BE CONCLUSIVE SO FAR AS PENALTY PROCEEDINGS ARE CONCERNED. FURTHER T HAT IT IS A SETTLED PRINCIPLE THAT PARAMETERS OF JUDGING THE JUSTIFICATION FOR AD DITION MADE IN ASSESSMENT PROCEEDINGS ARE DIFFERENT FROM PENALTY IMPOSED ON A CCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME. CERTAIN DISALLOWANCES/ADDITIONS CAN BE LEGALLY MADE IN THE ASSESSMENT PROCEEDINGS ON ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 14 - THE PREPONDERANCE OF PROBABILITIES BUT PENALTY CANN OT BE IMPOSED ON PREPONDERANCE OF PROBABILITY. RATHER, REVENUE HAS T O PROVE THAT THE CLAIM OF THE ASSESSEE IS NOT GENUINE. MERELY BECAUSE AN ADDI TION HAS BEEN CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAI NST SUCH ADDITION, THE SAME CANNOT BE THE SOLE GROUND FOR COMING TO A CONCLUSIO N THAT ASSESSEE HAS CONCEALED ANY INCOME. WE TAKE INSPIRATION FROM THE JUDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT-VS-BARODA TIN WORKS I N THIS RESPECT. WE HAVE FURTHER CONSIDERED THE JUDGMENT PASSED IN T HE MATTER OF M/S DISHMAN PHARMACEUTICAL & CHEMICALS LTD.-VS-ACIT IN ITA NO.1138/AHD/2011 FOR A.Y. 2004-05. THE RELEVANT POR TION WHERE OF IS AS FOLLOWS: 5. BEFORE US, LD. A.R. SUBMITTED THAT ASSESSEE HA D PURCHASED RAW MATERIALS FROM SOME PARTIES AND ON BEHALF OF ASSESS EE THE PAYMENTS WERE MADE BY JANKI SHAH (RS. 7 LACS), PIYUSH G. SHA H (RS. 5.5 LACS) AND PIYUSH G. SHAH HUF (RS.2.5 LACS). HE FURTHER SUBMIT TED THAT AFORESAID SUM WERE NOT CASH CREDITS BUT WERE TRADE CREDITS AN D THEY CANNOT BE TREATED AS CASH CREDIT FOR THE PURPOSE OF MAKING AD DITION U/S. 68. HE FURTHER SUBMITTED THAT A.O. NEVER DOUBTED THE PURCH ASES MADE FROM THE CONCERNED PERSONS TO WHOM THE AFORESAID PERSONS HAV E MADE PAYMENTS. HE FURTHER SUBMITTED THAT ONCE THE FIGURES OF PURCH ASES AND CORRESPONDING SALES ARE NOT DOUBTED, THE BALANCES O F TRADE CREDITORS WHO HAVE MADE PAYMENTS TO THE CONCERNED PERSONS ON BEHALF OF ASSESSEE CANNOT BE TREATED AS UNEXPLAINED CASH CRED ITS. HE FURTHER SUBMITTED THAT ASSESSEE HAD FURNISHED FULL DETAILS OF THE AFORESAID PERSONS AND THUS, HAD DISCHARGED INITIAL BURDEN CAS T ON IT. HE FURTHER SUBMITTED THAT QUANTUM PROCEEDINGS AND PENALTY PROC EEDINGS ARE DISTINCT AND DIFFERENT AND SECTION 68 CREATES A LEGAL FICTION WHEREBY CASH CREDITS RECEIVED ARE DEEMED TO BE UNEXPLAINED FOR WANT OF NECESSARY EVIDENCES AND CONSEQUENTLY ADDITION IS MA DE U/S.68. HE FURTHER SUBMITTED THAT WHEN ADDITION IS MADE BY INV OKING LEGAL FICTION IT IS NOT NECESSARY THAT PENALTY U/S. 271(1)(C) SHOULD ALSO BE LEVIED. LD. ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 15 - A.R. FURTHER SUBMITTED THAT THE TOTAL TURN OVER OF THE ASSESSEE WAS IN EXCESS OF RS.50 CRORE AND THE PROFITS OF BUSINESS W AS IN EXCESS OF RS.3.26 CRORE. IN SUCH CASES, IT WOULD BE HIGHLY IM PROBABLE THAT ASSESSEE WOULD INDULGE IN FURNISHING INACCURATE PAR TICULARS WITH RESPECT TO RS.15 LACS WHICH IS A VERY SMALL FIGURE AS COMPARED TO THE TURNOVER AND PROFIT TO AVOID THE TAX LIABILITY. HE ALSO RELIED ON THE DECISION IN CASE OF AMITABH CONSTRUCTION P. LTD. VS . ACIT, 335 ITR 523 ( JHARKHAND), CIT VS. PANCHAM DASS JAIN , 156 TAXMAN 50 (ALLAHABAD) AND THE DECISION IN CASE OF RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 (SC). HE THEREFORE SUBMITTED THAT THE P ENALTY LEVIED U/S. 271(1)(C) BE DELETED. LD. D.R. ON THE OTHER HAND SU PPORTED THE ORDERS OF A.O. AND CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACTS THAT ON THE ADDITION OF RS.15 LACS MADE U/S. 68 BY A.O. PENALTY U/S. 271(1)(C) HAS BEEN LEV IED BY A.O., WHICH HAS ALSO BEEN CONFIRMED BY CIT(A). IT IS ALSO A FAC T THAT ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS BEFORE THE A.O. AN D HAS ALSO SUBMITTED THE EXPLANATION WHICH HAS NOT BEEN FOUND TO BE FALS E. IT IS A WELL SETTLED LAW THAT PENALTY PROCEEDINGS ARE ENTIRELY DISTINCT FROM ASSESSMENT PROCEEDINGS AND HOWEVER RELEVANT AND GOOD, THE FIND INGS IN ASSESSMENT PROCEEDINGS MAY NOT BE CONCLUSIVE SO FAR AS PENALTY PROCEEDINGS ARE CONCERNED. IT IS WELL SETTLED THAT THE PARAMETERS O F JUDGING THE JUSTIFICATION FOR ADDITION MADE IN THE ASSESSMENT P ROCEEDINGS IS DIFFERENT FROM THE PENALTY IMPOSED ON ACCOUNT OF CO NCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME AND T HAT CERTAIN DISALLOWANCE/ADDITIONS COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES B UT NO PENALTY COULD BE IMPOSED U/S.271( 1 )(C) OF THE ACT ON PREPONDERA NCE OF PROBABILITY AND THE REVENUE HAS TO PROVE THAT THE CLAIM OF THE ASSESSEE WAS NOT GENUINE OR WAS INFLATED ITS TAX LIABILITY. FURTHER MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE, IT CANNOT BE THE S OLE GROUND FOR COMING TO THE CONCLUSION THAT ASSESSEE HAS CONCEALE D ANY INCOME. CONSIDERING THE AFORESAID AND PECULIAR FACTS OF THE CASE, WE ARE OF THE VIEW THAT IN THE PRESENT CASE, NO CASE FOR PENALTY HAS BEEN MADE. WE THUS DIRECT THE DELETION OF PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 16 - IT APPEARS FROM THE AFORESAID JUDGMENT THAT CERTAIN DISALLOWANCE AND/OR REASONS COULD LEGALLY BE MADE IN THE ASSESSMENT PRO CEEDING ON THE PREPONDERANCE OF THE PROBABILITIES BUT NO PENALTY C OULD BE IMPOSED U/S 271(1)(C) OF THE ACT ON PREPONDERANCE OF PROBABILIT IES AND THE REVENUE HAS TO PROVE THAT THE CLAIM OF THE ASSESSEE WAS NOT GENUIN E OR WAS INFLATED ITS TAX LIABILITY. TAKING INTO CONSIDERATION THE ENTIRE ASPECT OF THE MATTER AND ALSO THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT AS WELL AS THE JUDGMENT PASSED BY THE CO-ORDINATE BENCH, WE OBSERVE THAT MERELY BE CAUSE ADDITION U/S 68 IS ACCEPTED BY THE ASSESSEE THAT CANNOT BE A GROUND FO R LEVY OF PENALTY; PENALTY CANNOT BE LEVIED IN THE ABSENCE OF ANY SUCH CONCRET E FINDING THAT THE AMOUNT DEPOSITED IS THE ACTUAL INCOME OF THE ASSESSEE EVEN IF SUCH ADDITION HAS BEEN CONFIRMED BY THE FIRST APPELLATE AUTHORITY. WE FURT HER FIND NO SUCH FACT OF CONCEALMENT OF ANY INCOME OR FURNISHING OF ANY INAC CURATE PARTICULARS OF INCOME BY THE ASSESSEE IN THE INSTANT CASE BEFORE U S AS WE HAVE ALREADY DISCUSSED ABOVE. HENCE, RELYING UPON THE RATIO LAID DOWN BY THE JUDGMENT AS CITED ABOVE, WE FIND IT FIT AND PROPER TO QUASH THE IMPUGNED PENALTY LEVIED U/S 271(1)(C) OF THE ACT MERELY ON THE BASIS OF THE ADD ITION MADE BY INVOKING LEGAL FICTION U/S 68 OF THE ACT. HENCE, ASSESSEES APPEAL IS ALLOWED. 10. IN THE COMBINED RESULT, ASSESSEES BOTH APPEALS ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 0 4 / 0 9 /201 9 SD/- SD /- ( PRAMOD KUMAR) ( MS. MADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 04/09/2019 ITA NOS.3343 & 3344/AHD/2015 SHRI RAVINDRASINH N GOHIL VS. ITO ASST.YEARS 2010-11 & 2008-09 - 17 - PRITIYADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-6, AHMEDABAD. 5. , ! ', #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY // / (DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION .05.2019 (DICTATION PAGES18) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 04.06.2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S10.06.2019 + 24.06.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER