SHRI RAM KISHAN VERMA, Kota V. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-1, Kota

ITA 405/JPR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8771 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Jaipur
• Assessment Year: 2015-2016
• Appeal Filed On: 26-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR
• Assessee Lawyers: F. RAHMAN ADVOCATES
• Keywords: Search and seizure; Salary income; Document seized; Period of limitation; Initiation of penalty proceedings; Reasonable cause; Onus to prove; Retraction; Cancellation of registration; Documents seized
• Section: 131; 246; 263; 132; 133(6); 271D; 274; 207; 264; 246A; 43; 2(A); 13; 272A; 22; 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B, JAIPUR JH JES'K LH- 'KEKZ] YS[KK LNL; ,O A H JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA-@ ITA NO. 405/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16. SHRI RAM KISHAN VERMA, C/O MAHENDRA GARGIEYA & ASSOCIATES, ADVOCATES & TAX CONSULTANTS, 537-539, 5 TH FLOOR, MAHIMAS TRINITY, NEAR JYOTI RAO PHULE COLLEGE, NEW SANGANER ROAD, JAIPUR. CUKE VS. THE ADDITIONAL CIT, RANGE-1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ADDPK 1093 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA & SHRI F. RAHMAN (ADVOCATES) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RANJAN KUMAR (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.05.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 03/07/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 22 ND JANUARY, 2019 OF LD. CIT (A) KOTA ARISING FROM THE PENALTY O RDER PASSED UNDER SECTION 271D OF THE I.T. ACT FOR THE ASSESSMENT YEAR 2015-16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 2 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. 2. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM SALARY AS MANAGING DIRECTOR OF A CLOSELY HELD COMPANY, INCOME FROM HOU SE PROPERTY, INCOME FROM INTEREST AND OTHER SOURCES. THERE WAS A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE IT ACT ON 19.12.2014 IN CASE OF ONE SHRI D.P. SEHGAL, JAIPUR. DURING THE SAID SEARCH AND SEIZURE PROCEEDINGS, A LETTER SIGNE D BY THE ASSESSEE IN RESPECT OF THE LOAN OF RS. 15 CRORES FROM SHRI D.P. SEHGAL ALO NG WITH THE 15 UN-NAMED AND 3 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. UNDATED CHEQUES OF RS. 1 CRORE EACH SIGNED BY THE A SSESSEE WERE FOUND. AN ENQUIRY WAS ALSO CONDUCTED FROM THE ASSESSEE DURING THE ASS ESSMENT PROCEEDINGS IN CASE OF SHRI D.P. SEHGAL WHEREIN THE ASSESSEE DENIED HAVING RECEIVED ANY ALLEGED CASH LOAN OF RS. 15 CRORES FROM SHRI D.P. SEHGAL AND EXPLAINE D THAT THE SAID LETTER WAS AN ADVANCE ACKNOWLEDGEMENT ALONG WITH THE SECURITY IN THE SHAPE OF CHEQUES FOR SEEKING LOAN. HOWEVER, SUBSEQUENTLY THE LOAN WAS N OT TAKEN FROM SHRI D.P. SEHGAL BUT THE ASSESSEE RECEIVED THE LOAN FROM SOME FINANC IAL INSTITUTION. THEREAFTER, A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE IT ACT WAS ALSO CARRIED OUT ON 07.09.2017 IN CASE OF THE ASSESSEE. DURING THE SEA RCH AND SEIZURE PROCEEDINGS, STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTIO N 132(4) ON 07.09.2017 WHEREIN THE ASSESSEE ADMITTED THE TRANSACTION OF CA SH LOAN OF RS. 15 CRORES FROM SHRI D.P. SEHGAL. IN THE MEANTIME, THE AO ISSUED A SHOW CAUSE NOTICE DATED 1 ST SEPTEMBER, 2017 FOR IMPOSING THE PENALTY FOR VIOLAT ING THE PROVISIONS OF SECTION 269SS ON ACCOUNT OF RECEIVING CASH LOAN OF RS. 15 C RORES IN THE MONTH OF MAY-JUNE, 2014. THE AO IMPOSED THE PENALTY OF RS. 15 CRORES VIDE ORDER DATED 11.10.2017 PASSED UNDER SECTION 271D BY HOLDING THAT THE ASSES SEE HAS TAKEN LOAN OF RS. 15 CRORES IN CASH IN VIOLATION OF PROVISIONS OF SECTIO N 269SS OF THE IT ACT. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE INCRIMINATING MATERIAL WHICH IS THE BASIS OF LEVY OF PENALTY IN Q UESTION WAS FOUND IN THE PROCEEDINGS OF SEARCH UNDER SECTION 132 OF THE IT A CT CARRIED ON 19.12.2014 IN CASE OF SHRI D.P. SEHGAL. HOWEVER, THE SAID LETTER AND BLANK CHEQUES AS WELL AS PROMISSORY NOTES WERE GIVEN BY THE ASSESSEE ONLY FO R TAKING THE LOAN AS A PRE- CONDITION BUT SINCE THE ASSESSEE IN THE MEANTIME RE CEIVED THE LOAN FROM AU FINANCE 4 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. LTD. ON 30 TH JULY, 2014, THEREFORE, THE SAID REQUEST FOR LOAN F ROM SHRI DP SEHGAL OR THROUGH SHRI DP SEHGAL WAS NOT PURSUED FURTHER. EV EN IN THE STATEMENT RECORDED UNDER SECTION 132(4), SHRI DP SEHGAL HAS DENIED THE FACT OF GIVING THE ALLEGED LOAN TO THE ASSESSEE BUT HE EXPLAINED THAT SINCE HE COUL D NOT ARRANGE THE MONEY AND FINALLY IN THE MONTH OF AUGUST, 2014 HE EXPRESSED H IS INABILITY TO PROVIDE ANY LOAN. THE LD. A/R HAS FURTHER SUBMITTED THAT THE DOCUMENT S FOUND DURING THE SEARCH IN CASE OF SHRI DP SEHGAL WOULD NOT PROVE THE TRANSACT ION OF LOAN OF RS. 15 CRORES RECEIVED BY THE ASSESSEE FROM/THROUGH SHRI DP SEHGA L BUT IT WAS AT THE INITIAL STAGE OF REQUEST MADE BY THE ASSESSEE AND, THEREFORE, THE ALLEGED ACKNOWLEDGEMENT AND SECURITY IN THE SHAPE OF CHEQUES AND PROMISSORY NOT ES WERE GIVEN BY THE ASSESSEE IN ADVANCE AS A CONDITION FOR GRANT OF LOAN BUT THE RE WAS NO LOAN TAKEN BY THE ASSESSEE AS AGAINST THESE DOCUMENTS FOUND FROM SHRI DP SEHGAL. ONCE THE ASSESSEE HAS NOT TAKEN ANY ALLEGED CASH LOAN FROM S HRI DP SEHGAL, THE QUESTION OF VIOLATING THE PROVISIONS OF SECTION 269SS OF THE IT ACT DOES NOT ARISE AND CONSEQUENTLY LEVY OF PENALTY UNDER SECTION 271D IS NOT SUSTAINABLE. THE LD. A/R HAS SUBMITTED THAT THE IMPUGNED PENALTY ORDER PASSED BY THE AO IS CLEARLY BARRED BY LIMITATION. THERE IS NO SPECIFIC TIME LIMIT MENTIO NED FOR INITIATION OF PROCEEDINGS. HOWEVER, THE LIMITATION IS PROVIDED UNDER SECTION 2 75 FOR COMPLETION OF THE PROCEEDINGS. THEREFORE, EVEN IF THERE IS NO LIMITA TION PROVIDED FOR INITIATION OF PROCEEDINGS, IT IS NOT AVAILABLE FOR INDEFINITE PER IOD BUT THE LIMITATION PROVIDED FOR OTHER SIMILAR ACTIONS CAN BE TAKEN AS A REASONABLE TIME LIMIT FOR THE PURPOSE OF LEVY OF PENALTY UNDER SECTION 271D OF THE IT ACT. HE HA S FURTHER CONTENDED THAT THE DEPARTMENT IS BOUND TO EXERCISE THE POWERS WITHIN T HE REASONABLE TIME AS HELD BY THE HONBLE KERALA HIGH COURT IN CASE OF K. ISWARA BHAT VS. COMMISSIONER OF 5 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. AGRICULTURAL INCOME TAX, 200 ITR 238 (KER.). THERE FORE, EVEN IN THE ABSENCE OF A TIME LIMIT PRESCRIBED BY THE STATUTE, THE REPOSITOR Y OF THE POWER SHOULD INITIATE THE PROCEEDINGS WITHIN A REASONABLE TIME WITHIN WHICH T HE PROCEEDINGS ARE TO BE COMPLETED. THE LD. A/R HAS ALSO REFERRED THE DECIS ION OF HONBLE SUPREME COURT IN CASE OF STATE OF GUJARAT VS. PATEL RAGHAV NATHA, AI R 1969 SC 1297 WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT THE SUO MOTO PO WER OF REVISION CAN BE EXERCISED WITHIN A REASONABLE TIME EVEN IN THE ABSE NCE OF TIME LIMIT PRESCRIBED BY THE STATUTE. IN THE CASE IN HAND, THE AO HAS INITI ATED THE PROCEEDINGS BY ISSUING SHOW CAUSE NOTICE DATED 1 ST SEPTEMBER, 2017. HOWEVER, SINCE THE PROCEEDINGS AR E NOT INCONSEQUENCE OF ANY ASSESSMENT ORDER IN THE CA SE OF THE ASSESSEE, THEN THE RECKONING OF THE LIMITATION SHOULD BE FROM THE SEAR CH PROCEEDINGS IN CASE OF SHRI DP SEHGAL. THE LD. A/R HAS THEN SUBMITTED THAT THE IN ITIATION OF PENALTY PROCEEDINGS IS NOT BASED ON ANY ACTION OR PROCEEDINGS UNDER THE IN COME TAX ACT IN CASE OF THE ASSESSEE AND HENCE THE INITIATION ITSELF IS ILLEGAL AND BAD IN LAW. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION IN CASE OF SHARDA EDUCATIONAL TRUST VS. ACIT, 99 TTJ 212 (AGRA). THE LD. A/R HAS FURTHER CO NTENDED THAT THE PENALTY UNDER SECTION 271D IS GOVERNED BY SECTION 275(1)(C) OF TH E IT ACT AND FOR INITIATION OF PENALTY THERE MUST BE SOME PROCEEDINGS ON THE BASIS OF WHICH ACTION FOR IMPOSITION OF THE PENALTY HAS BEEN INITIATED. THUS IN THE PROC EEDINGS UNDER THE ACT IF THE AO IS SATISFIED THAT THE ASSESSEE HAS VIOLATED THE PROVIS IONS OF SECTION 269SS, THEN THE PROCEEDINGS FOR LEVY OF PENALTY UNDER SECTION 271D CAN BE INITIATED BY THE AO AND THE LIMITATION WOULD RECKON FROM THE COMPLETION OF SUCH PROCEEDINGS. ONLY THOSE PROCEEDINGS WHICH ARE RELEVANT FOR THE PURPOSES DUR ING THE COURSE OF WHICH THE AO FELT SATISFIED REGARDING THE DEFAULT FOR WHICH THE PENALTY WAS PROVIDED TO BE IMPOSED 6 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. WILL BE RELEVANT PROCEEDINGS. THUS IN CASE OF THE ASSESSEE WHEN NO PROCEEDINGS WERE INITIATED BY THE AO DURING WHICH THE AO WAS SA TISFIED ABOUT THE VIOLATION OF PROVISIONS OF SECTION 269SS, THEN THE INITIATION OF THE PROCEEDINGS ARE ILLEGAL. HE HAS RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. M.A. PRESSTRESSED WORKS, 220 ITR 226 (RAJ.). THE LD. A/ R HAS ALSO RELIED UPON THE FOLLOWING DECISIONS :- NOBLE PICTURES VS. JT. CIT 84 TTJ 718 (COCH.) CIT VS. HISSARIA BROS 291 ITR 244 (RAJ.) KAILASHBEN MANHARLAL CHOKSHI VS. CIT 328 ITR 411 (GUJ.) THUS THE LD. A/R HAS SUBMITTED THAT THE IMPUGNED OR DER PASSED BY THE AO IS BARRED BY LIMITATION AND LIABLE TO BE QUASHED. EVEN ON T HE MERITS, WHEN THERE IS NO DEFAULT ON THE PART OF THE ASSESSEE OF VIOLATING THE PROVIS IONS OF SECTION 269SS AS THE ASSESSEE HAS NOT TAKEN ANY CASH LOAN ALLEGED BY THE AO, THEN THE LEVY OF PENALTY ON THE BASIS OF SUSPICION IS NOT JUSTIFIED. THE LD. A /R HAS SUBMITTED THAT UNTIL AND UNLESS A DEFAULT UNDER SECTION 269SS IS FOUND TO BE COMMITTED BY THE ASSESSEE, THERE CANNOT BE A PRESUMPTION OF SUCH VIOLATION. T HE ASSESSEE CANNOT BE ASKED TO PROVE THE NEGATIVE OF THE ASSESSEES ALLEGED TRANSA CTION BUT THE ONUS IS ON THE DEPARTMENT TO PROVE AND ESTABLISH BEYOND DOUBT THAT THE ASSESSEE HAS TAKEN THE LOAN IN CASH IN VIOLATION OF SECTION 269SS. IT IS SETTLED LAW THAT WHAT IS APPARENT IS REAL UNLESS CONTROVERTED. THE ONUS LAY UPON THE PE RSON, WHO ALLEGES THAT WHAT IS APPARENT IS NOT REAL. THE LD. A/R REFERRED THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF CIT (CENTRAL) VS. DAULAT RAM RAWATMULL, 87 ITR 349 (SC), FOLLOWED IN 7 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. CASE OF CIT VS. BEDI & CO. PVT. LTD., 230 ITR 580 ( SC). IN THE PRESENT CASE, WHAT WAS APPARENT WAS THAT BOTH THE PARTIES HAVE DENIED TO ACCEPT /PAID LOAN. SHRI DP SEHGAL DENIED THAT HE COULD NOT ARRANGE FUND FOR TH E ASSESSEE SHRI RAM KISHAN VERMA. SIMILARLY, SHRI RAM KISHAN VERMA DENIED THAT HE NEVER RECEIVED CASH LOAN FROM SHRI D.P. SEHGAL. IF, SUCH AN APPARENT STATE O F AFFAIR, WAS ALLEGED TO BE UNREAL, IT WAS FOR THE PERSON MAKING SUCH ALLEGATION TO PRO VE THAT WHAT IS APPARENT IS NOT REAL. UNFORTUNATELY, THE LOWER AUTHORITIES HAVE TOT ALLY FAILED TO PROVE CONTRARY. HE HAS ALSO REFERRED TO SECTION 103 OF EVIDENCE ACT AN D SUBMITTED THAT THE BURDEN OF PROOF AS TO ANY PARTICULAR FACT LIES ON THAT PERSON WHO WISHES THE COURT TO BELIEVE IN ITS EXISTENCE, UNLESS IT IS PROVIDED BY ANY LAW THA T THE PROOF OF THAT FACT SHALL LIE ON ANY PARTICULAR PERSON. THE LD. A/R FURTHER SUBMITT ED THAT IN OUR CONTEXT, SINCE THE PENALTY WAS TO BE LEVIED ON THE FACT OF HAVING TAKE N LOAN, AND THAT TOO IN CASH, THE PERSON LEVYING PENALTY IS REQUIRED TO PROVE THAT TH E OFFENDING ACT TOOK PLACE. THE OFFICER SIMPLY IGNORED THE LAW OF THE LAND. THIS IS NOT AN INSIGNIFICANT OR A MINOR LAW BUT VERY FUNDAMENTAL PRINCIPLE OF ADMINISTRATION OF JUSTICE. ON THIS RULE IS BASED THE MAXIM THAT EVERYONE IS INNOCENT TILL PROVED OTHERWI SE. WE ARE PART OF PRESUMPTIVE SYSTEM OF JURISPRUDENCE AND NOT ACCUSATORY SYSTEM . IN PRESUMPTIVE SYSTEM, THE ACCUSED IS PRESUMED TO BE INNOCENT TILL PROVED OTHE RWISE. IT IS TRUE THAT AT TIMES, THE LEGISLATURE HAS PROVIDED FOR PRESUMPTIONS FOR INFLI CTING LIABILITIES ON CITIZENS, BUT SUCH PRESUMPTIONS ARE SPECIFIC AND LIMITED. WHENEVER THE LEGISLATURE DEEMED IT DESIRABLE, IT PROVIDED FOR PRESUMPTION OF MENS REA OR PRESUMPT ION OF EXISTENCE OF A STATE OF AFFAIRS. THERE CANNOT BE, AND THERE IS NO PRESUMPTI ON IN RESPECT OF OFFENDING ACT PRESCRIBED UNDER SECTION 269SS / 271D. THEREFORE, IT WAS THE BURDEN OF PENALIZING AUTHORITY TO PROVE THAT THE SAID OFFENDING ACT WAS COMMITTED. HE HAVING FAILED TO DO 8 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. SO, AND INSTEAD CASTING THE BURDEN ON THE APPELLANT TO PROVE HIS INNOCENCE, COMMITTED A GRAVE MISTAKE OF LAW. THE LD. A/R SUB MITTED THAT THE PROVISIONS OF SECTION 269SS ARE SPECIFIC AND CATEGORICAL. THEY UN MISTAKABLY AND UNAMBIGUOUSLY REQUIRE THE CONCERNED AUTHORITY TO ESTABLISH THAT T HE NOTICEE HAS TAKEN OR ACCEPTED A LOAN IN CASH. TAKING OR ACCEPTING A LOAN, PRESUPPOS ES A VALID CONTRACT UNDER THE PROVISION OF INDIA CONTRACT ACT, 1872 AND THE BASIC MINIMUM REQUIREMENT OF THERE BEING A VALID CONTRACT THEREFORE, MUST EXIST, AS PE R SEC. 2(A) OF INDIA CONTRACT ACT, 1872, WHEN ONE PERSON SIGNIFIES TO ANOTHER HIS WILL INGNESS TO DO OR TO ABSTAIN FROM DOING ANYTHING, WITH A VIEW TO OBTAINING THE ASSENT OF THAT OTHER TO SUCH ACT OR ABSTINENCE, HE IS SAID TO MAKE A PROPOSAL. IN OTHE R WORDS, THERE HAS GOT TO BE TWO CONTRACTING PARTIES WHO HAVE COME TOGETHER AND THE LENDER HAS ON ITS OWN VOLITION AGREED TO LEND A CERTAIN AMOUNT TO THE BORROWER ON CERTAIN AGREED TERMS & CONDITIONS ETC. AND SO ON. HOWEVER, IN THE PRESENT CASE THE SEIZED DOCUMENTS, WHICH ARE BASED FOR THE ALLEGATION OF CASH LOAN REC EIVED BY THE APPELLANT, MATERIALLY LACKS THE VITAL ASPECTS IN AS MUCH AS, ADMITTEDLY, NEITHER THE LENDER MR. DP SEHGAL HAS SIGNED NOR ANYBODY ELSE FOR THAT REASON, IF HAD HE/THEY GRANTED THE LOAN TO THE ASSESSEE. THEREFORE, FIRSTLY, IT WAS NOT AN EXECUT ED CONTRACT OR IT WAS A MERE PROPOSAL WHICH IS YET TO BE ACTED UPON. THUS, BASE D ON THE SEIZED DOCUMENTS, WHICH ARE SERIOUSLY LACKING IN MATERIAL LEGAL ASPEC T, THE UNDATED PROMISSORY NOTES AND CROSS ACCOUNT PAYEE CHEQUES ETC., THERE DID NOT EXIST ANY LEGALLY ENFORCEABLE AGREEMENT AND IN ANY CASE, MR. DP SEHGAL THE ALLEGE D LENDER COULD NOT HAVE COMPELLED THE ALLEGED BORROWER ASSESSEE TO PAY BACK THE LOAN, IF ANY GIVEN. INTERPRETING THE PROVISION OF SECTION 269SS FROM TH E ANGLE OF THE ASSESSEE BORROWER ALONE IS FALLACIOUS, UNLESS THERE IS A COMPLETED LO AN TRANSACTION BETWEEN THE TWO 9 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. PARTIES WHICH IS LEGALLY ENFORCEABLE, SECTION 269SS CANNOT BE APPLIED. HE HAS RELIED UPON THE DECISION OF COORDINATE BENCH OF THIS TRIBU NAL IN CASE OF DCIT VS. RAJAT AGARWAL, 144 TTJ 753 AS WELL AS DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN CASE OF A. PHIROJ & CO. VS. CIT, 59 ITR 645, DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. S.M. AGARWAL, 293 ITR 43 (DEL.). THE LD . A/R HAS REFERRED TO THE STATEMENT RECORDED UNDER SECTION 132(4) OF SHRI DP SEHGAL AND SUBMITTED THAT IN ANSWER TO QUESTION NO. 12, HE HAS CATEGORICALLY DEN IED GIVING ANY LOAN TO THE ASSESSEE. THUS THE DOCUMENTS FOUND AT THE TIME OF S EARCH IN CASE OF SHRI DP SEHGAL WERE NOTHING BUT A PROPOSAL FOR SEEKING LOAN AND EV EN THE FIRST LETTER WAS ONLY A DRAFT IN WHICH CERTAIN MODIFICATIONS/AMENDMENTS WER E MADE. THEREAFTER A SECOND LETTER WAS PREPARED. WHEN BOTH THESE LETTERS CONTA IN THE DETAILS OF THE SAME FACTS, THEN THE HANDING OVER OF THE CHEQUES BY THE ASSESSE E IS NOT SUBSEQUENT TO THE LOAN BUT IT IS PRIOR TO THE PROPOSED LOAN. EVEN THERE W AS NO CERTAINTY ABOUT FROM WHOM THE LOAN WAS ACTUALLY TAKEN AS IN THE ALLEGED ACKNO WLEDGEMENT LETTER IT IS STATED THAT THE LOAN WAS RECEIVED FROM OR THROUGH SHRI DP SEHGA L. THE AO WHILE PASSING THE PENALTY ORDER UNDER SECTION 271D WAS ALSO NOT SURE ABOUT THE FACT FROM WHOM THE ALLEGED LOAN WAS TAKEN. THUS IT WAS ONLY A PROPOSAL MADE BY THE ASSESSEE TO HIS CLOSE FRIEND WHO WAS HELPING HIM OUT IN ARRANGING T HE FINANCE. THE DOCUMENTS WHICH WERE FOUND IN THE POSSESSION OF SHRI DP SEHGA L WERE REQUIRED TO BE SUBMITTED IN ADVANCE FOR THE PROPOSED LOAN BUT FINALLY WHEN N O LOAN WAS TAKEN BY THE ASSESSEE, THESE DOCUMENTS ITSELF DO NOT PROVE THE T RANSACTION OF LOAN. THESE ARE ALL UNDATED DOCUMENTS, NOT EVEN INDICATING THE TRANSACT ION OF LOAN. THE DEPARTMENT HAS PRESUMED THAT THE ASSESSEE HAS TAKEN LOAN IN THE MO NTH OF MAY JUNE 2014 BASED ON THE STATEMENT OF SHRI DP SEHGAL AS WELL AS STATE MENT OF THE ASSESSEE RECORDED 10 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. UNDER SECTION 132(4) WHICH WAS IMMEDIATELY RETRACTE D BY THE ASSESSEE. THE PRESUMPTION UNDER SECTION 132(4A) CAN BE RAISED ONL Y AGAINST THE PERSON FROM WHOSE CONTROL OR POSSESSION THE DOCUMENT WAS FOUND AND, THEREFORE, IT IS HE, WHO IS ANSWERABLE. ONCE SHRI DP SEHGAL HAS DENIED HAVING GIVEN ANY LOAN TO THE ASSESSEE, THEN THERE CANNOT BE SECOND PRESUMPTION AGAINST THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. SMS INVESTMENT CORPORATION PVT. LTD ., 207 ITR 364 (RAJ.). THE LD. A/R THEN SUBMITTED THAT ONCE THE DOCUMENTS FOUND DU RING THE SEARCH DO NOT DISCLOSE THE FACT OF OBTAINING LOAN FROM SHRI DP SE HGAL AND FURTHER THE ASSESSEE HAS TAKEN A LOAN OF RS. 10 CRORES FROM AU FINANCE LTD. ON 30.07.2014, THEN THERE IS NO SCOPE OF ANY PRESUMPTION FOR TAKING THE ALLEGED LOA N OF RS. 15 CRORES BY THE ASSESSEE. HE HAS FURTHER CONTENDED THAT EVEN WHEN NO CORRESPONDING ASSET WAS FOUND TO SHOW THE ALLEGATION OF THE SAID LOAN BY TH E ASSESSEE, THEN THE PENALTY LEVIED ON THE BASIS OF PRESUMPTION IS NOT SUSTAINAB LE. THE LD. A/R HAS FURTHER SUBMITTED THAT THE LD. CIT (A) HAS CONSIDERED NEW M ATERIAL WHICH IS IN VIOLATION OF RULE 46A OF IT RULES READ WITH SECTION 251(4) OF TH E IT ACT. HE HAS POINTED OUT THAT THE LD. CIT (A) HAS CONSIDERED THE STATEMENT OF THE ASSESSEE RECORDED UNDER SECTION 132(4), HOWEVER, THE SAID STATEMENT WAS RETRACTED B Y THE ASSESSEE IMMEDIATELY WITHOUT ANY DELAY AND WAS NOT THE BASIS OF INITIATI ON AS WELL AS LEVY OF PENALTY BY THE AO UNDER SECTION 271D OF THE IT ACT. THE LD. A/R HA S SUBMITTED THAT THE PENALTY LEVIED BY THE AO UNDER SECTION 271D AND CONFIRMED B Y THE LD. CIT (A) IS NOT SUSTAINABLE AND THE SAME BE DELETED. 11 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T IN THE SEARCH AND SEIZURE UNDER SECTION 132 OF THE IT ACT IN CASE OF SHRI DP SEHGAL, UN-NAMED AND UNDATED 15 BLANK CHEQUES OF RS. 1 CRORE EACH SIGNED BY THE ASS ESSEE WERE FOUND, INVENTORIZED AND SEIZED FROM THE POSSESSION OF SHRI DP SEHGAL. ALONG WITH THE CHEQUES, A LETTER SIGNED BY THE ASSESSEE DULY ACKNOWLEDGED RECEIPT OF LOAN OF RS. 15 CRORES ALONG WITH ANOTHER SET OF 15 BLANK DEMAND PROMISSORY NOTE S OF RS. 1 CRORE EACH SIGNED BY THE ASSESSEE WERE ALSO SEIZED FROM THE POSSESSION O F SHRI DP SEHGAL. IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE IT A CT, SHRI DP SEHGAL HAS STATED TO HAVE RECEIVED THEM IN THE MONTH OF MAY-JUNE, 2014 F ROM THE ASSESSEE AS SECURITY. THE LD. D/R HAS ALSO REFERRED TO QUESTION NO. 7 AND ANSWER THERETO OF THE STATEMENT OF SHRI DP SEHGAL AND SUBMITTED THAT HE HAS EXPLAIN ED THAT THESE CHEQUES, PROMISSORY NOTES AND LETTER SIGNED BY THE ASSESSEE WERE RECEIVED IN THE MONTH OF MAY-JUNE, 2014. SUBSEQUENTLY SHRI DP SEHGAL FILED A SETTLEMENT APPLICATION BEFORE THE SETTLEMENT COMMISSION, NEW DELHI. THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 132(4) DATED 7 TH SEPTEMBER, 2017 HAS ADMITTED TO HAVE RECEIVED THE LOAN OF RS. 15 CRORES IN CASH FROM SHRI DP SEHGAL. HOWEVER, THE ASSESSEE SUBSEQUENTLY RETRACTED THE STATEMENT BY WRITING A L ETTER DATED 30 TH SEPTEMBER, 2017 TO THE CBDT. THE ALLEGED RETRACTION HAS NO EVIDENT IARY VALUE AS IT IS SENT TO THE CBDT AND NOT TO THE INVESTIGATION WING. FURTHER, W HEN THE ASSESSEE IN THE STATEMENT ON OATH HAS ADMITTED THE FACT OF RECEIVIN G THE LOAN OF RS. 15 CRORES, THEN THE SUBSEQUENT RETRACTION WITHOUT EXPLAINING THE CO GENT REASON FOR ANY MISTAKE IN THE STATEMENT IS NOT ACCEPTABLE. EVEN OTHERWISE, T HE ASSESSEE HAS NOT ALLEGED ANY COERCION, UNDUE PRESSURE OR THREAT AT THE TIME OF S TATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE SAID ADMISSION/CONFESSION O N THE PART OF THE ASSESSEE IS 12 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. BASED ON THE SEIZED MATERIAL WHICH WAS CONFRONTED T O THE ASSESSED AT THE TIME OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE LD. D/R HAS ALSO REFERRED TO THE REPORT CONDUCTED BY THE DEPARTMENT DURING TH E PROCEEDINGS UNDER SECTION 245D OF THE ACT AS WELL AS THE ORDER OF THE SETTLEM ENT COMMISSION WHEREIN THE SO CALLED RETRACTION AND DENIAL OF THE ASSESSEE WAS RE JECTED HAVING ANY EVIDENTIARY VALUE. THE LD. D/R HAS ALSO RELIED UPON THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. RAVI MATHUR IN DB IT APPEA L NO. 67 OF 2002 DATED 13 TH MAY, 2016. THUS IN THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION, IT WAS ESTABLISHED THAT THE ASSESSEE BORROWED CASH LOAN OF RS. 15 CROR ES FROM SHRI DP SEHGAL IN LIEU OF WHICH HE HAS GIVEN THE ACKNOWLEDGEMENT LETTER, BLAN K CHEQUES AND DEMAND PROMISSORY NOTES TO SHRI DP SEHGAL WHICH HAVE BEEN SEIZED FROM THE PREMISES OF SHRI DP SEHGAL. THIS FACT WAS FURTHER CORROBORATED BY THE ASSESSEE IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE IT ACT ON 07.0 9.2017 AND AGAIN ON 23.10.2017. THE SUBSEQUENT RETRACTION BY THE ASSES SEE IS A MAKE BELIEF DOCUMENT WHICH IS NOTHING BUT AFTER-THOUGHT TO ESCAPE TAXATI ON. 4.1. AS REGARDS THE LIMITATION OF PENALTY PROCEEDIN GS UNDER SECTION 271D OF THE ACT, THE ORDER PASSED BY THE AO IS WITHIN 6 MONTHS FROM THE REFERENCE MADE TO ADDITIONAL CIT-1, KOTA BY THE AO. THEREFORE, IT IS NOT BARRED BY LIMITATION. THE LD. D/R HAS REFERRED TO THE REFERENCE MADE BY THE ACIT CIRCLE-1, KOTA DATED 09.08.2017 TO ADDITIONAL CIT-I KOTA FOR LEVY OF PENALTY UNDER SECTION 271D OF THE IT ACT. THE IMPUGNED ORDER WAS PASSED ON 11.10.2017, THEREFORE, THE SAME IS WITHIN THE PERIOD OF LIMITATION AS PER PROVISIONS OF SECTION 275(1)(C ) OF THE IT ACT. THE LD. D/R HAS FURTHER CONTENDED THAT WHEN THE ASSESSEE FILED A RE TRACTION PETITION AFTER THE SEARCH 13 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. OPERATION, THEN THE CONTENTS/FACTS NARRATED IN THE SWORN IN STATEMENT MADE ON OATH UNDER SECTION 132(4) OR UNDER SECTION 131 OF THE AC T CANNOT BE BRUSHED ASIDE OR IGNORED. IF HE IS SO AGGRIEVED, THEN HE HAS TO COM E WITH FRESH EVIDENCE SO THAT HIS CLAIM CAN BE FACTUALLY SUSTAINABLE. MERE MAKING AL LEGATION WILL NOT BE ACCEPTED. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE D ECISION OF HONBLE SUPREME COURT IN CASE OF PULLANGODE RUBBER PRODUCTS CO. LTD. VS. STATE OF KERALA, 91 ITR 18 (SC) AND SUBMITTED THAT AN ADMISSION IS AN EXTREMELY IMP ORTANT PIECE OF EVIDENCE. HE HAS ALSO RELIED UPON THE DECISION OF HONBLE JURISD ICTIONAL HIGH COURT IN CASE OF M/S. BANNALAL JAT CONSTRUCTIONS PVT. LTD. IN DB IT APPEA L NO. 140/2018 AND SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT THE STATE MENT RECORDED UNDER SECTION 132(4) AS WELL AS UNDER SECTION 131 OF THE IT ACT C ANNOT BE DISCARDED SUMMARILY IN CRYPTIC MANNER AND THE RETRACTION IS REQUIRED TO BE MADE AS SOON AS POSSIBLE OR IMMEDIATELY AFTER THE STATEMENT OF THE ASSESSEE WAS RECORDED. IN VIEW OF DOCUMENTARY FACTS GATHERED AND LEGAL POSITION AS LA ID DOWN IN VARIOUS DECISIONS, IT IS CLEAR THAT THE ASSESSEE HAS COMMITTED THE DEFAULT O F TAKING CASH LOAN IN VIOLATION OF SECTION 269SS AND CONSEQUENTLY LIABLE FOR PENALTY U NDER SECTION 271D OF THE IT ACT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. SINCE THE ASSESSEE HAS RAISED A LEGAL ISSU E REGARDING VALIDITY OF THE ORDER PASSED UNDER SECTION 271D AS BARRED BY LIMITATION, THEREFORE, WE FIRST TAKE UP THE ISSUE OF LIMITATION. THE ADDITIONAL CIT HAS INITIA TED THE PENALTY PROCEEDINGS UNDER SECTION 271D BY ISSUING THE SHOW CAUSE NOTICE DATED 1 ST SEPTEMBER, 2017 AS UNDER :- 14 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. THE SAID SHOW CAUSE NOTICE WAS ISSUED BY THE ADDITI ONAL CIT ON THE BASIS OF THE LETTER DATED 09.08.2017 OF THE ASSISTANT COMMISSION ER OF INCOME-TAX, CIRCLE-1, KOTA BEING THE REFERENCE FOR LEVY OF PENALTY. FOR READY REFERENCE, WE REPRODUCE THE REFERENCE LETTER OF THE ASSTT. CIT FOR LEVY OF PENA LTY AS UNDER :- 15 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. HKKJR LJDKJ@ GOVERNMENT OF INDIA DK;KZY; LGK;D VK;DJ VK;QDR ]O`R&1] DKSVK OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA. DEJK LA[;K 106] IZFKE RY] NSFUD UOT;KSFR FCFYMAX] J KORHKKVK JKSM] DKSVK&324009 ROOM NO. 106, 1 ST FLOOR, DANIK NAVJYOTI BUILDING, RAWATBHATA ROAD, K OTA-324009. EKAD LGK-VK-VK-@O`R&1@DKSVK@2015&16@633 FNUAKD 09-08-2017 . TO THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-1, KOTA. SIR, SUB : INFORMATION IN THE CASE OF SHRI R.K. VERMA, K OTA (PAN:ADDPK 1093 R) REFERENCE FOR LEVY OF PENALTY U/S 271D REG. KINDLY REFER TO YOUR GOOD OFFICE LETTER NO. 446 DAT ED 06/06/2017 ON THE ABOVE MENTIONED SUBJECT. IT IS SUBMITTED THAT THIS OFFICE HAS RECEIVED AN IN FORMATION FROM THE DDIT(INV.)-III JAIPUR THAT DURING SEARCH & SEIZURE ACTION U/S 132(1) IN THE CASE OF ADVENTAGE GROUP (MR. D.P. SEHGAL), JAIPUR 15 BLANK CHEQUES OF RS. 15 CRORES (ONE CRORE EACH) SIGNED BY SHRI RAM KISHAN VERMA WERE FO UND AND SEIZED ALONGWITH 15 BLANK DEMAND PROMOTES OF RS. 15 CRORES (ONE CRORE E ACH) DULY SIGNED BY SHRI R.K. VERMA. DURING THE COURSE OF SEARCH STATEMENT OF SHR I D P SEHGAL WAS RECORDED AND AS PER WHICH CHEQUES & PROMOTES WERE RECEIVED IN MA Y-JUNE 2014 FROM MR. R.K. VERMA AS A SECURITY TO MANAGE FUND FROM PERSONAL SO URCE & MARKET. IT WAS ALSO STATED IN THE STATEMENT THAT HE COULD NOT MANAGE FU ND. SHRI R.K. VERMA WAS ISSUED SUMMONS U/S 131 ON 01.04 .2015 FOR RECORDING THE STATEMENT ON 10.04.2015 BY THE DY. DIRECTOR OF INCOME TAX (INV)-III, JAIPUR AND THE SAME WAS DULY SERVED UPON HIM, BUT HE DID NOT C OMPLY WITH THE SAME IN ANY WAY, A CONFIRMATORY LETTER OF SHRI R.K. VERMA ACKNO WLEDGING RECEIPT OF LOAN OF RS. 15 CRORE FROM SHRI D.P. SEHGAL AND HIS FRIENDS WAS ALS O FOUND & SEIZED AT THE SAME OF SEARCH OPERATION. THE DDIT-III, JAIPUR OPINED THAT THE DOCUMENTS SO F OUND AND SEIZED AS AFORESAID ARE PRESUMABLY TRUE WITHIN THE MEANING O F SECTION132(4A) OF THE I.T. ACT, 1961 AND BASED THEREON AND ALSO THE NON-COMPLIANCE ON THAT PART OF SHRI R.K. VERMA TO THE SUMMONS ISSUED TO HIM, CAME TO THE CO NCLUSION THAT SHRI D. P. 16 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. SEHGAL AND HIS FRIENDS HAVE GIVEN UNACCOUNTE D CASH LOAN OF RS. 15 CRORE TO SHRI R. K. VERMA CARRYING ANN UAL INTEREST @ 24% PER ANNUM. AS SUCH, THE DDIT (INV.)-III, JAIPUR HAS INFORMED THAT SHRI R.K. VERMA HAD CONTRAVENED PROVISIONS OF SECTION 269SS AND APPROPRIATE ACTION UNDER THE PROVISION OF I.T. ACT, 1961 HAS TO BE INITIATED IN THE CASE OF SHRI R.K. V ERMA. THE LETTER BEARING NO. 946 DATED 23.10.2015 OF THE DDIT (INV.)-III, JAIPUR ALONGWITH ITS ENCLOSURE ARE BEING SUBMITTED FOR KIN D PERUSAL AND NECESSARY ACTION. YOURS FAITHFULLY, SD/- ( R.K. DOI ) ENCL. AS ABOVE. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA. THIS REFERENCE WAS MADE ON THE BASIS OF THE DOCUMEN TS SEIZED FROM THE POSSESSION OF SHRI DP SEHGAL DURING THE COURSE OF SEARCH AND S EIZURE ACTION UNDER SECTION 132(1) ON 19.12.2014. THE AO HAS ALSO MADE A REFER ENCE IN THE SAID LETTER OF SUMMONS ISSUED UNDER SECTION 131 ON 01.04.2015 BY T HE DDIT INVESTIGATION, JAIPUR. THE DDIT JAIPUR VIDE LETTER DATED 23.10.2015 INFORM ED THE ACIT/AO ABOUT THE CONTRAVENTION OF PROVISIONS OF SECTION 269SS OF THE IT ACT BY THE ASSESSEE AND APPROPRIATE ACTION UNDER THE PROVISIONS OF THE ACT HAS TO BE INITIATED. THUS THE INITIATION OF PENALTY PROCEEDINGS BY ISSUING THE SH OW CAUSE NOTICE DATED 01.09.2017 IS BASED ON THE INFORMATION RECEIVED BY THE AO OF T HE ASSESSEE FROM THE DDIT INVESTIGATION JAIPUR VIDE LETTER DATED 23 RD OCTOBER, 2015. SECTION 275 PROVIDES THE LIMITATION FOR IMPOSITION OF PENALTY UNDER CHAPTER- XXI OF THE IT ACT. SINCE IN THE CASE IN HAND, THE PENALTY UNDER SECTION 271D IS NOT IMPO SED PURSUANT TO ANY ASSESSMENT 17 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. ORDER, THEREFORE, CLAUSE (C) OF SECTION 275(1) IS R ELEVANT FOR THE PURPOSE OF LIMITATION FOR PASSING THE ORDER UNDER SECTION 271D OF THE IT ACT. FOR READY REFERENCE, WE REPRODUCE THE PROVISIONS OF SECTION 275(1) AS UNDER :- 275. 39 [(1)] NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTE R SHALL BE PASSED 40 [(A) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER OR DER IS THE SUBJECT- MATTER OF AN APPEAL TO THE 41 [***] COMMISSIONER (APPEALS) UNDER SECTION 246 42 [OR SECTION 246A ] OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER SECTION 253 , AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPL ETED 43 , OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE 44 [***] COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE 45 [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 45 [PRINCIPAL COMMISSIONER OR] COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER : 46 [ PROVIDED THAT IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTH ER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE COMMISSIONER (AP PEALS) UNDER SECTION 246 OR SECTION 246A , AND THE COMMISSIONER (APPEALS) PASSES T HE ORDER ON OR AFTER THE 1ST DAY OF JUNE, 2003 DISPOSING OF SUCH APPEAL, AN ORDER IMPOSING PENALTY SHALL BE PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR I N WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HA S BEEN INITIATED, ARE COMPLETED, OR WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) IS RECEIVED BY THE 45 [PRINCIPAL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER OR 45 [PRINCIPAL COMMISSIONER OR] COMMISSIONER, WHICHEVER IS LATER;] (B) IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER OR DER IS THE SUBJECT- MATTER OF REVISION UNDER SECTION 263 46 [OR SECTION 264 ], AFT ER THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH SUCH ORDER OF REVISION IS PASSED; (C) IN ANY OTHER CASE, AFTER THE EXPIRY OF THE FINANCIA L YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR THE IMPOSITION OF PE NALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED, WHICHEVER PERIOD EXPIRES LATE R.] THUS NO ORDER IMPOSING A PENALTY SHALL BE PASSED AF TER EXPIRY OF FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED ARE COMPLETED OR 6 MONTHS FROM THE E ND OF THE MONTH IN WHICH THE ACTION FOR IMPOSITION OF PENALTY IS INITIATED WHICH EVER PERIOD EXPIRES LATER. THE PLAIN 18 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. READING OF THIS CLAUSE REVEALS THAT IN CASE THE PRO CEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED IN THE FINANCIAL YEAR, THEN THE ORDER FOR PENALTY SHALL NOT BE PASSED AFTER THE EXP IRY OF THE SAID FINANCIAL YEAR. HOWEVER, THERE MAY BE INSTANCES WHEN SUCH PROCEEDIN GS ARE COMPLETED AT THE FAG END OF THE FINANCIAL YEAR TO SAY IN THE MONTH OF MA RCH ITSELF, THEN IT IS PRACTICALLY NOT POSSIBLE TO PASS A PENALTY ORDER BEFORE 31 ST MARCH OF THE SAME FINANCIAL YEAR. THEREFORE, THE SECOND LIMB OF THIS CLAUSE IS RELEVA NT WHICH GIVES 6 MONTHS FROM THE END OF THE MONTH IN WHICH ACTION OF IMPOSITION OF P ENALTY IS INITIATED. IN THE CASE IN HAND, THE ACTION FOR IMPOSITION OF THE PENALTY WAS INITIATED VIDE LETTER DATED 23 RD OCTOBER, 2015 WHEREBY THE DDIT INVESTIGATION-3, JAI PUR SENT INFORMATION ALONG WITH THE DOCUMENT TO THE AO FOR HIS PERUSAL AND NECESSAR Y ACTION. THESE ARE THE PROCEEDINGS FROM WHICH THE AO HAS SATISFIED HIMSELF ABOUT THE DEFAULT ON THE PART OF THE ASSESSEE OF VIOLATION OF THE PROVISIONS OF SECT ION 269SS OF THE ACT BY TAKING THE ALLEGED LOAN OF RS. 15 CRORES IN CASH. THOUGH THERE WAS SUBSEQUENT SEARCH AND SEIZURE ACTION IN THE CASE OF THE ASSESSEE ON 07.09 .2017, HOWEVER, THOSE PROCEEDINGS WERE SUBSEQUENT TO THE SATISFACTION OF THE AO AS WELL AS INITIATION OF THE PENALTY PROCEEDINGS BY ISSUING SHOW CAUSE NOTICE DA TED 01.09.2017. THEREFORE, FOR THE PURPOSE OF LIMITATION UNDER SECTION 275(1) WHAT IS RELEVANT IS THE COMMUNICATION FROM THE DDIT INVESTIGATION-3, JAIPUR TO THE ACIT C IRCLE-1, KOTA VIDE LETTER DATED 23 RD OCTOBER, 2015. THEREFORE, THE LIMITATION WOULD REC KON FROM THE END OF THE MONTH OF OCTOBER, 2015 AND SHALL EXPIRE ON THE EXPI RY OF 6 MONTHS FROM THE END OF THE MONTH OF OCTOBER, 2015. IN OTHER WORDS, THE LI MITATION FOR PASSING THE PENALTY ORDER UNDER SECTION 271D SHALL EXPIRE ON 30 TH APRIL, 2016. THE AGRA BENCH OF THE 19 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. TRIBUNAL IN CASE OF SHARDA EDUCATIONAL TRUST VS. AC IT (SUPRA) HAS CONSIDERED THIS ISSUE OF LIMITATION FOR PASSING THE ORDER UNDER SEC TION 271D IN PARA 13(1) AS UNDER :- 13. AFTER HAVING CONSIDERED THE RIVAL SUBMISSIONS , FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF S. 275(1)( C) OF THE ACT AND AFORESAID VARIOUS DECISIONS AND THE CIRCULAR NO. 38 7 RELIED UPON BY THE COUNSEL FOR THE ASSESSEE AND THE FACT THAT THE LEAR NED DEPARTMENTAL REPRESENTATIVE HAS NOT BROUGHT ANY DECISION CONTRAR Y TO VARIOUS DECISIONS RELIED UPON BY THE COUNSEL FOR THE ASSESS EE, TO OUR NOTICE AT THE TIME OF HEARING, WE ARE OF THE OPINION THAT THE ASSESSEE IS TO SUCCEED ON ALL COUNTS SUCH AS ; (I) IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT NE ITHER THE ASSESSEE HAD FURNISHED ANY RETURN FOR THE ASST. YR. 1996-97, NOR ANY ASSESSMENT WAS MADE NOR ANY PROCEEDINGS UNDER T HE IT ACT RELATING TO THE ASSESSEE WAS PENDING BEFORE THE IT AUTHORITIES ON 12 TH JUNE, 2003, OR LATER ON, TILL THE DATE OF LEVY OF PENALTY UNDER S. 271D, I.E., ON 12 TH JUNE, 2003, WHEN THE PROCEEDINGS WERE INITIATED OR ON 11 TH DEC., 2003, WHEN THE PENALTY ORDER WAS PASSED AND THEREFORE, THE PENALTY PROCEEDINGS HAVING NOT BEEN INITIATED DURING THE CO URSE OF ANY PROCEEDINGS, THE SAME WERE ILLEGAL AND BAD IN LAW. IT IS ALSO AN ADMITTED FACT THAT THE PENALTY PROCEE DINGS IN QUESTION WERE INITIATED AFTER A LAPSE OF A PERIOD OF MORE TH AN SEVEN YEARS. CONSEQUENTLY, WE ARE UNABLE TO UPHOLD THE LEVY OF P ENALTY. OUR CONCLUSION IS SUPPORTED BY THE DECISION OF TRIBUNAL , COCHIN BENCH, IN THE CASE OF NOBLE PICTURES (SUPRA), WHEREIN IT HAS BEEN HELD THAT THE PENALTY PROCEEDINGS UNDER S. 272A HAVING BEEN INITI ATED AFTER A PERIOD OF MORE THAN 6 YEARS WERE BARRED BY LIMITATION, AND ALSO BY THE 20 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. RAJINDER KUMAR SOMANI (SUPRA), WHICH HAD BEEN FOLLOWED BY THE TRIB UNAL IN THE CASE OF NOBLE PICTURES (SUPRA). IN THE CASE IN HAND, THE AO HAS NOT SATISFIED HIMSE LF DURING THE ASSESSMENT PROCEEDINGS OR ANY OTHER PROCEEDINGS UNDER THE IT A CT BUT THIS SATISFACTION OF THE AO AS REVEALED FROM THE REFERENCE LETTER IS BASED O N THE INFORMATION AND DOCUMENT RECEIVED FROM THE INVESTIGATION WING, JAIPUR. THERE FORE, EVEN IF THE SAID CORRESPONDENCE IS CONSIDERED AS PART OF THE PROCEED INGS OF INVESTIGATION CARRIED OUT BY THE JAIPUR INVESTIGATION WING IN CASE OF SHRI DP SEHGAL, THE LIMITATION WILL RECKON WHEN THE SAID INVESTIGATION PROCEEDINGS WERE COMPLE TED AND THEREAFTER THE INFORMATION WAS SENT BY THE INVESTIGATION WING TO T HE AO OF THE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS . M.A. PRESSTRESSED WORKS, 220 ITR 226 (RAJ.) HAS CONSIDERED THE ASPECT OF INITIAT ION OF PENALTY PROCEEDINGS AS UNDER :- WE HAVE CONSIDERED THE SUBMISSIONS MADE BY LEARNED COUNSEL FOR THE REVENUE. SECTION 274 OF THE INCOME-TAX ACT PROVIDES THE PROC EDURE FOR IMPOSING THE PENALTY WHILE SECTION 275 SETS OUT THE TIME-LIMIT WITHIN WHICH THE PENALTY PR OCEEDINGS MUST BE COMPLETED. SECTION 275 REQUIRES T O COMPLETE THE PENALTY PROCEEDINGS WITHIN TWO YEARS F ROM THE END OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS IN THE COURSE OF WHICH THE ACTION FOR I MPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLE TED. BUT WHERE THE ASSESSMENT ORDER OR ANY OTHER ORDER IS THE SUBJECT-MATTER OF APPEAL BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER OF INCOME- TAX (APPEALS) OR TO THE INCOME-TAX APPELLATE TRIBUNAL, THE PERIOD FOR COMPLETING THE PENALTY PRO CEEDINGS WILL BE EITHER A TWO YEAR PERIOD FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH THE ACTION FOR IMPOSITION OF TH E PENALTY WAS TAKEN, ARE COMPLETED, OR A PERIOD OF SI X MONTHS FROM THE END OF THE MONTH IN WHICH THE ORD ER OF THE APPELLATE AUTHORITY IS RECEIVED BY THE COMMIS SIONER, WHICHEVER PERIOD EXPIRES LATER. SECTION 275 , WHICH APPLIES TO THE CASE OF THE ASSESSEE, READS AS UNDER: '275. BAR OF LIMITATION FOR IMPOSING PENALTIES. (1) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHALL BE PASSED ( A )IN A CASE WHERE THE RELEVANT ASSESSMENT OR OTHER O RDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (AP PEALS) UNDER SECTION 246 OR AN APPEAL 21 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. TO THE APPELLATE TRIBUNAL UNDER SUB-SECTION (2) OF SECTION 253, AFTER THE EXPIRATION OF THE PERIOD OF ( I )TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE PROCEEDINGS, IN THE COURSE OF WHICH THE ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITI ATED, ARE COMPLETED, OR ( II )SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (APPEALS) OR, AS THE C ASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER; ( B )IN ANY OTHER CASE, AFTER THE EXPIRATION OF TWO YEA RS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED.' SECTION 275 DIVIDES THE CASES INTO TWO CATEGORIES : THE FIRST CATEGORY OF CASES IS WHERE THE ASSESSMEN T ORDER OR THE ORDER TO WHICH PROCEEDINGS FOR IMPOSIT ION OF PENALTY RELATE, WAS THE SUBJECT-MATTER OF AP PEAL UNDER SECTION 246 OR AN APPEAL UNDER SECTION 253. T HE LIMITATION FOR THE CASES FALLING UNDER THIS CATE GORY, IS TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH THE ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED , WERE COMPLETED ; OR SIX MONTHS FROM THE END OF TH E MONTH IN WHICH THE ORDER OF THE APPELLATE AUTHORITY WAS RECEIVED BY THE COMMISSIONER, WHICHEVER PERIOD EXPIRES LATER. THE SECOND CATEGORY COVERS ALL OTHER CASES NOT FALLING WITHIN CATEGORY NO. 1 AND THE LIMITATION PROVIDED FOR THESE CASES IS WITHIN TWO Y EARS FROM THE END OF THE FINANCIAL YEAR IN WHICH TH E PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPO SITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED . THE WORDS 'IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED' USED IN SECTION 275 INDIC ATE THE PROCEEDINGS IN WHICH THE INCOME-TAX AUTHORI TY IS SATISFIED ABOUT THE DEFAULT WHICH ATTRACTS THE P ENALTY AND NOT WITH RESPECT TO ANY OTHER PROCEEDING IN WHICH THE ORDER LIKE THE CANCELLATION OF THE REGIST RATION, ETC., HAS BEEN PASSED. IT IS THE ASSESSMENT ORDER OR ANY OTHER ORDER PASSED IN THE PROCEEDING IN THE COURSE OF WHICH IT IS FOUND THAT THE ASSESSEE HAS BROUGHT HIMSELF WITHIN THE MISCHIEF OF THE PENALTY PROCEEDINGS. IN THE PRESENT CASE, THE ORDER, IN WHICH THE PROCEE DINGS FOR IMPOSITION OF PENALTY WERE INITIATED, WAS PASSED ON JULY 30, 1983, WHICH WAS SUBJECTED TO APP EAL AND THE APPEAL WAS DISMISSED ON FEBRUARY 24, 1984. THE HONBLE HIGH COURT HAS OBSERVED THAT THE WORDS IN WHICH THE PROCEEDINGS IN COURSE OF WHICH THE ACTION FOR IMPOSITION OF PENALT Y HAS BEEN INITIATED, ARE COMPLETED USED IN SECTION 275 INDICATE THE PROCEED INGS IN WHICH THE INCOME TAX AUTHORITIES SATISFIED ABOUT THE DEFAULT WHICH ATTRA CTS THE PENALTY AND NOT WITH RESPECT TO ANY OTHER PROCEEDINGS IN WHICH THE ORDER , LIKE CANCELLATION OF REGISTRATION HAS BEEN PASSED. IN THE CASE IN HAND, THE TAXING A UTHORITY HAS EXHIBITED HIS SATISFACTION ABOUT THE DEFAULT OF SECTION 269SS IN THE INVESTIGATION PROCEEDINGS CARRIED OUT BY THE INVESTIGATION WING IN CASE OF SH RI DP SEHGAL AND FINALLY THE SAID 22 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. SATISFACTION WAS COMMUNICATED TO THE AO OF THE ASSE SSEE VIDE LETTER DATED 23 RD OCTOBER, 2015. HENCE WHAT IS RELEVANT IS THE SAID L ETTER DATED 23 RD OCTOBER, 2015 WHEREBY IT WAS COMMUNICATED TO THE AO AND BASED ON THE SAID INFORMATION AND MATERIAL, THE AO FURTHER MADE A REFERENCE TO THE AD DITIONAL CIT FOR LEVY OF PENALTY. THUS THE LIMITATION FOR PASSING THE ORDER FOR LEVY OF PENALTY UNDER SECTION 271D WOULD RECKON FROM THE END OF THE OCTOBER, 2015 AND SHALL EXPIRE ON 30 TH APRIL, 2016 BEING THE PERIOD OF 6 MONTHS FROM THE END OF THE SA ID MONTH OF OCTOBER, 2015. THE PENALTY ORDER PASSED UNDER SECTION 271D IN THE CASE OF ASSESSEE IS DATED 11.10.2017 WHICH IS BARRED BY LIMITATION AND, THERE FORE, THE SAME IS LIABLE TO BE QUASHED. WE MAKE IT CLEAR THAT THE SUBSEQUENT SEAR CH AND SEIZURE ACTION UNDER SECTION 132 OF THE IT ACT CONDUCTED IN THE CASE OF ASSESSEE ON 7 TH SEPTEMBER, 2017 WOULD NOT EXTEND THE PERIOD OF LIMITATION WHEN THE PENALTY PROCEEDINGS WERE ALREADY INITIATED BY ISSUING SHOW CAUSE NOTICE DATED 01.09. 2017 WHICH IS BASED ON THE SATISFACTION VIDE LETTER DATED 23 RD OCTOBER, 2015. IT IS NOT UNDERSTANDABLE AS TO WHY THE AO HAS NOT INITIATED THE PROCEEDINGS UNDER SECT ION 271D AFTER RECEIVING THE SAID INFORMATION AND DOCUMENTS VIDE LETTER DATED 23 RD OCTOBER, 2015 TILL HE HAS MADE THE REFERENCE ON 09.08.2017. ACCORDINGLY, WE HOLD THAT THE IMPUGNED PENALTY ORDER PASSED UNDER SECTION 271D DATED 11.10.2017 IS ILLEG AL BEING BARRED BY LIMITATION. ON THE MERITS OF LEVY OF PENALTY : 6. ON CAREFUL PERUSAL OF THE PENALTY ORDER PASSED U NDER SECTION 271D OF THE IT ACT, WE FIND THAT THE SAID ORDER IS BASED ON THE DO CUMENTS FOUND AND SEIZED FROM 23 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. THE POSSESSION OF SHRI DP SEHGAL DURING THE SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE IT ACT CARRIED ON 19 TH DECEMBER, 2014. THE ADDITIONAL CIT HAS MADE THE REFERENCE OF THE ACKNOWLEDGEMENT LETTER SI GNED BY THE ASSESSEE ALONG WITH 15 UNDATED BLANK CHEQUES OF RS. 1 CRORE EACH A S WELL AS 15 BLANK PROMISSORY NOTES SIGNED BY THE ASSESSEE. THOUGH THERE IS A SU BSEQUENT SEARCH IN THE CASE OF THE ASSESSEE ON 7 TH SEPTEMBER, 2017 WHEREIN STATEMENT OF THE ASSESSEE UNDER SECTION 132(4) OF THE ACT WAS RECORDED TO GET THE C ONFIRMATION OF THE TRANSACTION OF LOAN OF RS. 15 CRORES, HOWEVER, THE SAID ADMISSION/ CONFESSION ON THE PART OF THE ASSESSEE WAS RETRACTED BY THE ASSESSEE VIDE LETTER DATED 30 TH SEPTEMBER, 2017. WE WILL DEAL WITH THE FACTS OF RETRACTION MADE BY THE ASSESSEE AT LATER STAGE. FIRST, WE WILL ANALYZE WHETHER THE DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE IN THE CASE OF SHRI DP SEHGAL ON 17 TH DECEMBER, 2014 WOULD ESTABLISH THE TRANSACTION OF LOAN OF RS. 15 CRORES IN CASH. IT IS PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION IN CASE OF SHRI DP SEHGAL TWO LETTERS SIGNED BY THE ASSESSEE WERE FOUND ALONG WITH THE 15 UNDATE D BLANK CHEQUES AND 15 PROMISSORY NOTES. FOR READY REFERENCE, BOTH THE UN DATED LETTERS ARE REPRODUCED AS UNDER :- 24 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. 25 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. 26 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. THE PECULIAR FEATURE OF BOTH THE LETTERS IS THAT TH E CONTENTS OF THESE LETTERS ARE IDENTICAL EXCEPT SOME AMENDMENT/ADDITIONS WERE SUGG ESTED IN THE FIRST LETTER REGARDING RATE OF INTEREST, PERIOD FOR REPAYMENT OF LOAN AND THEN COMPOUNDING INTEREST IN CASE OF NON-PAYMENT OF INSTALLMENT SHOW N. HOWEVER, THE DETAILS OF THE CHEQUES IN BOTH THE LETTERS ARE SAME WHICH ARE ALSO MATCHING WITH THE CHEQUES FOUND DURING THE COURSE OF SEARCH. THUS IT IS APPA RENT THAT THE FIRST LETTER SIGNED BY THE ASSESSEE MENTIONED THE TERMS AND CONDITIONS WHI CH WERE NOT ACCEPTABLE TO THE OTHER PARTY AND SOME CHANGES WERE PROPOSED IN THE S AID LETTER AND ACCORDINGLY THE SECOND LETTER WAS AGAIN PREPARED BY INCORPORATING T HE AMENDMENTS AS SUGGESTED ON THE FIRST LETTER. THEREFORE IT IS CLEAR THAT AT THE TIME OF SUBMITTING THE FIRST LETTER, THE TRANSACTION OF LOAN WAS NOT COMPLETED EVEN THOUGH T HE LANGUAGE OF ACKNOWLEDGEMENT OF RECEIPT OF LOAN IS SAME IN BOTH THE LETTERS. THIS SHOWS THAT THE MERE CONTENTS OF THE LETTER WOULD NOT ESTABLISH THE FACT OF ACTUAL TRANSACTION OF LOAN OF RS. 15 CRORES WHEN THE SAME CONTENTS AND DETAILS OF THE CHEQUES ARE GIVEN IN THE SECOND LETTER WHICH IS TREATED AS ACKNOWLEDGEMENT O F RECEIPT OF LOAN BY THE DEPARTMENT. IT APPEARS THAT THIS LETTER ACKNOWLEDG ING THE LOAN ALONG WITH THE COLLATERAL CHEQUES AND PROMISSORY NOTES WERE SUBMIT TED BY AS A PROPOSAL FOR GRANT OF LOAN. EVEN OTHERWISE, THE ACKNOWLEDGEMENT LETTER DOES NOT SPEAK ABOUT THE LOAN OF RS. 15 CRORES IN CASH. THESE FACTS ALONG WITH T HE UNDISPUTED FACT OF AVAILING LOAN OF RS. 10 CRORES BY THE ASSESSEE FROM AU FINANCE LT D. ON 30 TH JULY, 2014 SUBSTANTIATE THE EXPLANATION OF THE ASSESSEE THAT A FTER AVAILING THIS LOAN FROM THE AU FINANCE LTD. THE REQUEST FOR LOAN OF RS. 15 CRORES FROM OR THROUGH SHRI DP SEHGAL WAS NOT PURSUED. WE FURTHER NOTE THAT THIS FACT IS EVEN CORROBORATED BY SHRI DP 27 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. SEHGAL IN HIS STATEMENT RECORDED UNDER SECTION 132( 4) ON 19 TH DECEMBER, 2014. THE RELEVANT PART OF ANSWER TO QUESTION NO. 12 IS A S UNDER :- Q 12 VKIDS DK;KZY; DS HKKSFRD LR;KIU DS NKSJKU IK;S X;S DQN VU; NLRKOST FTUGSA ANNEXURE-A DS EXIBIT-15 ESA LADFYR FD;K X;K GS MUGSA ES VKIDKS FN[KK JGK G WWA D`I;K BUDK /;KUIWOZD VOYKSDU DJ BU NLRKOSTKS ESA TKS FOOJ.K GS ML IJ LIF'VDJ.K NSOSAA MRRJ % ESUS ANNEXURE-A DS EXIBIT-15 DK /;KUIWOZD VOYKSDU DJ FY;K GSA BLDS LACA/K ESA ESJK ;G FUOSNU GS FD VKJ-DS-OEKZ ESJS ?KFUV FE= GS FTULS ESJK 22 OKKSZA LS IKFJOKFJD LACA/K GS TGKW RD EQ>S ;KN GS EBZ 2014& TWU 2014 ESA MUGKSUS EQ>S VIUS FUTH L=KSR ,OA CKTKJ LS MUDS SCHOOL PROJECT DS FY;S IWATH TQVKUS GSRW DGK FKKA FTLDH SECURITY DS CRKSJ MUGKSUS EQ>S :I;S 1]00]00]000@& IZR;SD DS LSUVY CSAD VKWQ BFUM;K ] CZ KAP RYOAMH] DKSVK DS MUDS [KKRK LA[;K 00000003088007990 DS UNDATED & UNNAMED 15 PSD FN;S FKSA BLDS VYKOK EQ>S 15 UNDATED IZKSESLJH UKSVL HKH HKSTS FKSA BL CKR LS LACF/KR ES JK MULS COMMUNICATION HKH GQVK FKK FTLDS VARXZR ESUS MULS ,D I= OKGD }KJK YK;S X;S UNDATED I= ESA DQN LQ/KKJ DJDS NQCKJK HKSTUS DS FY;S HKH OKIL FN;K FKKA ;G NKSUKS I= MLDS EWY LO:IK ESA ANNEXURE-A DS EXIBIT-15 DS I`B DZE 9 ,OA 10 IJ J[KS GSA ES ;GKW ;G HKH LIV DJ NSUK PKGRK GWW FD D;WFD ES BRUS :I;KSA DK IZCA/K UGHA DJ IKK;K FKKA BLFY;S ESUS TGKA RD EQ>S ;KN GS YXHKX VXLR 2014 ESA JH VKJ-DS- OEKZ DKS VIUH FOOKRK TKFGJ DJ NH FKH RFKK VOXR DJOK FN;K FKK FD ISLKS DH O;OLFKK UGHA GKS IKBZA BLLS LACAF/KR ESUS MUDKS ,D I= HKH FY[KK FKK TKS FD DK;KZY; ES DGH IJ J[KK GKSXK T KS FD HKKSFRD LR;KIU DS NKSJKU KK;N /;KU ESA UGHA VK;KA BL I= DH DK;KZY; IZFR ES FOHKKX DS LE{K IZLRQR DJ NWAXKA ES ;G HKH IZ;KL D:AXK FD MIJKSDR I= DH EWY IZFR HKH JH VKJ- DS- OEKZ LS IZKI R DJDS FOHKKX DS LE{K IZLRQR DJ NWAXKA---- THUS SHRI DP SEHGAL HAS EXPLAINED HOW TWO LETTERS W ERE FOUND AT THE TIME OF SEARCH THAT THERE WERE SOME CORRECTIONS/AMENDMENTS IN THE FIRST LETTER AND, THEREFORE, THE 28 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. SECOND LETTER WAS TAKEN FROM THE ASSESSEE. HE HAS A LSO SPECIFICALLY STATED THAT IN THE MONTH OF AUGUST, 2014 HE HAS EXPRESSED HIS INABILIT Y TO ARRANGE THE LOAN AND, THEREFORE, NO LOAN WAS GRANTED BY HIM TO THE ASSESS EE. THUS THE OUT-COME OF THE INVESTIGATION PROCEEDINGS IN CASE OF SHRI DP SEHGAL HAS NOT ESTABLISHED CONCLUSIVELY THAT A LOAN OF RS. 15 CRORES WAS RECEIVED BY THE AS SESSEE FROM SHRI DP SEHGAL, MUCH LESS THE LOAN IN CASH. IT APPEARS THAT THE DEPARTM ENT THOUGH TRIED TO EXAMINE THE ASSESSEE DURING THE POST SEARCH ENQUIRY IN CASE OF SHRI DP SEHGAL BY ISSUING SUMMON UNDER SECTION 131 TO THE ASSESSEE ON 01.04.2 015 AND THEREAFTER THE NOTICE UNDER SECTION 133(6) WAS ALSO ISSUED TO THE ASSESSE E ON 13 TH OCTOBER, 2016. THE ASSESSEE REPLIED THE SUMMONS OF THE DEPARTMENT VIDE LETTER DATED 07.09.2016. THUS IT IS CLEAR THAT WHEN THE DEPARTMENT COULD NOT SUCCEED IN THE CASE OF SHRI DP SEHGAL, THEY CONDUCTED A SEARCH AND SEIZURE ACTION IN CASE OF THE ASSESSEE ON 7 TH SEPTEMBER, 2017 TO STRENGTHEN THEIR CASE AGAINST SH RI DP SEHGAL. THE CONTEMPORANEOUS EVENTS OF MAKING THE REQUEST OF LOA N IN THE MONTH OF MAY-JUNE 2014 TO SHRI DP SEHGAL AND THEREAFTER THE APPROVAL OF LOAN WAS GRANTED BY AU FINANCE LTD. ON 30 TH JULY, 2014 AND SUBSEQUENT DROPPING OF THE PROPOSAL OF LOAN FROM SHRI DP SEHGAL AS HE HAS STATED IN THE STATEME NT THAT IN THE MONTH OF AUGUST HE REGRETTED THE REQUEST OF THE ASSESSEE FOR NOT AR RANGING THE FUNDS CLEARLY ESTABLISHED THE CHAIN OF EVENTS WHICH CANNOT BE DOU BTED WHEN THERE IS NO OTHER EVIDENCE OF ACTUAL TRANSACTION OF LOAN EXCEPT THE P APERS GIVEN BY THE ASSESSEE AS A SECURITY AND PRE-REQUISITION FOR GRANT OF THE ALLEG ED LOAN FROM SHRI DP SEHGAL. HENCE ALL THESE SEQUENCE OF TRANSACTIONS AND EVENTS MAKE IT CLEAR THAT THE REVENUE HAS FAILED TO ESTABLISH THE FACT WITHOUT ANY DISPUTE AN D DOUBT THAT AN ACTUAL MOVEMENT OF CASH OF RS. 15 CRORES HAPPENED BETWEEN THE ASSES SEE AND SHRI DP SEHGAL. THE 29 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. PROCEEDINGS UNDER SECTION 271D ARE INITIATED AND PE NALTY IS LEVIED GENERALLY WHEN THE TRANSACTION OF VIOLATION OF PROVISIONS OF SECTI ON 269SS IS NOT IN DISPUTE BUT THE ONLY QUESTION REGARDING THE LEVY OF PENALTY IS WHET HER THE ASSESSEE HAS BEEN ABLE TO EXPLAIN A REASONABLE CAUSE FOR THE VIOLATION. IN T HE CASE IN HAND, THE TRANSACTION OF ALLEGED LOAN ITSELF IS IN DISPUTE AND THE REVENUE H AS TAKEN ONLY A VIEW BASED ON CERTAIN DOCUMENTS BUT STILL IT IS NOT AN UNDISPUTED OR ESTABLISHMENT OF FACT BEYOND DOUBT THAT THE SAID TRANSACTION HAS ACTUALLY TAKEN PLACE. SINCE THE REVENUE HAS RELIED UPON THE STATEMENT OF THE ASSESSEE RECORDED UNDER SECTION 132(4), THEREFORE, THE EVIDENTIARY VA LUE OF THE SAID STATEMENT AS WELL AS SUBSEQUENT RETRACTION OF THE ASSESSEE IS ALSO RE LEVANT FOR ARRIVING AT THE CONCLUSION WHETHER THERE IS AN ACTUAL TRANSACTION O F LOAN OF RS. 15 CRORES IN CASH RECEIVED BY THE ASSESSEE FROM SHRI DP SEHGAL. THE LD. D/R HAS REFERRED TO VARIOUS CASES IN SUPPORT OF HIS CONTENTION TO SAY THAT THE RETRACTION MADE BY THE ASSESSEE HAS NO EVIDENTIARY VALUE. HOWEVER, WE FIND THAT THE RETRACTION OF THE ASSESSEE VIDE LETTER DATED 30 TH SEPTEMBER, 2017 IS NOT A STAND TAKEN BY THE ASSESS EE FIRST TIME AFTER THE ADMISSION/CONFESSION MADE BY THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 132(4) ON 7 TH SEPTEMBER, 2017. IT IS PERTINENT TO NOTE THAT THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED BY THE IN VESTIGATION WING AND EVEN IN THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION HAS TA KEN THE SAME STAND. THE ASSESSEE HAS REFERRED TO THE REPLY DATED 07.09.2016 WHICH IS ALSO REFERRED IN THE REPLY FILED BY THE ASSESSEE TO THE SHOW CAUSE NOTIC E AS REPRODUCED IN THE PENALTY ORDER AT PAGES 3 & 4 AS UNDER :- 30 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. IN RESPONSE TO THE NOTICE, SH. K.C. JAIN, CA, AUT HORIZED REPRESENTATIVE (AR) OF THE ASSESSEE ALONG WITH SH. HARISH JAIN, SR. MAN AGER FINANCE & ACCOUNTS ATTENDED AND FILED REPLY SIGNED BY SHRI R.K. VERMA VIDE LETTER DATED 21.09.2017 WHICH IS REPRODUCED BELOW. PLEASE REFER TO ABOVE. AT THE OUTSET I HEREBY UNCONDITIONALLY DENY HAVING EVER RECEIVED ANY LOAN OR DEPOSIT FROM SHRI DP SEHGAL IN CONTRAVENTIO N OF SECTION 269SS OF THE INCOME TAX ACT, 1961. I MAY ALSO BRING TO YOUR KIND NOTICE THAT AN ENQUIR Y IN THE MATTER WAS ALSO DONE BY DEPUTY COMMISSIONER OF INCOME TAX (CEN TRAL CIRCLE)-III, JAIPUR IN THE MATTER OF THE ASSESSMENT PROCEEDINGS OF SHRI DP SEHGAL FOR AY 2015-16. IN THE SAID ENQUIRY I WAS ASKED TO EXPLAIN THE MATTER. I HEREBY ENCLOSE A COPY OF THE SAID REPLY FOR READY REFERENCE. I HEREBY REAFFIRM THE CONTENTS OF THE SAID REPLY FULLY AND WITHOUT ANY RESERVATIONS. ANY OTHER VERSION OF FACTS OR EVIDENCE CONTRARY TO MY AFORESAID REPLY DATED 07.09.2016, IRRESPECTIVE OF SOURCE OR POINT O F TIME OF SUCH VERSION IS DENIED, SAME BEING UNTRUE. IF YOU PROPOS E TO RELY ON ANY SUCH VERSION/EVIDENCE, I HEREBY REQUEST YOUR GOODSE LF TO PROVIDE ME A COPY THEREOF AND AN OPPORTUNITY TO EXPLAIN/REBUT THE SAME. IN THIS REPLY, SHRI R.K. VERMA HAS REAFFIRMED THE C ONTENTS OF HIS REPLY IN THE MATTER SUBMITTED BY HIM BEFORE DCIT (CENTRAL CIRCLE )-III, JAIPUR WHICH IS REPRODUCE BELOW :- PLEASE REFER TO ABOVE. AT THE OUTSET, I WOULD LIKE TO HUMBLY SUBMIT THAT A NY CONCLUSION PROPOSED TO BE DERIVED BY YOU ON THE BASIS OF ANY P APERS/DOCUMENTS SEIZED FROM THE PREMISES OF MR. D.P. SEHGAL (OR HIS CONCERNS) THAT I HAD OBTAINED ANY LOAN FROM MR. D.P. SEHGAL OR HIS A SSOCIATES/FRIENDS IS FACTUALLY INCORRECT AND LOGICALLY NOT SUSTAINABL E. I HAD NOT RECEIVED ANY LOAN FROM MR. D.P. SEHGAL OR HIS ASSOCIATES/FR IENDS ON THE BASIS OF ANY SUCH/SEIZED DOCUMENTS BECAUSE MR. D.P.SEHGAL WAS NOT ABLE TO ARRANGE FUNDS FROM IS ASSOCIATES/FRIENDS ON THE TER MS AND CONDITIONS MENTIONED IN THE SAID UNDATED LETTER. IN VIEW OF THE ABOVE FACTUAL POSITION, ANSWER TO IT EM NO. A-F OF PARAGRAPH 3 OF YOUR LETTER DATED 13.10.2016 MAY BE TREATED AS NULL/NOT APPLICABLE. 31 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. AT THIS STAGE ITSELF, I WOULD, HOWEVER, LIKE TO POI NT OUT THAT THE VERY FACT THAT TWO LETTERS WERE FOUND AND SEIZED IN RESPECT OF THE SAME MATTER, BOTH SIGNED BY ME AND BOTH ACKNOWL EDGING RECEIPT OF MONEY UNCONDITIONALLY BUT CONTAINING MAT ERIALLY AND SIGNIFICANTLY DIFFERENT CRITICAL TERMS GO TO INDICA TE THAT THE ACKNOWLEDGEMENT OF RECEIPT OF MONEY THEREIN WAS A SORT OF ADVANCE RECEIPT IN THE HOPE THAT MR. SEHGAL WOULD BE ABLE TO ARRANGE SUCH FUNDS AND EXECUTE THE TRANSACTION WITH OUT REFERRING TO ME FOR THE PURPOSE OF OBTAINING FORMAL RECEIPT AND THEREBY DELAYING THE TRANSACTION. UNFORTUNATELY, TH E TRANSACTION DID NOT TAKE PLACE AT ALL AND ALL THESE UNDATED UNN AMED DOCUMENTS WERE FORGOTTEN AND CONTINUED TO REMAIN WI TH HIM UNUTILIZED. I HOPE THE ABOVE INFORMATION/EXPLANATION ANSWERS YO UR QUERIES IN THE ABOVE CONNECTION. THUS BY CONSIDERING THE EARLIER STAND OF THE ASSESS EE PRIOR TO THE STATEMENT RECORDED UNDER SECTION 132(4) AS WELL AS THE SUBSEQ UENT RETRACTION MADE BY THE ASSESSEE VIDE LETTER DATED 30 TH SEPTEMBER, 2017, WE NOTE THAT THIS IS NOT AN ABRUP T AFTER-THOUGHT RETRACTION BY THE ASSESSEE FROM THE S TATEMENT MADE UNDER SECTION 132(4) BUT AS FAR AS THE ALLEGED LOAN OF RS. 15 CRO RES IS CONCERNED, THE STAND OF THE ASSESSEE RIGHT FROM THE BEGINNING WAS CLEAR THAT HE HAS NOT TAKEN ANY LOAN FROM SHRI DP SEHGAL. THIS EXPLANATION OF THE ASSESSEE I S NOT A MERE VAGUE GENERAL EXPLANATION BUT IT IS BASED ON THE RELEVANT FACTS A S WELL AS EVIDENCE. EVEN THE HONBLE SUPREME COURT IN CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA & OTHERS, 91 ITR 18 (SC) RELIED UPON BY THE LD. D/R HAS OBSERVED THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDEN CE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. THEREFORE, IF THE ASSESSEE HAS MADE OU T A CASE AND SHOWS THAT THE STATEMENT MADE UNDER SECTION 132(4) IS NOT BASED ON CORRECT FACTS, THEN THE SUBSEQUENT RETRACTION IS NOT PROHIBITED. THE HONB LE JURISDICTIONAL HIGH COURT IN 32 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. CASE OF CIT VS. RAVI MATHUR (SUPRA) AS RELIED UPON BY THE LD. D/R HAS ALSO CONSIDERED THIS ISSUE AND ONLY AFTER NOTICING THE F ACT THAT THERE IS AN INORDINATE DELAY IN RETRACTING THE STATEMENT EARLIER MADE ON OATH, T HE SAID RETRACTION HAS NO EVIDENTIARY VALUE. FURTHER, IN THE SAID CASE THE A SSESSEE COULD NOT DEMONSTRATE THAT THE STATEMENT INITIALLY RECORDED WERE FACTUALLY INC ORRECT. SIMILAR POSITION WAS EXPRESSED IN THE OTHER DECISIONS RELIED UPON BY THE LD. D/R. THEREFORE, THE RETRACTION IS NOT OUT-RIGHTLY PROHIBITED BUT IF THE ASSESSEE SUBSEQUENTLY POINTS OUT WITH SUPPORTING MATERIAL TO SHOW THAT THE STATEMENT OF ADMISSION IS NOT FACTUALLY CORRECT, THEN SUCH RETRACTION CANNOT BE IGNORED OR BRUSHED ASIDE. THE HONBLE GUJARAT HIGH COURT IN CASE OF KAILASHBEN MANHARLAL CHOKSHI VS. CIT (SUPRA) HAS DISCUSSED THIS ASPECT IN PARA 22 TO 26 AS UNDER :- 22. WE HAVE HEARD LEARNED COUNSELS APPEARING FOR THE R ESPECTIVE PARTIES AT GREAT LENGTH AND CONSIDERED THE SUBMISSIONS. WE HAV E ALSO GONE THROUGH THE ORDERS PASSED BY THE AUTHORITIES BELOW. IT IS TRUE THAT IN NORMAL CIRCUMSTANCES THIS COURT WOULD NOT INTERFERE IN THE FINDING OF FA CT ARRIVED AT BY THE AUTHORITIES. IT IS, HOWEVER, TO BE SEEN AS TO WHETH ER THE EXPLANATION TENDERED BY THE ASSESSEE WOULD BE CONSIDERED BY THE AUTHORITIES BELOW. IT IS ALSO TO BE SEEN AS TO WHETHER AN ADDITION MADE IS MERELY BASED ON T HE STATEMENT RECORDED BY THE ASSESSING OFFICER UNDER SECTION 132(4) OF THE A CT AND WHETHER ANY COGNIZANCE MAY BE TAKEN OF THE RETRACTED STATEMENT. SO FAR AS CASE ON HAND IS CONCERNED, THE GLARING FACT REQUIRED TO BE NOTED IS THAT THE STATEMENT OF THE ASSESSEE WAS RECORDED UNDER SECTION 132(4) OF THE A CT AT MID NIGHT. IN NORMAL CIRCUMSTANCES, IT IS TOO MUCH TO GIVE ANY CREDIT TO THE STATEMENT RECORDED AT SUCH ODD HOURS. THE PERSON MAY NOT BE IN A POSITION TO MAKE ANY CORRECT OR CONSCIOUS DISCLOSURE IN A STATEMENT IF SUCH STATEME NT IS RECORDED AT SUCH ODD HOURS. MOREOVER, THIS STATEMENT WAS RETRACTED AFTER TWO MONTHS. 23. THE MAIN GRIEVANCE OF THE ASSESSING OFFICER WAS TH AT THE STATEMENT WAS NOT RETRACTED IMMEDIATELY AND IT WAS DONE AFTER TWO MONTHS. IT WAS AN AFTERTHOUGHT AND MADE UNDER LEGAL ADVISE. HOWEVER, IF SUCH RETRACTION IS TO BE VIEWED IN LIGHT OF THE EVIDENCE FURNISHED ALONG WIT H THE AFFIDAVIT, IT WOULD IMMEDIATELY BE CLEAR THAT THE ASSESSEE HAS GIVEN PR OPER EXPLANATION FOR ALL THE ITEMS UNDER WHICH DISCLOSURE WAS SOUGHT TO BE OBTAI NED FROM THE ASSESSEE. SO FAR AS AMOUNT INVESTED IN HOUSE PROPERTY IS CONCERN ED, THE ASSESSEE HAS SPECIFICALLY STATED IN HIS EXPLANATION DATED 28-2-1 989 THAT THERE WAS ABSOLUTELY 33 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. NO BASIS FOR MAKING THE DISCLOSURE ON ACCOUNT OF BU NGLOW AT 68, SARJAN SOCIETY, ATHWA LINES, SURAT. IT WAS IN THE YEAR 196 4 THAT THE ASSESSEE TOOK ONE PLOT NO. 68 IN SARJAN CO-OPERATIVE HOUSING SOCIETY WHICH WAS ALSO CONSTRUCTING THE BUNGLOW FOR WHICH THE ASSESSEE CLA IMED TO HAVE BEEN MADE CONTRIBUTION FROM TIME TO TIME. THE ASSESSEE TOOK P OSSESSION OF THE BUNGLOW IN 1974 WHEN ONLY GROUND FLOOR WAS CONSTRUCTED. SIN CE THEN HE HAS BEEN LIVING THERE. THE ASSESSEE HAS CONSTRUCTED FIRST FLOOR DUR ING 1986 TO 1988 AND HE HAS INCURRED THE EXPENSES FOR FIRST FLOOR STRUCTURE TO THE TUNE OF RS. 2,03,185.65 BUT THIS AMOUNT HAS BEEN WITHDRAWN FROM THE ACCOUNT OF THE FIRM IN WHICH THE ASSESSEE IS A PARTNER. AS PER SAY OF MR. SHAH EVEN DEPARTMENTAL VALUATION OFFICER HAS ALSO ACCEPTED THAT THE COST OF CONSTRUC TION OF FIRST FLOOR WORKED OUT TO RS. 2,06,060. THERE WAS, THEREFORE, NO REASON FO R MAKING ADDITION OF RS. 4 LAKHS ON THE BASIS OF ALLEGED DISCLOSURE MADE BY TH E ASSESSEE IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. IN SUPPOR T OF THIS STATEMENT THE REVENUE HAS NOT BROUGHT ANY EVIDENCE WHATSOEVER WHI CH WOULD ESTABLISH THAT THE ASSESSEE HAD IN FACT INCURRED AN AMOUNT OF RS. 4 LAKHS ON THE CONSTRUCTION OF THE FIRST FLOOR AND THAT AMOUNT WAS INVESTED OUT OF THE UNDISCLOSED INCOME. HENCE THERE IS NO JUSTIFICATION FOR MAKING ACCOUNT OF RS. 4 LAKHS MERELY ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 132 (4). NONE OF THE AUTHORITIES HAVE CONSIDERED THIS EXPLANATION AND THE CIT(A) AS WELL AS TRIBUNAL BOTH HAVE PROCEEDED ON THE FOOTING THAT THE ASSESSING OFFICER HAS CONSIDERED THE EXPLANATION. 24. SO FAR AS THE ADDITION ON ACCOUNT OF GOLD ORNAMENT TO THE TUNE OF RS. 1 LAKH IS CONCERNED, THE ASSESSEE HAS GIVEN THE EXPLANATIO N THAT WAS REPRODUCED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER WHICH SAYS THAT DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDING, STATEMENT OF ASSESSEE'S WIFE, SMT. KAILASHBEN CHOKSHI WAS RECORDED AND ACCORDING TO WH ICH SHE HAD RECEIVED ABOUT 25 TOLAS OF GOLD EACH FROM HER PARENTS AND FR OM HER PARENTS-IN-LAW SIDE AT THE TIME OF HER MARRIAGE IN THE YEAR 1960. SHE H AD GIVEN 15 TOLAS OF GOLD ORNAMENTS TO HER DAUGHTER RITABEN AT THE TIME OF HE R MARRIAGE IN THE MONTH OF MARCH, 1988. IF THE TOTAL JEWELLERY FOUND DURING TH E COURSE OF SEARCH IS TAKEN INTO CONSIDERATION, IN LIGHT OF THE INSTRUCTIONS IS SUED BY THE BOARD, ANY MIDDLE CLASS INDIAN FAMILY MAY BE HAVING JEWELLERY AND GOL D ORNAMENTS TO THAT EXTENT. HENCE, NO ADDITION CAN BE MADE ON THAT COUNT. EVEN IF THE BOARD CIRCULAR MAY NOT HAVE RETROSPECTIVE OPERATION, LOOKING TO THE QU ANTUM OF HOLDING AND ASSESSEE'S EXPLANATION, WE ARE OF THE VIEW THAT THI S IS A NORMAL HOLDING WHICH CAN BE FOUND IN ANY MIDDLE CLASS INDIAN FAMILY AND HENCE NO ADDITION COULD HAVE BEEN JUSTIFIED ON THAT COUNT. 25. SO FAR AS ADDITION OF RS. L LAKH ON ACCOUNT OF UNA CCOUNTED INVESTMENT IN FURNITURE IS CONCERNED, IT IS STATED BY THE ASSESSE E THAT ON THE GROUND FLOOR FURNITURE WAS MADE BEFORE 15 YEARS AND ASSESSEE HAD SPENT RS. 25,000 FOR RENOVATION AFTER MAKING WITHDRAWAL FROM THE FIRM'S ACCOUNT. IT IS FURTHER SUBMITTED THAT THE FURNITURE ON THE FIRST FLOOR WAS PARTLY RECEIVED AND PAID OUT OF WITHDRAWALS FROM THE FIRM. AT THE TIME OF THE SE ARCH ADDITIONAL FURNITURE MEANT FOR THE FIRST FLOOR WAS JUST RECEIVED BY WAY OF PARCEL FROM AHMEDABAD AND WAS LYING IN BUNDLES. A DETAILED SOURCE OF INVE STMENT OF FURNITURE PURCHASED FROM AHMEDABAD WITH A DUE CONFIRMATION FR OM THE PARTY CONCERNED HAVE BEEN FILED BY THE ASSESSEE BEFORE THE ASSESSIN G OFFICER. SINCE NO 34 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. PAYMENT OF THIS ADDITIONAL FURNITURE WAS MADE BY TH E ASSESSEE TILL THE DATE OF SEARCH, NO ADDITION COULD HAVE BEEN MADE ON THIS CO UNT. 26. IN VIEW OF WHAT HAS BEEN STATED HEREINABOVE WE ARE OF THE VIEW THAT THIS EXPLANATION SEEMS TO BE MORE CONVINCING, HAS NOT BE EN CONSIDERED BY THE AUTHORITIES BELOW AND ADDITIONS WERE MADE AND/OR CO NFIRMED MERELY ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. DESPITE THE FACT THAT THE SAID STATEMENT WAS LATER ON RETRACTED NO E VIDENCE HAS BEEN LED BY THE REVENUE AUTHORITY. WE ARE, THEREFORE, OF THE VIEW T HAT MERELY ON THE BASIS OF ADMISSION THE ASSESSEE COULD NOT HAVE BEEN SUBJECTE D TO SUCH ADDITIONS UNLESS AND UNTIL, SOME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. WE ARE ALSO OF THE VIEW THAT FROM THE STATEMENT REC ORDED AT SUCH ODD HOURS CANNOT BE CONSIDERED TO BE A VOLUNTARY STATEMENT, I F IT IS SUBSEQUENTLY RETRACTED AND NECESSARY EVIDENCE IS LED CONTRARY TO SUCH ADMI SSION. HENCE THERE IS NO REASON NOT TO DISBELIEVE THE RETRACTION MADE BY THE ASSESSING OFFICER AND EXPLANATION DULY SUPPORTED BY THE EVIDENCE. WE ARE, THEREFORE, OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN MAKING ADDIT ION OF RS. 6 LAKHS ON THE BASIS OF STATEMENT RECORDED BY THE ASSESSING OFFICE R UNDER SECTION 132(4) OF THE ACT. THE TRIBUNAL HAS COMMITTED AN ERROR IN IGN ORING THE RETRACTION MADE BY THE ASSESSEE. IN THE CASE IN HAND, WHEN THE DOCUMENTS SEIZED DURI NG THE COURSE OF SEARCH IN CASE OF SHRI DP SEHGAL DO NOT ESTABLISH CONCLUSIVELY THE FACT OF ALLEGED LOAN OF RS. 15 CRORES, THEN THE SAID MATERIAL CAN BE A RELEVANT EV IDENCE BUT IN THE ABSENCE OF ANY OTHER CORROBORATIVE MATERIAL TO SHOW THE ACTUAL TRA NSACTION AND MOVEMENT OF MONEY, IT IS NOT ESTABLISHED THAT THE TRANSACTION O F LOAN OF RS. 15 CRORES IN CASH HAS ACTUALLY TAKEN PLACE BETWEEN THE ASSESSEE AND SHRI DP SEHGAL. WE HAVE ALREADY DISCUSSED THE CONTENTS OF THE ACKNOWLEDGMENT AND AR RIVED AT THE CONCLUSION THAT THESE DOCUMENTS ITSELF DO NOT ESTABLISH THE TRANSAC TION OF LOAN BUT THESE ARE ONLY SUBMITTED IN ADVANCE FOR PROPOSAL OF LOAN WHICH WAS NOT MATERIALIZED AND THIS FACT IS ALSO CORROBORATED BY THE SUBSEQUENT SANCTION OF LOAN BY AU FINANCE LTD. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, WE HOLD THAT THE REVENUE HAS FAILED TO ESTABLISH CONCLUSIVE LY AND BEYOND DOUBT THAT THE ACTUAL TRANSACTION OF RS. 15 CRORES HAS TAKEN PLACE BETWEEN THE ASSESSEE AND SHRI 35 ITA NO. 405/JP/2019 SHRI RAM KISHAN VERMA, KOTA. DP SEHGAL, HENCE THE PENALTY LEVIED UNDER SECTION 2 71D IS NOT SUSTAINABLE AND THE SAME IS LIABLE TO BE DELETED. ACCORDINGLY, WE DELET E THE PENALTY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 03/07/20 19. SD/- SD/- ( JES'K LH- 'KEKZ ) ( FOT; IKY JKWO (RAMESH C. SHARMA ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 03/07/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI RAM KISHAN VERMA, KOTA. 2. THE RESPONDENT THE ADDL. CIT, RANGE-1, KOTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 405/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR