Shri Dipakkumar Keshavlal Patel, Gandhinagar V. The Income Tax Officer, Ward-1, Gandhinagar

ITA 419/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8185 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Keywords: Wrong claim; Corroborative evidences; Onus to prove
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.419/AHD/2015 (ASSESSMENT YEAR : 2010-11) SHRI DIPAKKUMAR KESHAVLAL PATEL, C/O. HANUMAN WOOD INDUSTRIES, 1007, GIDC, SECTOR 28, GANDHINAGAR 382 028. VS. THE ITO, WARD-1, GANDHINAGAR. [PAN NO. AHBPP 0975 F] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI M. J. SHAH, A.R. RESPONDENT BY : SHRI JAYANT JHAVERI, SR. D.R. DATE OF HEARING 14/12/2018 DATE OF PRONOUNCEMENT 01/01/2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 11.11.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - GANDHINAGAR [LD. CIT(A) IN SHORT] FOR ASSESSMENT YEAR (AY) 2010-11 ARISING OUT OF THE PENALTY ORDER U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS 'THE ACT') DATED 25.09.2013 PASSED BY THE ITO, WARD-1, GANDHINAGAR WITH THE FOL LOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED IN LEVYING PENALTY ON ADDITION MADE OF UNSECURED LOANS OF RS.1,15,500/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED IN LEVYING PENALTY ON ADDITION MADE OF UNSECURED CREDI TORS OF RS.1,50,360/- AS UNEXPLAINED. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND, ALT ER OR MODIFY ANY OF THE GROUNDS STATED HEREINABOVE EITHER BEFORE OR AT THE TIME OF HEARING. - 2 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 2. THE ASSESSEE IS A CIVIL CONTRACTOR DECLARED TOTA L INCOME OF RS.7,17,790/- BY FILING RETURN ON 21.09.2010. THE ASSESSMENT WAS FINALIZED U/S 143(3) OF THE ACT WITH AN ADDITION OF RS.1,15,500/- ON ACCOUNT OF UNSECURED L OAN AND RS.1,50,360/- BEING DISALLOWANCE OF BOGUS CREDITORS NAMELY MS. GAYATRI TRADING CO. IN FACT, UNSECURED LOANS TO THE TUNE OF RS.7,96,300/- WERE OBTAINED BY THE A SSESSEE, DETAILS WHEREOF WAS CALLED FOR BY THE LEARNED AO UPON WHICH FOLLOWING WERE SUBMITT ED: 1. BHANUMATIBEN J PATEL RS.19,500/- 2. BHAVIK PATEL RS.19,500/- 3. DILIPBHAI J. PATEL RS.19,500/- 4. HETAL PATEL RS.19,500/- 5. DALPAT MAMA RS.19,500/- 6. MOHANLAL PATEL RS.18,500/- TOTAL RS.1,15,500/- THEREFORE, SHOW-CAUSE WAS ISSUED AS TO WHY SUCH UN SECURED LOANS SHOULD NOT BE TREATED AS SHAM. SUCH ADDITION WAS CLAIMED TO HAVE BEEN AGREED UPON BY THE ASSESSEE IN TERMS OF THE ORDER SHEET ENTRY DATED 25.02.2013. PENALTY PROCEEDING WAS INITIATED ON THE ALLEGED GRO UND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE RETURN OF INCOME OF TH E ASSESSEE. IT IS THE CASE OF THE ASSESSEE THAT FROM THE LEDGER ACCOUNT OF THE M/S. GAYATRI TR ADING CO. IT IS ESTABLISHED THAT THOUGH TOTAL TRANSACTION WAS MADE TO THE TUNE OF RS.1,50,3 60/- NOTHING WAS PAID TO IT HENCE CREDITORS IN THE BALANCE SHEET OF THE ASSESSEE. FUR THER THAT, THE ASSESSEE HAS NOT FURNISHED THE ADDRESS OF M/S. GAYATRI TRADING CO. ULTIMATELY ADDITION WAS MADE BY THE LEARNED AO IN THE ABSENCE OF ANY DETAILS FURNISHED BY THE A SSESSEE. IN THE PENALTY PROCEEDING SHOW-CAUSE WAS ISSUED TO THE ASSESSEE BY AND UNDER A NOTICE DATED 17.07.2013. IN RESPONSE THEREOF THE AS SESSEE FILED ITS REPLY DATED 31.08.2013 WITH THE FOLLOWING EXPLANATION: ...THE ASSESSEE HAD NOT CONCEALED ANY INCOME NOT F URNISHED INACCURATE PARTICULAR OF INCOME HENCE HE DON'T FALL IN THE CAT EGORY FOR THE PENALTY - 3 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 PROCEEDINGS BECAUSE YOUR ATTENTION IS INVITED IN TH E BALANCE SHEET OF THE ASSESSEE THE ASSESSEE HAD SHOWN A UNSECURED LOAN OF RS.1,15, 500/- AND THE SAME WAS ALREADY BEEN OFFERED FOR THE PURPOSE OF TAXATION. D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE APPELLANT HAD SUBMITTED CONFIRMATION ALONG WITH THE LEDGER ACCOUNT DULY SIGNED BY BOTH THE PARTY HENCE IDENTITY OF THE PAYEE AND GENUINENESS OF THE PAYMENT WAS ESTABLISHED BY THE A SSESSEE. IN YOUR ASSESSMENT ORDER PARA 4.1 IT WAS STATED BY YOU THAT CONFIRMATI ON OF ACCOUNT WAS NOT FILED THIS STATEMENT IS NOT CORRECT. WE HAD FULLY DISCHARGED T HE BURDEN OF PROOF TO PROVE THE GENUINENESS OF THIS DEPOSIT ACCOUNT, HENCE NO OBJEC TION MATERIAL WAS COLLECTED BY YOU TO PROVE THAT THIS DEPOSIT IS NOT GENUINE NO SU MMONS WAS ISSUED NOR NO INFORMATION WAS CALLED FOR U/S.133(6) OF THE INCOME TAX ACT. FURTHER TO AVOID ANY LITIGATION AND TO OBTAIN PEACE OF MIND I AGREED FOR THE SAME ADDITION. ADDITION OF RS.1,50,360/- ON ACCOUNT OF SUNDRY CRED ITORS I HAVE TO STATE THAT DURING THIS YEAR I HAD PURCHASED A BUILDING MATERIA L FROM GAYATRI TRADING CO. AFTER RECEIVING THE GOODS FROM THIS PARTY WE FOUND QUALITY OF THIS GOOD WAS NOT SATISFACTORY TO US AND THERE WAS A DISPUTED MATTER IN THIS ISSUE. I HAD TRIED OUR LEVEL BEST TO SET-ASIDE THIS ISSUE BEFORE THE CLOSE OF THE ACCOUNTING YEAR. THEREAFTER THIS PARTY WAS CAME FORWARD TO SETTLE THIS ISSUE AN D THIS ACCOUNT WAS SETTLED IN THE F.Y.2011-12 HENCE IT WAS A DISPUTED MATTER AND SOME INFORMATION WAS NOT PROVIDED BY THE PARTY TO US THEREFORE DETAILS WAS N OT FURNISHED UNDER THIS CIRCUMSTANCES IT CANNOT BE TREATED AS A BOGUS PURCH ASE BECAUSE PAYMENT OF PURCHASE WAS FULFILLED NEXT YEAR. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE DOCUMENT SUBMITTED WAS FULLY ACCEPTED BY THE INCOME TAX OFFICER AND NO ABY DEFECTS FOUND IN THOSE DOCUMENTS. IT IS DECIDED IN THE FOLLOWING CASES THA T ASSESSEE OFFERED AN INCOME TO BE TAX IN THIS CIRCUMSTANCES NO PENALTY IS LEVIABLE . 1) CIT V/S. VINAYCHAND HARILAL 120 ITR 752(GUJ HC) 2) CIT V/S. NAVNEETLAL PCHALAL 213 ITR 69(GUJ HC) 3) CIT V/S. MILLAX CABLE INDUSTRIES 261 ITR 675(G UJ HC) 4) CIT V/S. SURESHCHANDRA MITAL 251 ITR (SC) IN VIEW OF THE ABOVE FACTS AND SUBMISSION WE REQUES T YOU TO DROP THE PENALTY PROCEEDINGS.' IT IS THE FINDING OF LEARNED ASSESSING OFFICER WHIL E IMPOSING PENALTY THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OF PROVIN G HIS BONAFIDE REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . NO PRIMA FACIE EVIDENCE AND/OR DETAILS AS TO THE IDENTITY AND/OR THE CREDITWORTHIN ESS OF THE CREDITORS AND GENUINENESS OF - 4 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 THE TRANSACTION WERE FURNISHED BY THE ASSESSEE. NEI THER ANY COGENT DOCUMENT AND/OR EVIDENCE HAS BEEN SUBMITTED BY THE ASSESSEE IN SUPP ORT OF HIS STATEMENT THAT DETAILS REGARDING OF THE TRANSACTION DURING THE COURSE OF A SSESSMENT PROCEEDINGS WAS FILED BY THE ASSESSEE AS ALSO OBSERVED BY THE LEARNED AO IN THE SAID ORDER OF PENALTY. IN FACT, IT WAS FURTHER OBSERVED THAT THE ASSESSEE THOUGH CLAIMED O F MAKING PAYMENT TO THE TUNE OF RS.1,50,360/- TO M/S. GAYATRI TADING CO. NO PAYMENT ACTUALLY WAS MADE TO THE SAID PARTY AND THE ENTIRE AMOUNT WAS SHOWN AS OUTSTANDING AT T HE END OF THE YEAR. IT IS THE FINDING OF THE LEARNED AO THAT THE ADDRESS OF THE SAID PARTY W AS NOT PROVIDED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND THE ASSESSEE ALSO EX PRESSED ITS INABILITY TO FURNISH DETAILS AND OFFERED THE AMOUNT FOR TAXATION. THUS, IT IS TH E CLEAR CASE WHERE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULAR OF INCOME TO THE TU NE OF RS.1,50,360/- ON ACCOUNT OF SUNDRY CREDITORS. THE LEARNED AO FURTHER OBSERVED A S FOLLOWS: EXPLANATION 1 TO SEC.271(1)( C) IS CLEARLY APPLICA BLE IN BOTH THE ABOVE ISSUES IN AS MUCH AS ASSESSEE HAS FAILED TO FURNISH MATERIAL EVIDENCE WHICH WAS NECESSARY FOR COMPUTATION OF INCOME AND THAT THE EX PLANATION OF THE ASSESSEE CANNOT BE TERMED AS BONAFIDE. THE ASSESSEE HAS NOT GIVEN ANY CONFIRMATION LETTER OR ADDRESS OF DEPOSITORS/SUNDRY CREDITORS. THESE AR E MATERIAL EVIDENCE FOR THE PURPOSE OF MAKING ASSESSMENT AS IT WOULD HAVE ENABL ED THE AO TO CARRY OUT THE ENQUIRIES. FURTHER THE ASSESSEE NEVER PROVED THAT HE IS PREVEN TED BY SUFFICIENT CAUSE FROM FURNISHING DETAILS REQUIRED BY THE AO. THEREFO RE NON FURNISHING OF THE DETAILS PREVENTING THE AO TO CARRY OUT ITS VERIFICATION WOU LD BE THE CASE SQUARELY COVERED WITHIN THE MEANING OF EXPLANATION 1 TO SEC.271(1)(C ) AS THIS IS LACK OF DISCLOSURE OF SUCH PARTICULARS. THE ASSESSEE HAS REFERRED TO SOME CASE LAWS IN REPL Y FURNISHED. THE FACTS OF THE CASE OF THE ASSESSEE ARE DIFFERENT TO THAT OF T HE CASE LAWS REFERRED TO AND, ARE THEREFORE, NOR COMPARABLE. 3. AT THE TIME OF THE HEARING OF THE INSTANT APPEAL , THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE VEHEMENTLY ARGUED ON THIS PARTICULAR P OINT THAT THERE IS NO CONCEALMENT OF INCOME BY THE ASSESSEE AT ANY STAGE NOR THERE IS AN Y CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. IN FACT, THE ASSESSEE ESTABLISHED THE IDENTITY, - 5 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . HE HAS RELIED UPON THE DOCUMENTS APPEARING FROM PAGE 1 TO 14 OF THE PAPER BOOK TO JU STIFY THE REPAYMENT MADE BY THE ASSESSEE TO PARTIES CONCERNED. ACCORDING TO THE LEA RNED AR EVEN IF THE DETAILS OF THE PARTIES WERE NOT PROVIDED BY THE ASSESSEE TO THE LE ARNED AO DURING ASSESSMENT PROCEEDING, THE LEARNED AO COULD HAVE DIRECT THE AS SESSEE TO PROVIDE THE SAME DURING PENALTY PROCEEDING WHICH IS THE DUTY INCUMBENT UPON THE AUTHORITIES BELOW FOR MAKING ENQUIRY BEFORE COMING TO THE CONCLUSION OF IMPOSITI ON OF PUNISHMENT. IN SUPPORT OF HIS ARGUMENT HE RELIED UPON THE JUDGMENT PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NATIONAL TEXTILE-VS.-CIT. ON THE CONTRARY, THE LEARNED DR RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, PERUSED TH E RELEVANT MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE PENALTY PROCEEDING WAS ISS UED ON THE PREMISE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN T HE RETURN OF INCOME RELATING TO UNSECURED LOANS AND PROCEEDED PARTICULARLY ON THE F INDING THAT THE ASSESSEE HAS FAILED TO SATISFACTORILY DISCHARGE ITS ONUS OF PROVE HIS BONA FIDE REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IN THE ASSESSM ENT PROCEEDING, EVEN ASSUMING, THAT THE ASSESSEE FAILED TO SUBMIT SUCH DETAILS OF THE P ARTIES AS ASKED FOR BY THE REVENUE NO DELIBERATION HAS BEEN MADE BY THE LEARNED AO TO MAK E AN ENQUIRY BY CALLING FOR SUCH DETAILS FROM THE ASSESSEE IN THE PENALTY PROCEEDING BEFORE IMPOSING PENALTY. NO EFFORT, WHATSOEVER WAS MADE BY THE DEPARTMENT FOR SUCH ENQU IRY TO COME TO A CONCLUSIVE FINDING THAT THE ASSESSEE HAS COMMITTED DEFAULT U/S 271(1)(C) OF THE ACT BY NOT FURNISHING INACCURATE PARTICULARS OF INCOME. THE ADDITION ON T HIS ACCOUNT AS MADE BY THE LEARNED AO IN THE QUANTUM PROCEEDING WOULD NOT AUTOMATICALL Y JUSTIFY IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT BY RECOURSE TO EXPLANATION-1, OF SECTION 271(1)(C) IN THE ABSENCE OF A FRESH ENQUIRY CONDUCTED BY THE ASSESSING OFFICER IN THE PENALTY PROCEEDING. WE FIND THAT WHILE IMPOSING PENALTY THE ASSESSING OFFICER P OINTED OUT THE LACUNA ON THE PART OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDING IN TH E MANNER AS FOLLOWS: - 6 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 THE ASSESSEE IN HIS REPLY TO THE PENALTY NOTICE HA S CLAIMED THAT HE HAD FILE CONFIRMATION ALONGWITH LEDGER ACCOUNT AND SIGNED BY BOTH THE PARTY, IS WITHOUT ANY SUPPORTING EVIDENCE. AS IT CAN CLEARLY SEEN IN ORDER SHEET ENTRY DATED 11/02/2013 DULY SIGNED BY ASSESSEE'S AUTHORIZED REP RESENTATIVE THAT THE ASSESSEE HAS NOT FILED ANY CONFIRMATION IN THE ABOVE CASE OF UNSECURED LOAN. FURTHER THE AUTHORIZED REPRESENTATIVE VIDE ORDER SHEET ENTRY DA TED 25/02/2013 HAS SHOWN HIS INABILITY TO PROVIDE ANY DETAILS AND HAS OFFERED TH E SAME FOR TAXATION. FROM THE ABOVE, IT IS CLEAR THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FAILED TO SATISFACTORI LY DISCHARGE ITS ONUS OF PROVING HIS BONAFIDE REGARDING IDENTITY, CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTION., EVEN IN THE COURSE OF PENALTY PROCEED INGS NO PRIMA FACIE EVIDENCE OR DETAILS AS TO THE IDENTITY AND/OR THE CREDITWORTHIN ESS OF CREDITORS AND GENUINENESS OF THE TRANSACTIONS WERE FURNISHED BY THE ASSESSEE. MOREOVER NOW THE ASSESSEE IS MAKING A FALSE CLAIM THAT IT HAS FILED DETAILS THE COURSE OF ASSESSMENT PROCEEDING WITHOUT SUBMITTING ANY COGENT EVIDENCE. THIS IS CLE AR CASE WHERE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.1,15,000/-. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS MADE TOTAL TRANSACTION OF RS.1,50, 360/- WITH GAYATRI TRADING CO. AND NO PAYMENT WAS MADE TO THE PARTY AND THIS ENTIR E AMOUNT WAS SHOWN AS OUTSTANDING AT THE END OF THE YEAR. THE AO VIDE NOT E SHEET ENTRY DATED 12/12/2012 WAS ASKED THE ASSESSEE TO PROVIDE ADDRESS OF GAYATR I TRADING CO TO MAKE ENQUIRY. AGAIN VIDE NOTE SHEET ENTRY DATED 20/12/2012 ASSESS EE WAS AGAIN REQUESTED TO FILE ADDRESS OF THE PARTY. THE ASSESSEE DID NOT FILE THE ADDRESS OF GAYATRI TRADING CO. VIDE ORDER SHEET ENTRY DATED 11/02/2013 THE ASSESSE E WAS ASKED TO SHOW CAUSED AS TO WHY ADDITION SHOULD NOT MADE AS THE DETAILS CALL ED FOR WAS NOT PROVIDED INSPITE OF REPEATED REMINDERS. FINALLY VIDE NOTE SHEET ENTR Y DATED 25/02/2013, THE ASSESSEE EXPRESSED ITS INABILITY TO FURNISH DETAILS AND OFFERED THE AMOUNT FOR TAXATION. THE JUDGMENT CITED BY THE LEARNED COUNSEL ON THIS A SPECT CLEARLY DEALS WITH THE PROPOSITION AS ARGUED BY HIM, THE OPERATIVE PARA WH EREOF IS AS FOLLOWS: 51. THE ORDER IMPOSING PENALTY IS QUASI-CRIMINAL IN NATURE AND, THUS, BURDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT THE ASSESS EE HAD CONCEALED HIS INCOME. SINCE BURDEN OF PROOF IN PENALTY PROCEEDINGS VARIES FROM THAT IN THE ASSESSMENT PROCEEDING, AS FINDING IN AN ASSESSMENT PROCEEDING THAT A PARTICULAR RECEIPT IS INCOME CANNOT AUTOMATICALLY BE ADOPTED, THOUGH A FI NDING IN THE ASSESSMENT PROCEEDING CONSTITUTE GOOD EVIDENCE IN THE PENALTY PROCEEDING. IN THE PENALTY PROCEEDINGS, THUS, THE AUTHORITIES MUST CONSIDER TH E MATTER AFRESH AS THE QUESTION - 7 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 HAS TO BE CONSIDERED FROM A DIFFERENT ANGLE. [SEE A NANTHARAM & CO. V. CIT., ANDHRA PRADESH, 1980 SUPP SCC 13]. FURTHER THAT, THE OPERATIVE PART OF THE JUDGMENT PR ONOUNCED IN THE CASE OF NATIONAL TEXTILES-VS-CIT [2001] 249 ITR 125 (GUJ) DECIDING T HE RATIO ON THIS ASPECT IS ALSO REQUIRED TO BE NARRATED. RELEVANT PORTION WHEREOF I S AS FOLLOWS: IN THE INSTANT CASE, THE CASH CREDITS WERE NOT SAT ISFACTORILY EXPLAINED BY EVIDENCE AND DOCUMENTS. THE PARTIES WHO HAD ADVANCED THE ALL EGED TEMPORARY LOANS WERE NEITHER DISCLOSED WITH THEIR PARTICULARS NOR ANY SU PPORTING DOCUMENTS WERE ON RECORD. ONLY TWO ENTRIES WERE EXPLAINED. THE ACCOUN TANT WHO HAD ARRANGED THE LOAN WAS NOT PRODUCED STATING THAT HE HAD LEFT THE SERVICE AND RELATIONS WITH HIM ARE STRAINED. ON THIS STATE OF ACCOUNTS AND EVIDENC ES IN THE QUANTUM PROCEEDINGS, THE DEPARTMENT WAS JUSTIFIED IN TREATING THE CASH C REDITS AS INCOME OF THE ASSESSEE BUT MERELY ON THAT BASIS BY RECOURSE TO EXPLANATION 1, PENALTY UNDER SECTION 271(1)(C) COULD NOT HAVE BEEN IMPOSED WITHOUT THE D EPARTMENT MAKING ANY OTHER EFFORT TO COME TO A CONCLUSION THAT THE CASH CREDIT S COULD IN NO CIRCUMSTANCES COULD HAVE BEEN AMOUNTS RECEIVED AS TEMPORARY LOANS FROM VARIOUS PARTIES. THE ASSESSEE IN THE QUANTUM PROCEEDINGS FAILED TO PRODU CE THE ACCOUNTANT BUT THE DEPARTMENT ALSO IN PENALTY PROCEEDINGS MADE NO EFFO RT TO SUMMON HIM. APPLYING THE TEST (I) DISCUSSED ABOVE, THEREFORE IT WAS A CA SE WHERE THERE WAS NO CIRCUMSTANCES TO LEAD TO A REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEES CASE-THAT THE CASH CREDIT WERE ARRANGED AS TEMPORAR Y LOANS, WAS FALSE. THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE H YPOTHESIS THAT IT COULD HAVE BEEN SUNDRY LOANS IN SMALL AMOUNTS OBTAINED FROM DI FFERENT PARTIES. IN OUR OPINION, THEREFORE EVEN TAKING RECOURSE TO EXPLANAT ION1, THE SAME CIRCUMSTANCES OR STATE OF EVIDENCE ON WHICH THE CASH CREDITS WERE TREATED AS INCOME, COULD NOT BY THEMSELVES JUSTIFY IMPOSITION OF PEANTLY WITHOUT AN YTHING MORE ON RECORD PRODUCED BY THE ASSESSEE OR THE DEPARTMENT. IF THE RATIO OF THE JUDGMENT IS MADE TO BE APPLICAB LE IN THE INSTANT CASE BEFORE US THEN WITHOUT ANY HESITATION WE WOULD LIKE TO OBSERV E THAT THE FINDING ON THE BASIS OF THE OBSERVATION ON THE CONDUCT OF THE ASSESSEE BEFORE T HE ASSESSMENT PROCEEDING AS MADE BY THE LEARNED AO IN THE PENALTY ORDER IS OF NO CONSEQ UENCE IN THE ABSENCE OF FRESH ENQUIRY CONDUCTED BY HIM BY ASKING THE ASSESSEE TO PRODUCE THE DETAILS OF THOSE PARTIES DURING THE PENALTY PROCEEDING IN ORDER TO COME TO A CONCLUSIVE FINDING OF GUILT BY THE ASSESSEE FOR IMPOSING PENALTY. ADMITTEDLY, THOUGH IT IS INCUMBEN T UPON THE AUTHORITIES BELOW WHILE - 8 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 DEALING THE ISSUE IN A QUASI JUDICIAL PROCEEDING, T HE SAME HAS NOT BEEN PERFORMED BY THE LEARNED AO NOR BY THE FIRST APPELLATE AUTHORITY. TH E DOCUMENTS SO PLACED BEFORE US THOUGH WERE AVAILABLE BEFORE THE LEARNED CIT(A) WAS NOT TAKEN INTO CONSIDERATION IN ITS PROPER PROSPECTIVE. IF THOSE DOCUMENTS WERE REALLY INSUFFICIENT TO REACH THE LEVEL OF SATISFACTION TO ASSESS THE BONAFIDE OF THE ASSESSEE THE LEARNED CIT(A) COULD HAVE CALLED FOR DETAILS FROM THE ASSESSEE IN THE PENALTY APPEAL PROCEEDING, INSTEAD OF DOING SO, SIMPLY ON THE BASIS OF THE FINDING OF THE ASSESSING OFFICE R, THE LEARNED CIT(A) CONFIRMED THE PENALTY WHICH IN OUR CONSIDERED VIEW IS ARBITRARY, ERRONEOUS AND OF COURSE NOT IN ACCORDANCE WITH LAW. WE, THEREFORE, RESPECTFULLY RE LYING UPON THE JUDGMENT PASSED BY THE JURISDICTIONAL HIGH COURT DECIDE THE ISSUE AGAINST THE REVENUE. WE FIND THAT THE ORDER IMPOSING PENALTY AS MADE BY THE LEARNED AO, CONFIRM ED BY THE LEARNED CIT(A) IS WITHOUT ANY FIRM BASIS AND/OR INDEPENDENT ENQUIRY W HICH FAILED TO HAVE BEEN CONDUCTED BY THE AUTHORITIES BELOW. SUCH FINDING CULMINATING INTO THE ORDER OF THE IMPOSITION OF PENALTY IS BAD AND LIABLE TO THE QUASHED. WE, THUS, ALLOW THE APPEAL FILED BY THE ASSESSEE. 5. IN THE RESULT, ASSESSEES APPEAL IS THUS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 01/01/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 01/01/2019 PRITI YADAV, SR.PS - 9 - ITA NO.419/AHD/2015 DIPAKKUMAR KESHAVLAL PATEL VS. ITO ASST.YEAR 2010-11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-GANDHINAGAR. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD