RAVAL & CO., MUMBAI V. ITO 14(3)(3), MUMBAI

ITA 4567/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7749 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-06-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 05-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI N. V. VASUDEVAN, J.M. AND SHRI B. RAMAK OTAIAH, A.M. I.T.A. NO.4567/MUM/2009 ASSESSMENT YEAR : 1998-99 M/S. RAVAL & CO. 105, SHREEJI BHUVAN, 1 ST FLOOR, 51, MANGALDAS ROAD, MUMBAI-400 021 PAN NO : AAAFR 0408 F THE INCOME TAX OFFICER 14(3)(3), EARNEST HOUSE, NARIMAN POINT, MUMBAI-400 021 (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI M. SUBRAMANIAN RESPONDENT BY : SHRI JITENDRA YADAV ORDER PER N. V. VASUDEVAN (JM) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER DATED 10.06.2009 OF COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL XV, MUMBAI RELATING TO THE ASSESSMENT YEAR 1998-99. THE GROUN DS RAISED BY THE ASSESSEE READS AS FOLLOWS:- 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN NOT ADMITTING, AND DISMISSING THE APPEAL. 2. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT NO PENALTY ORDER WAS EVER VALIDLY SERVED ON THE APPELLANT. 3. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE MODE OF ALLEGED SERVICE OF TH E ORDER OF PENALTY BY AFFIXTURE WAS IN VIOLATION OF THE PROVIS IONS OF S.282 OF THE I.T. ACT, 1961, READ WITH THE RELEVANT PROVISIO NS OF THE CODE OF CIVIL PROCEDURE. 4. THE LEARNED CIT(A) ERRED IN LAW IN NOT APPRECIATING THAT THE ALLEGED ATTEMPT TO SERVE THE ORDER OF PENALTY AFTER OFFICE HOURS AND FINDING THE PREMISES CLOSED DOES NOT VALIDATE S ERVICE OF THE SAID ORDER BY AFFIXTURE IN VIEW OF THE PROVISIONS O F S.282 OF THE 2 I.T. ACT, 1961, READ WITH THE RELEVANT PROVISIONS O F THE CODE OF CIVIL PROCEDURE. 5. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE A.O. VIOLATED THE PRINCIPLES OF NATURAL JUSTICE BY NOT GIVING AN OPPORTUNITY TO THE APPELLANT OF BE ING HEARD BEFORE PASSING THE IMPUGNED ORDER. THE ORDER MAY BE QUASHED AS BAD IN LAW. 6. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CON FIRMING THE ORDER OF PENALTY ON MERITS OF THE CASE. 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF DEALING IN ELECTRICAL GOODS MAINLY HEATING ELEMENTS. DURING THE PREVIOUS YEAR, THE ASSESSEE HAD TAKEN LOANS FROM 86 PARTIES, TOTALLING A SUM OF ` .29,59,975/-. THE ASSESSEE DID NOT FILE THE REQUIRED CONFIRMATION BEFORE THE AO. ACCORDING TO THE ASSESSEE, BECAUSE OF THE NON PAYMENT OF THE LOANS BY THE ASSESSEE, THE CREDITORS OF THE ASSESSEE REFUSED TO GIVE CONFI RMATION OF LOANS. THE ASSESSEE FURNISHED ADDRESSES OF SOME OF THE LENDERS AND SUMMONS WERE ISSUED TO THEM FOR VERIFICATION OF THE GENUINENESS OF THE LOANS SHOWN BY THE ASSESSEE. SOME OF THE LENDERS TO WHOM THE SUMMONSES WERE ISSUED APPEARED BEFORE THE AO AND CONFIRMED THE TRANSACTIO N. IN RESPECT OF LOANS TO THE EXTENT OF ` .18,69,975/-, NEITHER CONFIRMATION LETTER WERE FILE D NOR ADDRESSES WERE FURNISHED BY THE ASSESSEE AND THE IN THE CIRCUMSTANCES, THE AO TREATED THE LOANS TO THE ABOVE EXTENT AS UNEXPLA INED CASH CREDIT AND MADE AN ADDITION U/S.68 OF THE ACT. 3. BEFORE THE LEARNED CIT(APPEALS), THE ASSESSEE FU RNISHED ADDITIONAL EVIDENCE FOR ESTABLISHING THE GENUINENESS OF THE LO ANS. AFTER OBTAINING REMAND REPORT FROM THE AO, THE LEARNED CIT(APPEALS) DELETED THE ADDITIONS EXCEPT TO THE EXTENT OF ` .9,50,000/-. THE ASSESSEE AND REVENUE FURTHER PREFERRED APPEAL BEFORE THE ITAT IN ITA NO.6241 & 7 225/MUM/2002 AND TRIBUNAL BY HIS ORDER DATED 10.08.2006 CONFIRMED TH E ORDER OF THE LEARNED CIT (APPEALS), IN RESPECT OF ADDITION TO THE EXTENT OF ` .9,50,000/-. 4. IN RESPECT OF THE ADDITION MADE BY TREATING THE LOANS AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT, TO THE EXTENT OF ` .9,50,000/-, THE AO INITIATED 3 THE PENALTY PROCEEDINGS AND PASSED AN ORDER DATED 2 8.03.2007 IMPOSING PENALTY ON ASSESSEE U/S.271(1)(C) OF THE ACT. 5. UNDER SECTION 249 OF THE ACT, THE ASSESSEE HAS T O FILE AN APPEAL AGAINST THE ORDER IMPOSING PENALTY U/S.271(1)(C) OF THE ACT, WITHIN A PERIOD OF 30 DAYS ON THE DATE OF SERVICE OF THE NOTICE OF DEMAND RELATING TO THE PENALTY. THE ASSESSEE HOWEVER, PREFERRED AN APPEAL AGAINST THE ORDER DATED 28.03.2007 OF THE AO IMPOSING PENALTY BEFORE THE LE ARNED CIT (APPEALS) ONLY ON 08.04.2009. THERE WAS, THEREFORE, A DELAY IN FIL ING THE APPEAL BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS). THE ASSES SEE FILED AN APPLICATION FOR CONDONING DELAY IN FILING THE APPEAL BEFORE CIT (A). IN THE SAID APPLICATION, THE ASSESSEE SUBMITTED THAT, THE ASSES SEE WAS NOT SERVED WITH ANY SHOW CAUSE NOTICE U/S.274 OF THE ACT, BEFORE IM POSING PENALTY U/S.271(1)(C ) OF THE ACT. IT WAS ALSO CLAIMED THAT ASSESSEE WAS NOT SERVED WITH THE ORDER OF THE AO IMPOSING PENALTY NOR WITH THE DEMAND NOTICE FOR RECOVERY OF PENALTY. THE ASSESSEE POINTED OUT THAT IT RECEIVED AN ORDER U/S. 220(2) OF THE ACT, DATED 12.10.2007, IN WHICH THE A O HAS MADE A REFERENCE TO THE ORDER DATED 28.12.2001 IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT. IN THE SAID ORDER, IT WAS FURTHER BEEN MENTIONED THAT THE DEMAND NOTICE ALONG WITH CHALLAN WAS SERVED ON THE ASSESSEE ON 30.03.20 07. SINCE THE PENALTY WHICH WAS DUE ON 30.04.2007 WAS NOT PAID, THE ORDER U/S.220(2) OF THE ACT WAS PASSED CHARGING INTEREST FROM THE DUE DATE I.E. 30.04.2007 TILL THE DATE OF PAYMENT OF PENALTY. 6. ON THE RECEIPT OF THIS ORDER, THE ASSESSEE BY HI S LETTER DATED 23.10.2007 POINTED OUT THAT HE NEVER RECEIVED ANY S HOW CAUSE NOTICE BEFORE IMPOSING PENALTY NOR THE PENALTY ORDER OR THE NOTIC E OF DEMAND IN RESPECT OF THE PENALTY IMPOSED. 7. IN REPLY TO THE SAID LETTER, THE AO ACCEPTED THA T THE ACKNOWLEDGEMENT REGARDING SERVICE OF NOTICE ON THE ORDER OF IMPOSIN G PENALTY, DEMAND NOTICE WERE NOT AVAILABLE ON RECORD. THE AO HOWEVER TOOK A STAND THAT PENALTY ORDER WAS SERVED BY AFFIXTURE BY THE WARD INSPECTOR . ALONG WITH THIS LETTER 4 THE AO ALSO SENT TO THE ASSESSEE A COPY OF THE SHOW CAUSE NOTICE U/S.274 OF THE ACT, BEFORE IMPOSING PENALTY AND THE ORDER PASS ED U/S.271(1)(C) OF THE ACT. 8. THEREAFTER, THE ASSESSEE WROTE LETTERS DATED 14 .11.2007, DENYING SERVICE OF ANY OF THE LETTERS OR ORDERS. BY ANOTHER LETTER DATED 26.06.2008, THE ASSESSEE ALSO POINTED OUT THAT SERVICE OF ORDER IMPOSING PENALTY BY AFFIXTURE WAS ILLEGAL BECAUSE PRIOR TO SERVICE NOTI CE BY AFFIXTURE THERE SHOULD BE SATISFACTION RECORDED THAT THE ASSESSEE IS EVADI NG SERVICE. THEREAFTER ANOTHER LETTER WRITTEN BY THE ASSESSEE DATED 30.03. 2009 COMPLAINING ABOUT NON SERVICE OF NOTICE AS WELL AS ORDER IMPOSING PEN ALTY. IT APPEARS THAT, THE ASSESSEE WAS ADVISED TO FILE AN APPEAL AGAINST THE ORDER IMPOSING PENALTY (WHICH WAS SENT TO THE ASSESSEE BY THE AO IN RESPON SE TO ASSESSEES LETTER DATED 23.10.2007 COMPLAINING ABOUT NON RECEIPT OF S HOW CAUSE NOTICE, PENALTY ORDER AND NOTICE OF DEMAND OF PENALTY) AND ACCORDINGLY, ON 08.04.2009, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(APPEALS) AGAINST THE ORDER OF THE AO DATED 28.03.2007 IMPOSI NG PENALTY U/S.271(1)(C) OF THE ACT. 9. THE ASSESSEE NARRATED THE ABOVE FACTS BEFORE THE LEARNED CIT(APPEALS) AND SUBMITTED THAT THE DELAY IN FILING THE APPEAL, IF ANY, SHOULD BE CONDONED. THE LEARNED CIT(APPEALS) HELD AS FOLLOWS :- I HAVE CONSIDERED THE ISSUE VERY CAREFULLY. I HAVE ALSO GONE THROUGH THE RECORDS AVAILABLE WITH THE APPELLANT FO LDER AND HAS ALSO HAVE CONSIDERED THE FULL FACTS OF THE MATTER I N ITS TOTALITY. I FIND THAT APPEAL IS NOT MAINTAINABLE FROM BOTH THE ANGLE I.E. SERVICE OF ORDER AND NOTICES AND FOLLOWING OF PROCE DURE OF SERVICE OF NOTICES. IN FACT, APPELLANT HAS ADMITTED THE REC EIPT OF NOTICE ON 08.03.2001 FOR LEVY OF PENALTY WHICH WAS NOT COMPLI ED WITH BY THE APPELLANT HENCE, APPARENTLY PROCEEDING FOR LEVY OF PENALTY WAS KEPT IN ABEYANCE TILL THE DECISION OF APPELLANT AUTHORITIES. ONLY AFTER FINAL DECISION OF THE HONBLE ITAT VIDE ITA NO.6241 & 7225/MUM/2002 DATED 10.08.2006 AO HAS GIVEN AN OPPO RTUNITY TO THE APPELLANT FOR LEVY OF PENALTY. THE LD. AO HA S ISSUED A LETTER DATED 08.03.2007 FOR FURNISHING THE EXPLANAT ION AS TO WHY PENALTY SHOULD NOT BE LEVIED U/S.271(1)(C). THIS LE TTER WAS SENT BY POST, WHICH WAS NOT COMPLIED HENCE, PENALTY ORDER W AS PASSED O 5 N 28.03.2007 AND WAS SENT BY THE WARD INSPECTOR TO GET IT SERVED UPON THE APPELLANT. WHEN INSPECTOR WENT TO THE PREM ISE OF THE APPELLANT IT WAS FOUND LOCKED, THEREFORE, THE PENAL TY ORDER WAS SERVED BY AFFIXTURE ON 30.03.2007. THE APPELLANT HA S NOT DENIED THE CLOSURE OF PREMISE ON 30.03.2007 NOR HAS DENIED THE EXISTENCE OF AFFIXTURE OF THE ORDER, ONLY PROCEDURE FOR SERVICE HAS BEEN CHALLENGED WHICH IS NOT TENABLE BECAUSE OF THE REASON THAT DUE TO LIMITATION OF PASSING THE ORDER AND GETTING IT SERVED IN TIME, SUCH MODE OF SERVICE WAS ADOPTED WHICH MAKES NO DIFFERENCE SO FAR AS, COMMUNICATION OF ORDER IN WRI TING IS CONCERNED. FURTHERMORE, WHEN ORDER WAS SERVED THROU GH AFFIXTURE OBVIOUSLY IT WAS IN THE KNOWLEDGE OF THE APPELLANT ABOUT THIS PENALTY ORDER. NOT ONLY THAT IT IS VERY IMPORT ANT TO NOTE THAT APPELLANT HAS NOT APPROACHED TO THE ASSESSING OFFIC ER TO HAVE ANY CERTIFIED COPY OF SUCH ORDER WITHIN REASONABLE TIME AFTER AFFIXTURE, HENCE I FIND NO MERIT IN THE ARGUMENT TH AT PENALTY ORDER WAS NOT PASSED IN THE STIPULATED TIME. IN ADDITION TO THIS IMPORTANT ASPECT OF THE MATTER, IT IS ALSO NOTED TH AT ON THE REQUEST OF THE APPELLANT ASSESSING OFFICER HAS GIVEN A COPY OF THE PENALTY ORDER WHICH WAS RECEIVED BY THE APPELLANT ON 30.03. 2007, WHICH REVEALS THAT THE CERTIFIED COPY OF THE ORDER WAS RE CEIVED BY THE APPELLANT AS EARLY AS 17 MONTHS BACK AND INSTEAD OF FILING OF APPEAL ON RECEIPT OF THE CERTIFIED COPY OF THE PENA LTY ORDER, APPELLANT INDULGED IN CHALLENGING THE PENALTY ORDER BEFORE THE ASSESSING OFFICER ON THE BASIS OF NON-RECEIPT OF SH OW CAUSE NOTICE, WHICH CLEARLY REVEALS THAT THIS DELAY OF FI LING OF APPEAL WAS NOT BECAUSE OF ANY VALID REASON BUT WAS INTENTI ONAL ONE. 10. AGGRIEVED, BY THE ORDER OF THE LEANED CIT(APPEA LS), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE CALLED FOR THE ASSESSMENT RECORDS TO VERIFY THE SERVICE OF NOTICE. ON VERIFIC ATION OF THE ASSESSMENT RECORDS IT IS SEEN THAT THERE IS NO EVIDENCE OF THE SHOW CAUSE NOTICE BEFORE IMPOSING PENALTY HAVING BEEN SENT BY THE AO BY POST . IT IS SEEN THAT THE SHOW CAUSE NOTICE PRIOR TO IMPOSING PENALTY DATED 1 3.09.2006 AND ANOTHER NOTICE DATED 08.03.2007 CLAIMED TO HAVE BEEN ISSUED BY THE AO CONTAINS A NOTING SENT BY POST BUT THERE IS NO POSTAL ACKNOWLE DGEMENT EVIDENCING DESPATCH OF NOTICE BY POST. ADMITTEDLY THERE IS NO ACKNOWLEDGEMENT OF SERVICE OF NOTICE ON RECORD. THERE IS HOWEVER, REPO RT OF THE WARD INSPECTOR REGARDING SERVICE OF PENALTY ORDER BY AFFIXTURE, TH E SAME READS AS FOLLOWS :- 6 MUMBAI DT. 30.03.2007 TO, THE INCOME TAX OFFICER 14(3)(3) MUMBAI. SUB : SERVICE OF PENALTY ORDER M/S. RAVAL & CO. A Y 1998-99. SIR, AS DIRECTED I WENT TO MAKE SERVICE THE PENALTY ORDE R IN THE CASE OF ABOVE ASSESSEE AT GIVEN ADDRESS. SINCE IT W AS LATE IN THE EVENING THE PREMISES WERE FOUND LOCKED. HENCE, THE PENALTY ORDER DATED 28.03.2007 WAS SERVED BY AFFIXTURE. YOURS FAITHFULLY, (A.A. PARAB) INSPECTOR 14(3)(3) MUMBAI 12. AS IT CAN BE SEEN FROM THE REPORT OF THE INSPEC TOR THERE WAS NO REASON WHY SERVICE OF ORDER IMPOSING PENALTY BY AFFIXTURE WAS EFFECTED. NO ATTEMPTS HAVE BEEN MADE BY THE REVENUE TO SERVE THE ORDER ON THE ASSESSEE, OTHER THAN BY AFFIXTURE I.E. NO EFFORTS WERE TAKEN FOR PE RSONAL SERVICE OF ORDER. IT IS MANDATORY UNDER THE PROVISION OF RULE 19A OF ORDER V CPC TO MAKE EFFORTS FOR PERSONAL SERVICE OF NOTICE AND ALSO RECORD SATI SFACTION THAT THE ASSESSEE IS EVADING SERVICE BEFORE RESORTING TO SERVING ORDE R BY AFFIXTURE. THIS WAS ADMITTEDLY NOT DONE. 13. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE PLEA OF THE ASSESSEE THAT IT WAS NOT SERVED WITH THE ORDER IMPOSING PENA LTY OR SHOW CAUSE NOTICE BEFORE IMPOSING PENALTY AND NOTICE OF DEMAND OF PEN ALTY HAS TO BE ACCEPTED. WE MAY ALSO MENTION THAT THE LEARNED CIT (APPEALS) HAS REFERRED TO A NOTICE DATED 08.03.2001 HAVING BEEN SERVED ON THE ASSESSEE IN THE PENALTY PROCEEDINGS. IN THIS REGARD, WE FIND THAT THE SAID NOTICE WAS ISSUED IMMEDIATELY AFTER PASSING OF ORDER OF ASSESSMENT. T HE ORDER OF ASSESSMENT 7 WAS CHALLENGED IN APPEAL AND THE PROCEEDINGS IN APP EAL BEFORE THE ITAT WERE CONCLUDED ONLY ON 10.08.2006. IT IS ONLY AFTER THIS DATE, THAT SERVICE OF SHOW CAUSE NOTICE BEFORE IMPOSING PENALTY TO THE AS SESSEE THAT WAS IN DISPUTE. FURTHER, THERE IS NO ANSWER FOR THE NON SE RVICE OF THE ORDER IMPOSING PENALTY AS WELL AS THE NOTICE OF DEMAND OF PENALTY. IN THESE CIRCUMSTANCES, WE HOLD THAT THE LEARNED CIT (APPEAL S) OUGHT TO HAVE ENTERED THE APPEAL OF THE ASSESSEE ON MERITS. WE HOLD ACCOR DINGLY. 14. IN NORMAL CIRCUMSTANCES, WE WOULD HAVE REMANDED THE MATTERS TO THE LEARNED CIT (APPEALS) FOR ADJUDICATING AS TO WHETHE R IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY U/S.271(1)(C) OF THE ACT, COULD BE IMPOSED. SINCE THE ISSUE RELATES TO ASSESSMENT YEAR 1998-99, WE DEEM IT PROPER TO ADJUDICATE ON THE MERITS OF THE ORDER OF THE AO IMPOSING PENALTY. ON THIS ASPECT, WE FIND THAT THE PENALTY HAS BEEN I MPOSED FOR AN ADDITION U/S.68 OF THE ACT, WHEREBY LOANS TO THE EXTENT OF ` .9,50,000/- WERE TREATED AS UNEXPLAINED. THE DETAILS OF THE LOANS WHICH WERE TREATED AS UNEXPLAINED ARE AS FOLLOWS :- 1. NILAM H. JETHANI ` .40,000/- 2. KUSUM A. NAZARE ` .25,000/- 3. LOANS TAKEN FORM S.M. COMPANIES FINANCE BROKERS ` .7,80,000/- 4. MISCELLANEOUS ` .1,50,000/- 15. IT IS SEEN FROM THE ORDERS IN THE QUANTUM PROCE EDINGS THAT THE ASSESSEE HAS BEEN TAKEN A STAND THAT THE CREDITORS WERE NOT CO-OPERATING BECAUSE OF NON PAYMENT OF THEIR DUES. OUT OF THE 86 LOANS, THE ASSESSEE HAS SUBSTANTIALLY EXPLAINED ALL THE CREDITS. EVEN IN RE SPECT OF THE AFORESAID PERSONS, THE ASSESSEE SUBMITTED BEFORE THE AO THAT THEY WERE NOT WILLING TO GIVE THE CONFIRMATIONS. IN RESPECT OF THE LOANS OF ` .7,80,000/- AVAILED THROUGH FINANCE BROKERS S.M. & COMPANY, THE ASSESSE E SUBMITTED THAT THE FINANCE BROKER WAS ABSCONDING AND THAT THE LOANS WE RE OBTAINED THROUGH BANKING CHANNELS AND THE NAMES OF THE PARTIES AND A DDRESSES WERE ALSO FURNISHED. THE ASSESSEE REQUESTED FOR ISSUE OF SUMM ONS TO THESE PARTIES BUT 8 THE AO HELD THAT SINCE CONFIRMATION WERE NOT FILED, THE REQUEST OF THE ASSESSEE FOR ISSUE OF SUMMONS CANNOT BE ACCEPTED. S IMILAR ARE THE FACTS WITH RESPECT OF REMAINING LOAN OF ` .1,50,000/-. 16. IN THE PRESENT APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL, THE ASSESSEE HAS FILED AN APPLICATION UNDER RULE 29 OF THE ITAT RULES, 1963, SEEKING TO FILE CONFIRMATIONS FROM NILAM H. JETHANI, KUSUM A. NAZARE AND THE DETAILS OF OTHER LOANS TOGETHER WITH THE EVIDENCE THAT THE LOANS HAD COME THROUGH BANKING CHANNELS. WE DO NOT WISH TO GO INTO THE DET AILS OF ADDITIONAL EVIDENCE BEFORE US. WE ARE OF THE VIEW THAT THE FAC TS AS IT EXISTED IN THE QUANTUM PROCEEDINGS WOULD JUSTIFY THE ADDITIONS MAD E BUT IN PENALTY PROCEEDINGS WHAT HAS TO BE SEEN IS AS TO WHETHER TH E ASSESSEE IS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN OUR VIEW, IT CANNOT BE SAID WITH CERTAINTY THAT THE LOANS IN QUESTION WERE ASSE SSEES OWN MONEY. IT IS ONLY BECAUSE OF THE PRESUMPTION U/S.68 OF THE ACT, THE IMPUGNED ADDITIONS HAVE BEEN MADE IN THE QUANTUM PROCEEDINGS. THE CIRC UMSTANCES PREVAILING IN THE ASSESSEES CASE CLEARLY SHOWS THAT IT WAS BE YOND THE ASSESSEES CONTROL TO HAVE ESTABLISHED THE CREDITS IN QUESTION AS REQUIRED U/S.68 OF THE ACT. WE ARE OF THE VIEW THAT IN THE FACTS AND CIRCU MSTANCES OF THE ASSESSEES CASE, PENALTY U/S.271(1)( C) OF THE ACT OUGHT NOT T O HAVE BEEN IMPOSED. WE, THEREFORE, DIRECT THAT THE PENALTY IMPOSED BE CANCE LLED. IN SIMILAR FACTS AND CIRCUMSTANCES IT HAS BEEN HELD BY THE HONBLE PUNJA B AND HARYANA HIGH COURT, IN THE CASE OF CIT VS. KAMAL CHEMICALS INDUS TRIES 277 ITR 150, THAT NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. IN THA T CASE, THE FACTS WERE THAT THE ASSESSEE COULD NOT PROVE THE CASH CREDITS BECAUSE OF NON- COOPERATION BY THE CREDITORS AND THE MIDDLE MAN AND THE ASSESSEE ACCEPTED THE ADDITION U/S.68 OF THE ACT. IN OUR VIEW, THE RA TIO LAID DOWN IN THE AFORESAID DECISION WOULD COMPLY WITH THE FACTS OF T HE PRESENT CASE. 17. WE, THEREFORE, HOLD THAT THIS IS NOT FACT CASE FOR IMPOSING PENALTY. ACCORDINGLY, WE DIRECT THE PENALTY IMPOSED TO BE CA NCELLED. 9 18. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MARCH, 2011. SD/- SD/- ( B. RAMAKOTAIAH ) ( N. V . VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT: 31/03/2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, D- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI