Rafi Ahmed Khan, JODHPUR V. ACIT, JODHPUR

ITA 568/JODH/2013

• Counselvise Citation: 56823314 RSA 2013
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Peak credit; Question of law
• Section: 143(3); 50C; 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 569 /JODH/2013 (A.Y. 200 8 - 09 ) SMT. NAHID BANO KHAN, 791, C/ O UNANI HEALTH CARE CENTRE , 5 TH CHOPASNI ROAD, JODHPUR. VS. A CIT, CIRCLE - 3, JODHPUR. PAN NO. AAVPK 8999 F (APPELLANT) (RESPONDENT) ITA NO. 568/JODH/2013 (A.Y. 200 8 - 09 ) RAFI AHMED KHAN, 791, C/O UNANI HEALTH CARE CENTRE, 5 TH CHOPASNI ROAD, JODHPUR. VS. A CIT, CIRCLE - 3, JODHPUR. PAN NO. AAVPK 899 8 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHAVEER JAIN . DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 04 / 0 8 /201 4 . DATE OF PRONOUNCEMENT : 11 /0 9 /201 4 . O R D E R 2 PER N.K. SAINI, A.M THESE TWO APPEALS BY THE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE LD. CIT(A), JODHPUR DATED 14/10/2013 IN THE CASE OF SMT. NAHID BANO KHAN AND DATED 15/10/2013 IN THE CASE OF MR. RAFI AHMED KHAN . SINCE THE ISSUE INVOLVED IN BOTH THESE APPEALS IS SIMILAR HAVING IDENTICAL FACTS AND THE APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF F BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2 FIRST WE WILL DEAL WITH THE APPE AL IN I.T.A.NO. 569/JODH/2013. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: - 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE IMPUGNED PENALTY U/S. 271(1)(C) IS BAD IN L AW. THE LEARNED A.O. DID NOT JUSTIFY IN PASSING THE IMPUGNED PENALTY ORDER AND THE LEARNED CIT(A) DID NOT JUSTIFY IN SUSTAINING THE SAME. THE APPELLANT APPEALS FOR CANCELLATION OF THE SAME. 2. THAT WITHOUT ANY PREJUDICE TO THE FIRST GROUND OF APPEAL, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED A.O. DID NOT JUSTIFY IN IMPOSING THE IMPUGNED PENALTY OF RS. 1,82,596/ - AND THE LD. CIT(A) DID NOT JUSTIFY IN SUSTAINING THE SAME. THE APPELLANT APPEALS FOR CANCEL L ATION OF THE PENALTY SO IMPOSED. 3. THAT THE APPELLANT CRAVES OPPORTUNITY FOR FURNISHING ANY OTHER GROUND/S OF APPEAL ON OR BEFORE THE DATE OF APPEAL HEARING. 3. THE ASSESSEE ALSO RAISED THE FOLLOWING ADDITIONAL GROUND S VIDE APPLICATION DATED 18/06/2014 STATING THEREIN AS UNDER: - 1 THE APPELLANT VERY HUMBLY REQUESTS YOUR HONOUR TO KINDLY ADMIT THE 3 FOLLOWING ADDITIONAL GROUND NOS. 1A AND 1B TO THE MEMORANDUM OF APPEAL BEARING APPEAL NO. ITA/569/JODH - 2013 : - 1A. THAT IN THE ASSESSMENT ORDER, THE ID. AO RECORDED SATISFACTION THAT THE ASSESSEE CONCEALED INCOME OF RS. 5,40,000 WHEREAS IN THE IMPUGNED PENALTY ORDER, HE IMPOSED PENALTY ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF THIS FACT, THE IMPUGNED PENALTY ORDER IS NOT SUSTAINABLE IN LAW AND THE APPELLAN T APPEALS FOR ITS CANCELLATION. 1B. THAT THE NOTICE ISSUED U/S 274 R/W SEC. 271(1)(C) OF THE IT ACT, 1961 DTD. 25/10/2010 WAS NOT IN ACCORDANCE WITH THE SATISFACTION AS RECORDED IN THE ASSESSMENT ORDER, WHICH WAS TO THE EFFECT THAT THE ASSESSEE CONCEALED INCOME OF RS. 5,40,000 AND, THEREFORE, THE SHOW CAUSE NOTICE AS WELL AS CONSEQUENTIAL PENALTY ORDER ARE NOT SUSTAINABLE IN LAW AND THE APPELLANT APPEALS FOR THE CANCELLATION OF THE IMPUGNED PENALTY ORDER. 2 REGARDING THE REQUEST FOR ADMISSION OF THE AFORE SAID ADDITIONAL GROUNDS OF APPEAL, THE APPELLANTS HUMBLE SUBMISSIONS ARE AS FOLLOWS: - I. THAT WHILE DRAFTING THE MEMORANDUM OF APPEAL, THE APPELLANT WAS UNDER BONA FIDE IMPRESSION THAT THE GROUND NO. 1 WHICH CHALLENGED THE VALIDITY OF THE PENALTY ORDER, WOULD COVER ALL THE RELEVANT ISSUES ALSO AND, THEREFORE, THE AFORESAID ADDITIONAL GROUNDS OF APPEAL WERE NOT RAISED IN THE MEMORANDUM OF APPEAL. NOW, AS A MEASURE OF ABUNDANT PRECAUTION I.E., TO MEET WITH ANY DIFFERENCE IN INTERPRETATION OF THE GROUND NO. 1 OF THE MEMORANDUM OF APPEAL, THE APPELLANT NEEDS TO SET FORTH THE AFORESAID ADDITIONAL G ROUND NOS. 1A AND 1B IN THE MEMORANDUM OF APPEAL. 4 II. THAT UPON ADMISSION OF THE ADDITIONAL GROUNDS, NO KNEW FACTS WOULD BE REQUIRED TO BE INVESTIGATED. THE RELEVANT FACTS CAN BE ASCERTAINED FROM THE MATERIAL ALREADY ON RECORD, I.E., THE ASSESSMENT ORDER, THE PENALTY ORDER AND THE NOTICE U/S 274 R/W SEC. 271(1)(C) OF THE I.T. ACT, 1961 DT. 25/10/2010. III. THAT THE ADDITIONAL GROUNDS RAISE A QUESTION OF LAW WHICH BEARS ON THE LIABILITY OF THE APPELLANT IN RESPECT OF THE A.Y. 2008 - 09. WITH THE AFORESAID SUBMISSIONS , THE APPELLANT VERY HUMBLY URGES YOUR H ONOUR TO KINDLY ADMIT THE AFORESAID ADDITIONAL GROUNDS OF APPEAL IN THE MEMORANDUM OF APPEAL AND OBLIGE. 4. DURING THE COURSE OF HEARING , LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTS OF THE AFORESAID APPLICATION DATED 18/06/2014 AND REQUESTED TO ADMIT THE ADDITIONAL GROUN D BY STATING THAT NO NEW MATERIAL IS REQUIRED AS THE SAME IS AVAILABLE ON THE RECORD , T HEREFORE, THE LEGAL G ROUND MAY BE ADMITTED. 5. IN HIS RIVAL SUBMISSIONS, LEARNED D.R. OPPOSED THE ADMISSION OF ADDITIONAL GROUND. 6 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD, IT IS NOTICED THAT NO FRESH INVESTIGATION IS REQUIRED FOR THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE AND THE FACTS ARE CLEAR FROM THE MATERIAL AVAILABLE ON THE RECORD, THEREFORE, THE ADDITIONAL GROUNDS ARE ADMITTED. 5 7 . THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE SUSTENANCE OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT). 8 . FACTS RELATING TO THE ADDITIONAL GROUND RAISED BY THE ASSESSEE , IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 28/01/2009 DECLARING TOTAL INCOME AT RS. 22,86,140/ - . THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 25/10/2010 DETERMI NI NG THE TOTAL INCOME AT RS. 29,33,640/ - THEREBY MAKING TWO ADDITIONS , FIRST WAS RS. 1,07 ,5 0 0/ - ON ACCOUNT OF DIFFERENCE IN VALUATION OF PLOTS U/S. 50C AND SECOND WAS ADDITION OF RS. 5,40,000/ - BEING UNEXPLAINED CASH CREDI TORS . THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT IN RESPECT OF ADDITION OF RS. 5,40,000/ - AND SUBSEQUENT LY SOUGHT EXPLA NATION FROM THE ASSESSEE, WHO SUBMITTED THAT SINCE NAME AND ADDRESSES OF THE RELATIVES FROM WHOM THE LOANS WERE TAKEN WERE NOT AVAILABLE, THEREFORE, TO AVAIL PEACE OF MIND, SHE HERSELF OFFERED RS. 5,40,000/ - FOR ADDI TION AND AS SUCH NO PENALTY U/S. 271(1)(C) OF THE ACT WOULD BE LEVIED. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT IT WAS NOT THE CASE WHERE THE ASSESSEE HERSELF OFFERED RS. 5,40,000/ - WHEREAS FACT WAS THAT THE ASSESSEE COULD 6 NOT FURNISH DETAILS OF THOSE CREDITORS AND UNDER THOSE CIRCUMSTANCES, IDENTITY, CAPACITY, CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS REMAINED UNPROVED. HE, THEREFORE, HELD THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME WITH RESPECT OF THE SAID ADDITION OF RS. 5,40,000/ - AND L EVIED PENALTY OF RS. 1,82,596/ - U/S. 271(1)(C) OF THE ACT . 9 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT WHILE INITIATING THE PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD TRIED TO MAKE CLEAR CONCEALMENT OF INCOME BY WAY OF CLAIMING UNEXPLAI NED CREDITS WHEREAS WHILE IMPOS ING THE PENALTY, THE ASSESSING OFFICER CONCLUDED THA T THE ASSESSEE WAS GUILTY OF FURNISHING INACCURATE PARTICULARS OF ITS INCOME WITH RESPECT TO ADDITION OF RS. 5,40,000/ - MADE ON ACCOUNT OF BOGUS CREDIT U/S. 68 OF THE ACT. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER DID NOT GIVE ANY FINDING THAT THE ASSESSEE MAINTAINED BOOKS OF ACCOUNTS WHEREAS SECTION 68 OF THE ACT WAS APPLICABLE FOR CASH CREDITS IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER WHILE IMPOSING THE IMPUG N ED PENALTY , RELIED ON THE PROVISIO NS OF SECTION 68 OF THE ACT WHEREAS IN THE ABSENCE OF BOOKS OF ACCOUNTS, THE PROVIS I ONS OF SECTION 68 THEMSELVES WERE NOT APPLICABLE. 7 THUS, THE ADDITION ITSELF WAS BAD IN LAW AND CONSEQUENTLY THE IMPUGNED PENALTY WHICH WAS BASED ON THAT ADDITION WAS ALSO BAD IN LAW. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. SANTOSH NARAIN KAPOOR VS. DCIT 115 TTJ (LUC) 402. 2. RUCHI ORGANISORS (P) LTD. VS. ACIT 93 TTJ 242 . 3. BHAGAT & CO. VS. ACIT 101 TTJ (MUM) 553 4. CIT VS. D & H SECHERON ELECTRODES LTD. 203 CTR (MP) 164. 5. PADMA RAM BHARALI VS. CIT 110 ITR 54 (GAU.) 10 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT PROVIDES THAT THE ASSESSING OFFICER SHALL HIMSELF IMPOSE PENALTY IF HE IS SATISFIED THAT THE ASSESSEE HAD CONCEALED THE INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME . THEREFORE, BOTH THE CONDITIONS I.E. CONCEAL ED THE PARTICULARS OF INCOME OR FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME ARE TO BE FULFILLED AND THERE IS NO JUSTIFICATION TO SEE THESE CONDITIONS IN ISOLATION . THE LD. CIT(A) OBSERVED THAT I N THE PRESENT CASE IT IS CLEAR THAT THE ASSESSEE FURNISHED WRONG PARTICULARS O R HER INCOME TO THE TUNE OF RS. 5,40,000/ - AND THERE WAS NO CONTRADICTION IN CONCLUSION OF THE ASSESSING OFFICER, WHO OBSERVED AS UNDER: - IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THE ASSESSEE IS GUILTY OF FURNISHING INACCURATE PARTICULARS OF ITS INCOME WITH 8 RESPECT TO ADDITION OF RS. 5,40,000/ - MADE ON ACCOUNT OF BOGUS CASH CREDIT U/S. 68 OF THE ACT. I HEREBY IMPOSE A PENALTY OF RS. 1,82,5 9 6/ - (RS. ONE LACS EIGHTY TWO THOUSAND FIVE HUNDRED NINETY SIX) WHICH IS EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED. 11 . THE LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICER IMPOSED THE PENALTY FOR THE REASON THAT THE ASSESSEE FAILED TO PROVE HER CLAIM OF CA SH CREDIT BY FURNISHING DETAILS SUCH AS NAME AND IDENTITY, CAPACITY OF THE LENDERS AND THE DECISION RELIED IN THE CASE OF PADMA RAM BHARALI VS. CIT 110 ITR 54 ( GAU. ) WILL BE APPLICABLE TO THE FAC TS OF THE ASSESSEES CASE AS NO CONTRADICTION WAS FOUND IN THE ASSESSING OFFICERS FINDING . NOW THE ASSESSEE VIDE ADDITIONAL GROUN D CHALLENGED THE VALIDITY OF THE PENALTY LEVI ED U/S. 271(1)(C) OF THE ACT . 12. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER RECORDED THE SATISFACTION THAT THE ASSESSEE CONCEALED INCOME OF RS. 5,40,000/ - WHEREAS IN THE PENALTY ORDER, HE IMPOSED PENALTY ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, NOTICE ISSUE D U/S. 274 R. W.S. 271(1)(C) OF THE ACT WAS NOT IN ACCORDANCE WITH THE SATISFACTION AS RECORDED IN THE ASSESSMENT ORDER . THEREFORE, PENALTY ORDER WAS NOT SUSTAINABLE IN THE LAW. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAW: - 9 1. CIT & A NO. VS. MANJUNATHA COTTON & GINNING FACTOR (2013) 263 CTR (KAR) 153 . 13 IN HIS RIVAL SUBMISSIONS , LEARNED D.R. STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSING OFFICER RECORDED THE SATISFACTION THAT THE ASSESSEE CONCEALED THE INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME OF RS. 5,40,000/ - . THEREFORE, THERE WAS NO AMBIGUITY IN THE NOTICE ISSUED U/S. 274 R.W.S. 271(1)(C ) OF THE ACT AND THE PENALTY WAS RIGHTLY LEVIED, WHICH WAS SUSTAINED BY THE LD. CIT(A) IN ACCORDANCE WITH LAW. HENCE, PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) MAY BE CONFIRMED. 14 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS U NDISPUTED FACT THAT THE ASSESSEE COULD NOT FURNISH THE DETAILS RELATING TO CASH CREDITS OF RS. 5,40,000/ - AND AGREED FOR THE ADDITION. THE ASSESSING OFFICER MADE THE ADDITION AND INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. IN THE BODY OF THE ASSESSMENT ORDER DATED 25/10/2010, THE ASSESSING OFFICER WHILE INITIATING T HE PENALTY PROCEEDINGS U/ S. 271(1)(C) OF THE ACT AND MAKING ADDITION OF RS. 5,40,000/ - OBSERVED AS UNDER: - 10 THE SUBMISSION OF THE A/R HAS BEEN CONSIDERED. VIDE ORDER SHEET ENTRY DATED 21/10/2010 HE WAS INFORMED THAT SUCH CONDITION CANNOT BE IMPOSED ON THE A.O. AND HE WAS AT LIBERTY TO EXPLAIN THE CREDITORS. THE A/R , HOWEVER, SHOWN HIS INABILITY TO EXPLAIN THE CREDITS AND AGAIN OFFERED THE AMOUNT OF RS. 5,40,000/ - FOR TAX. SINCE THE CREDITS OF RS. 5,40,000/ - ARE NOT PROVED AND EXPLAINED, AT ALL, THE SAME A RE ADDED AS UNEXPLAINED CREDITS U/S. 68 OF THE I.T. ACT. PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT ARE ALSO INITIATED WITH REFERENCE TO THIS ADDITION AS THE ASSESSEE HAS TRIED TO MAKE CLEAR CONCEALMENT OF INCOME BY WAY OF CLAIMING UNEXPLAINED CR EDITS. 15 FROM THE ABOVE OBSERVATIONS OF THE ASSESSING OFFICER, IT IS CRYSTAL CLEAR THAT THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED IN RESPECT OF ADDITION OF RS. 5,40,000/ - AND THE ASSESSING OFFICER CLEARLY MENTIONED THAT THE ASSESSEE TRIED TO MAKE CLEAR CONCEALMENT OF INCOME BY WAY OF CLAIMING UNEXPLAINED CREDITS. THEREFORE, BOTH THE CONDITIONS I.E. CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME BY WAY OF CLAIMING UNEXPLAINED CREDITS EXISTED IN THIS CASE AND THE PENALTY U/S. 271(1)(C) OF THE ACT WAS RIGHTLY INITIATED BY THE ASSESSING OFFICER. WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS ADDITIONAL GROUND RAISED B Y THE ASSESSEE. 16 AS REGARDS TO THE MERIT OF THE CASE, THE ASSESSEE SU BMITTED TO THE LD. CIT(A) THAT THE CASH CREDITS OF RS. 5,40,000/ - WERE VOLUNTARILY SURRENDERED BY HER AS INCOME AND THE AMOUNT OF RS. 5,40,000/ - WAS TAKEN FROM A LARGE NUMBER OF RELATIVES OF WHICH NAMES AND LIST WERE NOT 11 AVAILABLE WITH THE ASSESSEE AND IN ABSENCE OF SUCH DETAILS, SHE CAME FORWARD TO PAY TAX ON THE SAID AMOUNT. IT WAS FURTHER STATED THAT THIS VOLUNTARY SURRENDER OF INCOME WAS NOT ACCEPTANCE OF INCORRECTNESS OF THESE CASH CREDITORS, BUT IT WAS OFFERED TO BUY PEACE OF MIND BY HERSELF AND HER RELATIVES AND THIS DOES NOT MEAN THAT THE CASH CREDITS WERE THE ASSESSEES OWN INCOME AND SHE ATTEMPTED TO CONCEAL THE SAME IN THE DIS GUISE OF CASH CREDITS. THEREFORE, THE PENALTY U/S. 271(1)(C) OF THE ACT WAS NOT LEVIABLE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. SANTOSH NARAIN KAPOOR VS. DCIT 115 TTJ (LUC) 402. 2. RUCHI ORGANISORS (P) LTD. VS. ACIT 93 TTJ 242. 3. BHAGAT & CO. VS. ACIT 101 T TJ (MUM) 553 4. CIT VS. D & H SECHERON ELECTRODES LTD. 203 CTR (MP) 164. 17 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSEE HAD SHOWN VARIOUS CASH CREDITORS AMOUNTING TO RS. 5,40,000/ - , BUT FAILED TO FURNISH ANY DETAIL WHATSOEVER TO ESTABLISH THE IDENTIFY, CAPACITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE PENALTY PROCEEDINGS OR EVEN AT THE APPELLATE STATE . HE FURTHER OBSERVE D THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS COULD NOT PROVE HER CLAIM OF CASH CREDIT AND HAD NO SCRUTINY ASSESSMENT 12 BEEN MADE THE AMOUNT OF RS. 5,40,000/ - WOULD HAVE REMAINED UNTAXED . HE ALSO OBSERVED THAT THE ONUS LIES ON THE ASSESSEE TO PROVE THE CASH CREDITS WITH EVIDENCE , B UT IN THE INSTANT CASE, EVEN THE IDENTIT Y OF THE CASH CREDITORS WAS NOT ESTABLISHED WHAT TO SPEAK CREDITWORTHINESS AND CAPACITY OF THE CREDITORS . SO , IT WAS A CLEAR CUT CASE OF FURNISHING INACCURATE PARTICULARS O F INCOME THEREBY CONCEALMENT OF INCOME AND THE IMPOSITION OF PENALTY WAS JUSTIFIED. THE LD. CIT(A) MENTIONED THAT THE FACTS AND CIRCUMSTA N CES OF THE CASE RELIED BY THE ASSESSEE WERE DIFFERENT . HE ALSO RELIED THE FOLLOWING CASE LAWS: - 1. P.C. JOSEPH & BRO. VS. CIT 240 ITR 808 (KER. ) 2. CIT VS. R. KESAVAN NAIR 287 ITR 276 (KER. ) 3. CIT VS. RAKESH PURI 331 ITR 458 (ALL. ) . 18 AS REGARDS TO THIS CONTENTION OF THE ASSESSEE THAT THE BOOKS OF ACCOUNTS WERE NOT MAINTAINED, THEREFORE, THE PROVISIONS OF SECTION 68 OF THE ACT WAS NOT APPLICABLE , T HE LD. CIT(A) OBSERVED THAT THE AMOUNT OF RS. 5,40,000 / - HAD BEEN TERMED AS CASH CREDITS, IN THE BALANCE SHEET PREPARED AND PRODUCED BY THE ASSESSEE HERSELF . THE LD. CIT(A) WAS OF THE VIEW THAT THE BALANCE SHEET COULD NOT BE PREPARED OUT OF TH I N AIR BUT REPRESENTED SUM TOTAL OF FINANCIAL AFFAIRS WHICH MAY OR MAY NOT BE RECORDED IN THE FORM OF FORMAL CASH BOOK AND LE DG ER , BUT THE BALANCE 13 SHEET IN ITSELF MAY BE CONSTRUED AS BOOKS OF ACCOUNTS IN MINIAT URE AND THAT O NCE A BALANCE SHEET IS PRODUCED T O EXPLAIN THE FINANCIAL AFFAIRS OF AN ASSESSEE THEN THE ASSESSING OFFICER HAS NO OPTION BUT TO TREAT IT AS AN EXTRACT OF BOOKS OF ACCOUNTS REFLECTING ALL FINANCIAL ACTIVITIES ON THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND THEREFORE, CONFRONTED TO EXPLAIN THE NATURE OF CERTAIN ENTRIES APPEARING IN THE BALANCE SHEET SUBMITTED BY THE ASSESSEE ITSELF, HE OR SHE COULD NOT TAKE THE SHELTER UNDER THE PLEA OF NON - MAINTENANCE OF REGULAR BOOKS OF ACCOUNTS AND EVEN IN A CASE , WHERE THE BOOKS OF ACCOUNTS ARE REJECTED, WHICH IMPLIES NON - MAINTENANCE OR NON - EXISTENCE OF BOOKS OF ACCOUNTS FOR THE PURPOSE OF ASSESSMENT PROCEEDINGS , THERE WAS NO OBJECTION TO THE PROPOSITION THAT THE ITO CAN RELY UPON REJECTED BOOKS OF ACCOUNTS FOR THE PURPOSE OF MAKING ADDITION TOWARDS UNEXPLAINED CASH AS HELD BY THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT , A.P. VS. MADURI RAJAIAHGARI KISTAIAH REPO RTED IN 120 ITR 294 . THE LD. CIT(A) ALSO RELIED ON THE FOLLOWING CASE LAWS: - 1. KALE KHAN MOHAMMAD HANIF VS. CIT (1963) 50 ITR 1 (SC) 2. CIT VS. DEVI PRASAD VISHWANATH PRASAD (1969) 72 ITR 19 6 (SC). NOW THE DEPARTMENT IS IN APPEAL. 14 19 LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE DID NOT WANT TO DISTURB THE CASH CREDIT ORS WHO WERE HER RELATIVES AND THEREFORE, IN ORDER TO BUY PEACE OF MIND FOR THE RELATIVES AND HERSELF SHE SURRENDERED/OFFERED THE AMOUNT OF CASH CREDITS AS HER INCOME WITH A REQUEST FOR NOT IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT. THE SURRENDER / OFFER WAS VOLUNTARY IN THE SENSE THAT PRIOR TO THE SURRENDER/OFFER THE ASSES SING OFFICER DID NOT HAVE ANY MATERIAL FOR TREATING THE CASH CREDITORS IN QUESTION AS THE ASSESSEE S INCOME AND MERELY BECAUSE THE ASSESSEE SURRENDERED CERTAIN AMOUNT TO BUY PEACE, THE SAME COULD NOT BE HELD TO BE A CONCEALED INCOME OF THE ASSESSEE. THEREFORE, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. SANTOSH NARAIN KAPOOR VS. DCIT (2008) 115 TTJ (LUCKNO W) 402 . 2. RUCHI ORGANISORS (P) LTD. VS. ACIT (200 5 ) 9 3 TTJ ( AHD) 242 . 3. BHAGAT & CO. VS. ACIT (2006) 101 TTJ (MUMBAI) 553. 4. CIT VS. D & H SECHERON ELECTRODES LTD. (2006) 203 CTR (MP) 164. 5. ACIT VS. PREM CHAND GARG (2009) 123 TTJ (DEL.) T.M. 433 . 6. SMT. BRIJ BALA CHOUDHARY VS. ITO (2004) 82 TTJ (LUCKNOW) 355. 15 20 IN HIS RIVAL SUBMISSIONS , LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS MADE BY THE LD. CIT(A) IN THE IMPUGNED ORDER . IT WAS FURTHER SUBMITTED THAT THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER DURING THE PENALTY PROCEEDINGS FOR THE REASONS THAT THE ASSESSEE COULD NOT EXPLAIN THE CASH CREDITS AT ALL THEREFORE, SURRENDER OF INCOME COULD NOT BE SAID TO BE VOLUN TARY, RATHER IT WAS UNDER COMPULSION BEING CORNERED BY THE REVENUE , SO, IT WAS A CASE OF CONCEALMENT OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICULARS OF INCOME . THEREFORE, LEVYING OF PENALTY U/S. 271(1)(C) OF THE ACT WAS FULLY JUSTIFIED. 21 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD SHOWN CASH CREDITS OF RS. 5,40,000/ - , BUT FAILED TO EXPLAIN THE NAMES OF T HE PERSONS FROM WHOM THOSE CREDITS WERE RECEIVED . WHEN THE ASSESSEE WAS UNABLE TO EXPLAIN THOSE CASH CREDITS TO THE SATISFACTION OF THE ASSESSING OFFICER SHE PREFERRED TO SURRENDER THE INCOME AND OFFERED THE SAME FOR TAXATION. THE ASSESSING OFFICER, HOWEV ER, DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND CREDITED THE SAME AS CONCEALMENT OF INCOME AND ACCORDINGLY IN I TIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT . 16 IN THE PRESENT CASE, HAD THE CASE BEEN NOT SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER DID NOT ASK FOR EXPLANATION FROM THE ASSESSEE, THE ADDITION WAS NOT POSSIBLE BECAUSE ONLY WHEN THE ASSESSEE WAS CORNERED THE AMOUNT WAS SURRENDERED AND MERELY ON THIS BASIS THAT THE ASSESSEE MADE THE SUR RENDER , IT CANNOT BE SAID THAT THERE WAS NO CONCEALMENT OF INCOME. RECENTLY, THE HON'BLE SUPREME COURT IN THE CASE OF M AK DATA P. LTD. VS. CIT REPORTED IN (2013) 358 ITR 593 HAS HELD AS UNDER: - EXPLANATION TO SECTION 271(1) OF THE INCOME - TAX ACT, 1961 , RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE ASSESSING OFFICER, BETWEEN REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE E X PLANATION, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE DEPARTMENT TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE . VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAS TO BE ABSOLVED FROM PENALTY. THE ASSESSING OFFICER SHOULD NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE SUCH AS VOLUNTARY DISCLOSURE, BUY PEACE, AVO ID LITIGATION, AMICABLE SETTLEMENT, TO EXPLAIN AWAY ITS CONDUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IT HAS FURTHER BEEN HELD THAT: - THE ASSESSEE HAD ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM OF RS. 40,74,000 TO AVOID LITIGATION, BUY PEACE AND TO CHANNELISE THE ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME - TAX DEPARTMENT. THE STATUTE DOES NOT RECOGNISE THOSE TYPES OF DEFENCES UNDER EXPLANATION 1 TO 17 SECTION 271(1)(C) OF THE ACT. THE SURRENDER OF INCOME IN THIS CASE WAS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION BY THE ASSESSING OFFICER IN THE SEARCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE . THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETU RN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONS EQUENTLY, IT WAS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCO ME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. IN THE OPINION OF THE SUPREME COURT, THE ASSESSING OFFICER, HAD RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND WAS LIABLE FOR PEN ALTY PROCEEDINGS U/S. 271 READ WITH SECTION 274 OF THE ACT. THERE WAS NO ILLEGALITY IN THE DEPARTMENT INITIATING PENALTY PROCEEDINGS. IN THE PRESENT CASE ALSO, ONLY ON THIS BASIS THAT THE ASSESSEE MADE SURRENDER WHEN CORNERED BY THE DEPARTMENT, IT CANNOT BE SAID THAT THE PENALTY U/S. 271(1)(C) OF THE ACT WAS NOT LEVIABLE. WE, THEREFORE, BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID REFERRED TO CASE, DO NOT SEE ANY MERIT IN THIS APPEAL OF THE ASSESSEE. 22 IN I.T.A.NO. 568/JODH/2013 , THE FACTS ARE IDENTICAL AS WERE INVOLVED IN I.T.A.NO. 569/JODH/2013 IN THE CASE OF SMT. NAHID BANO (SUPRA) EVEN THE ARRIVAL CONTENTIONS WERE SIMILAR, THE ONLY DIFFERENCE IS IN THE AMOUNT OF THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT, THEREFORE, OUR FINDINGS 18 GIVEN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS - MUTANDIS FOR THIS CASE ALSO . IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE ASSESSEE. 23 IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEES ARE DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 11 TH SEPTEMBER , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11 TH SEPTEMBER , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .