ACIT, New Delhi V. M/s. Anant Raj Industries Ltd., New Delhi

ITA 6634/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3877 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST IMPUGNED DATED PASSED
• Keywords: Unexplained cash credit; Unexplained expenditure; Reason to believe
• Section: 143(3); 133(6); 147; 68; 148

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.:-6634/DEL/2016 ASSESSMENT YEAR: 2007-08 O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 17.10.2016, PASSED BY LD. CIT (APPEALS) FOR THE ASSESSMENT YEAR 2007-08, IN RELATION TO THE PENALTY PRO CEEDINGS U/S 271(1)(C) FOR THE ASSESSMENT YEAR 2007-08. THE REVENU E HAS CHALLENGED THE DELETION OF PENALTY OF RS. 14,04,500/- IMPOSED BY THE ACIT, CIRCLE-2(2), ROOM NO. 392, C.R. BUILDING, I.P. ESTATE, NEW DELHI 110 002 VS. ANANT RAJ INDUSTRIES LTD. E-2, ARA CENTRE, JHANDEWALAN EXTENSION NEW DELHI 110 055 PAN AABCA3972B (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RAVI KANT GUPTA, SR.DR ASSESSEE BY : SHRI V.K. BINDAL, CA DATE OF HEARING 24/01/2018 DATE OF PRONOUNCEMENT 30/01/2018 ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 2 ASSESSING OFFICER U/S 271(1)(C) ON ACCOUNT OF THE ALL EGED UNEXPLAINED SALES MADE TO TWO PARTIES. 2. THE BRIEF FACTS ARE THAT THE ASSESSEE IS A PU BLIC LIMITED COMPANY MAINLY ENGAGED IN THE BUSINESS OF MANUFACTURI NG AND SALE OF CERAMIC TILES. IN THIS CASE, THE ORIGINAL ASSESSMENT WA S COMPLETED U/S 143(3) VIDE ORDER DATED 30 TH DECEMBER, 2009, AT AN INCOME OF RS. 92,02,67,218/-. THE SAID ASSESSMENT WAS REOPENED U/S 147 VIDE ISSUANCE OF NOTICE U/S 148 DATED 30 TH MARCH, 2012 AND IN PURSUANCE TO SUCH NOTICE, REASSESSMENT ORDER U/S 143(3) R.W.S 1 47 WAS PASSED VIDE ORDER DATED 1.11.2012, ASSESSING THE INCOME AT S AME AMOUNT, I.E., 92,02,67,218/-, AFTER DETAIL SCRUTINY. POST THE COMPLETION OF SUCH AN REASSESSMENT, ONCE AGAIN FOR THE SECOND TIME, ASSE SSEES CASE WAS REOPENED U/S 147, VIDE NOTICE DATED 29 TH MARCH, 2014 U/S 148; AND THIS TIME SUCH A REOPENING WAS DONE ON THE BASIS OF IN FORMATION RECEIVED BY THE AO FROM DDIT (INVESTIGATION) UNIT I II(1), NEW DELHI. THE RELEVANT REASONS RECORDED FOR REOPENING THE ASS ESSMENT WAS AS UNDER:- AN INFORMATION HAS BEEN RECEIVED FROM THE DY. DIRE CTOR OF INCOME TAX (INV.), NEW DELHI THAT A LETTER FROM CIT (A) AL WAR WAS RECEIVED ON 18.08.2011 ALONGWITH SUBMISSION OF SHRI SATYENDR A YADAV. SHRI YADAV IS PROP. M/S. SHIVAM EXPORTS HAD PURCHAS ED TILES FROM M/S. ANANT RAJ INDUSTRIES AND M/S. DAGA CERAMICS PV T. LTD. AS PER WHICH THE WHOLE AMOUNT FOR SALE OF TILES TO M/S . SHIVAM ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 3 EXPORTS IS SAID TO HAVE BEEN RECEIVED IN CASH FROM SHRI YADAV BY THESE PARTIES AT THE YEAR END. HOWEVER, AS PER THE SUBMISSION OF AR OF M/S. SHIVAM EXPORTS BEFORE THE LD. CIT(A) ALW AR , M/S. SHIVAM EXPORTS MADE PAYMENTS OF RS.10,09,024/- THRO UGH VARIOUS CHEQUES IN THE FY 2007-08. THE AO OF M/S. SHIVAM EXPORTS ON THE BASIS OF SUBMI SSION /STATEMENT OF M/S. ANANT RAJ INDUSTRIES AND M/S. DA GA CERAMICS PVT. LTD MADE ADDITION OF RS.22,02,016/- IN THE HAN DS OF SHRI SATYENDRA YADAV PROP. SHIVAM EXPORTS TREATING THE A MOUNT AS UNEXPLAINED EXPENDITURE U/S 69. THE LEARNED CIT (A) OPINED THAT IT IS APPAR ENT THAT M/S. ANANT RAJ INDUSTRIES PVT. LTD. HAS INTRODUCED ITS O WN CASH ACCOUNT IN ITS BOOKS. FROM THE OPINION OF LD. CIT(A ) IT WAS APPARENT THAT M/S. ANANT RAJ INDUSTRIES INTRODUCED SOME UNACCOUNTED CASH IN ITS BOOK UNDER THE VEIL OF CASH PAYMENT RECEIVED FROM M/S. SHIVAM EXPORT. AS PER DDIT, M/S. ANANT RAJ INDUSTRIES LTD IS MAINT AINING TWO LEDGERS IN ITS BOOKS OF ACCOUNT, ONE IN THE NAME OF M/S. SHIVAM EXPORT AND ANOTHER IN THE NAME OF SATYENDER YADAV P ROP. M/S. SHIVAM EXPORTS. AFTER ANALYSIS OF LEDGER OF SHIVAM EXPORTS IN THE BOOKS OF ANANT RAJ INDUSTRIES LTD., IT HAS BEEN FOU ND THAT ANANT RAJ HAS SHOWN TO HAVE RECEIVED RS.20,15,500/- AS CA SH AND RS.4,92,287/- THROUGH CHEQUES IN FY 2006-07 AND RS. L,50,000/- THROUGH CHEQUE IN FY 2007-08 FROM SHIVAM EXPORTS. A ND AFTER ANALYSIS OF THE LEDGER OF SHRI SATYENDER YADAV PROP M/S. SHIVAM EXPORTS IN THE BOOKS OF ANANT RAJ INDUSTRIES LTD., IT HAS BEEN FOUND THAT ANANT RAJ HAS SHOWN TO HAVE RECEIVED RS. 21,56,965/- AS CASH IN FY 2006-07 AND RS.2, 62, 680/- AS CASH A ND RS.8, 08,484/- THROUGH CHEQUES IN FY 2007-08. HOWEVER M/S . SHIVAM ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 4 EXPORTS HAS SHOWN TO HAVE PAID RS.6, 12,787/- THROU GH CHEQUES IN FY 2006-07 TO M/S. ANANT RAJ IN ITS BOOKS OF ACC OUNT. ALSO IT IS EVIDENT FROM THE SUBMISSION FILED BY M/S. SHIVAM EX PORTS BEFORE LD. CIT(A) ALWAR THAT HE MADE PAYMENT OF RS.10,09,0 24/- THROUGH VARIOUS CHEQUES IN FY 2007-08. THE SUMMARY OF TRANS ACTIONS CAN BE SUMMARIZED AS UNDER:- PAYMENT RECEIVED FROM M/S. SHIVAM EXPORTS & SATYEND ER YADAV PROP. M/S. SHIVAM EXPORTS AS PER THE BOOKS OR M/S. ANANT RAJ INDUSTRIES LTD. FY 2006-0 7 FY 200 7 -0 8 PAYMENT RECEIVED RS . 20 , 15 , 500 / - R S . 4,92 , 28 7 / - RS . L , 50 , 000 / - FROM M / S . SHIVAM IN CASH THROUGH CHEQUE THROUGH C H E QUE EXPORTS PAYMENT RECEI VE D RS . 21 , 56 , 965 / - R S . 2 , 62 , 680 / - RS . 8 , 0 8, 4 8 4 / - FROM SAT E NDER YADA V IN CA S H IN CASH THR O UGH C H E QUE PROP M /S . SHIVAM EXPORTS PAYMENT MADE BY M/S. SHIVAM EXPORTS TO M/S. ANANT R AJ INDUSTRIES LTD. FY 2006-0 7 FY 200 7 -0 8 PAYMENT MAD E RS . 6 , 12 , 7 8 7 / -THR O UGH C H E QU E RS . 1 0, 09 , 024 / - THR O U G H C H E QU E AS P E R BY M / S . SHIVAM AS PER BOO K S OF SHIVAM SUBMISSION FILED BY M / S . SHIVAM EXPO R TS EXPOR T S EXPORTS BEFORE THE LD . CIT(A ). IN VIEW OF ABOVE FACTS, IT IS EVIDENT THAT M/S. ANA NT RAJ INDUSTRIES LTD. HAS RECEIVED CASH PAYMENTS TO THE TUNE OF RS.4 1,72,465/- WHICH MIGHT HAVE ITS OWN UNACCOUNTED CASH INTRODUCE D IN ITS BOOKS. M/S. SHIVAM EXPORTS STATED TO BE PAID RS.6, 12,787/- THROUGH CHEQUE WHEREAS M/S. ANANT RAJ INDUSTRIES IS SHOWING CHEQUE RECEIPT OF RS. 4,92,287/- I.E. THERE IS DIFF ERENCE IN RECEIPT ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 5 AMOUNTING TO RS. 1,20,500/-. THUS AN AMOUNT OF RS. 42,92,965/- IS INCOME ESCAPE ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08. IN VIEW OF ABOVE, I HAVE REASON TO BELIEVE THAT AN INCOME TO THE EXTENT OF RS. 42,92,465/- HAS ESCAPED ASSESSMENT FO R THE ASSESSMENT YEAR 2007-08 AND TO ASSESS THE INCOME ME NTIONED ABOVE AND TO VERIFY THE GENUINENESS / CREDITWORTHIN ESS OF THE ABOVE INVESTORS, I PROPOSE TO ISSUE NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2007-08. 3. DURING THE COURSE OF SUCH ASSESSMENT PROCEED INGS, THE ASSESSEE SUBMITTED THAT IT HAS TRANSACTED WITH M/S. SHIVAM EXPORTS AND SHRI SATYENDRA YADAV DURING THE RELEVANT FINANCIA L YEAR TO WHOM THE ASSESSEE HAD SOLD CERAMIC TILES TO THE AFORESAID PA RTIES AGAINST C FORM AND HAD RECEIVED CHEQUES AND CASH AGAINST INVOICES ISSUED TO THEM. FURTHER, ASSESSEE ALSO FILED ITS REGULAR VAT RETU RN, WHEREIN SALE TRANSACTION AS PER C-FORM DULY REFLECTED IN THE BOO KS OF ACCOUNT WITH THE AFORESAID PARTY HAS BEEN DULY SHOWN. THE AS SESSEE HAD ALSO ACCOUNTED THE SAID SALES BOTH IN CASH AND CHEQUE AMOUN T IN ITS BOOKS OF ACCOUNT WHICH HAS BEEN SUBJECTED TO STATUTORY AUDIT AN D AUDIT U/S 44AB. AS IT IS A PUBLIC LIMITED COMPANY ALL THE DETAILS OF SALES, PURCHASES, ETC., ARE DULY SUPPORTED BY CASH BOOK, BAN K BOOK, JOURNAL VOUCHERS, PARTY WISE LEDGER ACCOUNTS, SALE INVOICES, BILLS, ETC. ENTIRE SALES WERE DULY EXAMINED DURING THE COURSE OF EARLI ER ASSESSMENT ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 6 PROCEEDINGS AND THEREFORE, SAME COULD NOT BE DISTURB ED. THE ASSESSEE IN SUPPORT TO ITS CONTENTION HAD SUBMITTED AS UNDER:- IN SUPPORT OF AFORESAID TRANSACTIONS THE ASSE SSEE IS ENCLOSING HEREWITH FOLLOWING DETAILS FOR YOUR PERUSAL:- 1. SUMMARY OF TRANSACTION WITH SHIVAM EXPORTS AND S ATINDER YADAV IS ATTACHED AS ANNEXURE-1. 2. COPY OF LEDGER ACCOUNTS OF SHIVAM EXPORTS AND SA TYENDER YADAV DURING THE PERIOD FROM 01.04.2006 TO 31.03.20 07 ARE ATTACHED AS ANNEXURE --2 3. COPIES OF BILL/INVOICE REGARDING SALE OF TILES T O THE - ABOVE MENTIONED PARTIES IS ATTACHED AS ANNEXURE- 3. 4. COPIES OF CASH RECEIPTS COUNTER SIGNED BY THE AS SESSEE IN CONSIDERATION OF SALE MADE TO ABOVE MENTIONED PARTI ES IS ATTACHED AS ANNEXURE A -4. 5. COPIES OF SALES TAX/VAT RETURN AND SALE TAX DEPO SIT CHALLANS FOR THE FINANCIAL YEAR 2006-07 ARE ATTACHE D AS ANNEXURE A-5. THE ASSESSEE FURTHER SUBMITS THAT THE TRANSACTIONS OF THE ASSESSEE ARE GENUINE AND EVERY SUCH TRANSACTION HAS BEEN EXPLAINED AND HAS BEEN SUBSTANTIATED WITH RELEVANT DOCUMENTS. COPY OF SALE INVOICES, CASH BOOK AND BANK STATEMENT WHEREIN AFORESAID CHEQUES AND CASH WERE DEPOSITED BY THE AS SESSEE IN ITS CURRENT BANK ACCOUNT AND CASH BOOK HAVE BEEN PRODUC ED TO PROVE THE GENUINENESS OF THE TRANSACTION. THIS IS VERY PERTINENT AND SUBSTANTIATES THE ASSESS EE'S CASE THAT THE PAYMENTS WERE RECEIVED AGAINST SALE OF TILES. I F THE STATEMENT OF ACCOUNT AS GIVEN BY SHIVAM EXPORTS AND SATENDRA SINGH BEFORE CIT (A), ALWAR, IS TO BE BELIEVED THAT HE HAS NOT G IVEN CASH TO THE ASSESSEE, THE OUTSTANDING AMOUNT WOULD HAVE CONTINU ED TO EXIST IN THE BOOKS OF THE AFORESAID PARTIES. 4. SUMMARY OF SALE AND CASH TRANSACTION WITH BOTH THE PARTIES WERE GIVEN IN THE FOLLOWING MANNER:- ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 7 - - -- . - ~ --- S.NO NAME OF PARTY OPENING SALES CASH CHEQUES CLOSI NG BALANCE RECD. RECD./ BALANCE TRANSFER 1 . SHIVAM EXPORTS (1,19,305) 27,02,939 20,15,500 5,11,159 56,975 2. SATENDRA YADAV - 28,73,783 21,56,965 - 7,16,818 TOTAL (1,19,305) 55,76,722 41,72,465 5,11,159 7,73,793 5. HOWEVER, THE LD. AO AFTER ANALYSING THE LEDGE R ACCOUNT OF M/S. SHIVAM EXPORTS, NOTED THAT IT HAS SHOWN TO HAVE PAID SUM OF RS. 6,12,787/- THROUGH CHEQUES TO THE ASSESSEE, WHEREAS TH E ASSESSEE HAD SHOWN CASH SALES FROM THE SAID PARTY. THE RELEVA NT COPY OF ACCOUNT IN THE BOOKS OF THE ASSESSEE COMPANY AND IN THE BOOKS OF M/S. SHIVAM EXPORTS WERE EXTRACTED BY HIM AS UNDER:- PAYMENT RECEIVED FROM M/S. SHIVAM EXPORTS & SATEND RA YADAV PROP. M/S. SHIVAM EXPORTS AS PER BOOKS OF M/S. ANAN T RAJ INDUSTRIES PERTAINS TO A.Y. 2007-08: . . PART I CULARS AMOUNT RECEIVED AMOUNT RECEIVED IN CASH THROUGH CHEQUES PAYMENT RECEIVED FROM M/S SHIVAM RS.20,15,500/- RS.4 , 92,287/ - EXPORTS PAYMENT RECEIVED FROM SATENDRA YADAV RS.21,56,965/- - PROP. M/S SHIVAM EXPORTS PAYMENT MADE BY M/S SHIVAM EXPORTS TO M/S. ANANT RA J INDUSTRIES AS PER BOOKS OF M/S. SHIVA M EXPORTS PARTICULARS AMOUNT RECEIVED AMOUNT RECEIVED IN CASH THROUGH CHEQUES PAYMENT MADE BY M/S SHIVAM EXPORTS RS.6,12,787/- - ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 8 6. LD. AO ISSUED NOTICES U/S 133(6) TO BOTH TH E PARTIES, HOWEVER NO REPLY WAS RECEIVED. HE FURTHER OBSERVED THAT THE AS SESSEE HAS ALSO FAILED TO PRODUCE THE SAID PERSON. ACCORDINGLY, BASED ON AFORESAID DIFFERENCE IN FIGURES IN ACCOUNT, HE TREATED THE SALE AGGREGATING TO RS. 41,72,465/- AS UNEXPLAINED SALES AND ADDED THE SAME U/S 68. AGAINST THE SAID ADDITION THE ASSESSEE HAD NOT PREFERRE D ANY APPEAL AND HENCE IN THE QUANTUM PROCEEDING SUCH AN ADDITION HAD ATTAINED FINALITY. 7. NOW PENALTY U/S 271(1)(C) HAS BEEN INITIATED AND LEVIED BY THE AO, MAINLY ON THE GROUND THAT ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE SAID ADDITION AND HELD THAT ASSESSEES EXP LANATION DURING THE COURSE OF PENALTY PROCEEDINGS BEFORE HIM WERE SA ME AS WAS MADE AT TIME OF ASSESSMENT AND NO NEW FACT OR GROUND HAS BEE N BROUGHT ON RECORD. THUS, HE HELD THAT ASSESSEE HAS INTRODUCED ITS OWN CASH IN THE GARB OF SALE; AND ACCORDINGLY, HE LEVIED PENALTY OF RS. 14,04,500/- ON THE SAID ADDITION. 8. BEFORE THE LD. CIT (A), THE ASSESSEE MADE VER Y ELABORATE SUBMISSIONS ALONGWITH ALL THE DOCUMENTARY EVIDENCES TO PROVE THAT THE SALES WERE NOT ONLY GENUINE, BUT DULY REFLECTED IN THE BOOKS OF ACCOUNT. SOME OF THE KEY EVIDENCES AND EXPLANATION SU BMITTED BY ASSESSEE WERE AS UNDER:- ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 9 (A) SUMMARY OF TRANSACTION WITH SHIVAM EXPORTS AN D SATENDRA YADAV IN THE BOOKS OF ACCOUNT OF THE APPELLA NT. (B) COPY OF LEDGER ACCOUNTS OF SHIVAM EXPORTS AND SATENDRA YADAV FOR THE PERIOD FROM 01.04.2006 TO 31.0 3.2007. (C) COPIES OF BILL/INVOICE REGARDING SALE OF TIL ES TO THE ABOVE MENTIONED PARTIES. (D) COPIES OF CASH RECEIPTS COUNTER SIGNE D BY THE APPELLANT, IN CONSIDERATION OF SALE MADE TO ABOVE MENTIONED PARTIES. (E) COPIES OF SALES TAX /VAT RETURN AND S ALE TAX DEPOSIT CHALLANS FOR THE FINANCIAL YEAR 2006-07 RELE VANT TO ASSESSMENT YEAR 2007-2008. (F) BANK STATEMENT - RELEVANT PAGE IN RESP ECT OF TRANSACTION WITH SHIVAM EXPORTS AND SATENDRA YADAV MADE DURING THE YEAR ENDED MARCH 31, 2007. (G) CASH BOOK - RELEVANT PAGE IN RESPECT OF TRANSACTION WITH SHIVAM EXPORTS AND SATENDRA YADAV MADE DURING THE YEAR ENDED MARCH 31, 2007. (H) PROVIDED THE ADDRESSES OF MR. SATENDRA YADAV AND SHIVAM EXPORTS; (PAN OF MR. SATENDRA YADAV WAS IN KNOWLEDGE OF THE LEARNED DCIT). 7. LD. CIT(A), DELETED THE SAID PENALTY AFTER OBSERVING THAT ASSESSEE HAS SHOWN SALE TO SHRI SATENDRA YADAV AND M /S. SHIVAM EXPORTS OF CERAMIC TILES FOR SUM OF RS. 55,76,722/-; AND AGAINST SUCH SALES, ASSESSEE HAS RECEIVED PAYMENTS OF RS. 41,72, 465/- BY WAY OF CASH AND RS. 5,11,159/- BY WAY OF CHEQUE. ENTIRE SAL E AMOUNT HAS BEEN DULY RECORDED IN THE BOOKS WHICH HAS BEEN SUBJE CTED TO AUDIT AND THE SALES IS COMPREHENSIVELY PROVED BY THE VARIOU S DOCUMENTS ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 10 FILED BY THE ASSESSEE BEFORE THE AO. HE FURTHER HELD THAT, NO INFORMATION HAS BEEN BROUGHT ON RECORD BY THE AO TO PR OVE THAT A CASH CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE SHOWN AS SALES ACTUALLY BELONG TO THE ASSESSEE OR ASSESSEE HAS ROUTED ITS OWN MONEY. APART FROM THAT, AO HAS DRAWN ADVERSE INFERENCE ON TH E BASIS OF STATEMENT OF SHRI SATENDRA YADAV, TAKEN NOTE BY THE LD. CI T(A) ALWAR IN HIS OWN CASE, HOWEVER THERE WAS NO CROSS EXAMINAT ION PROVIDED TO THE ASSESSEE OF SHRI SATENDRA YADAV. THUS, HE HELD TH AT THERE WAS NOTHING ON RECORD WHICH CAN PROVE THAT ASSESSEE HAD CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF INC OME. ACCORDINGLY, HE DELETED THE SAID ADDITION. 8. BEFORE US THE LD. SR. DR SUBMITTED THAT THE AO HA S ADDED THE AMOUNT AS UNEXPLAINED CASH CREDIT U/S 68 ON THE GROUND THAT THE PARTY TO WHOM SALE WAS MADE, HAD NOT SHOWN THE SAID A MOUNT IN ITS LEDGER ACCOUNT AND THIS FACT HAS BEEN DULY NOTED BY TH E LD. CIT (A) ALWAR IN THE CASE OF THE SAID PARTY. THE ADDITION WHIC H HAS MADE BY THE AO HAS NOT BEEN CHALLENGED BY THE ASSESSEE AND THE REFORE, IT HAS ATTAINED FINALITY. THIS GOES TO SHOW THAT THE THEORY OF S ALES GIVEN BY THE ASSESSEE HAS NOT BEEN FOUND TO BE CORRECT IN THE QU ANTUM PROCEEDINGS. THUS, PENALTY HAS RIGHTLY BEEN INITIATED AND LEVIED ON SUCH AN ADDITION. ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 11 9. ON THE OTHER HAND, LD. COUNSEL FOR ASSESSEE , SHRI BINOD KUMAR BINDAL SUBMITTED THAT, HERE IN THIS CASE ALREADY THE SAID AMOUNT STANDS CREDITED AS SALES IN THE TRADING ACCOUNT AND ONCE IT HAS BEEN SHOWN AS SALES THEN IT IS AUTOMATICALLY RECKO NED AS INCOME OF THE ASSESSEE. THE FACTUM OF SALE HAS BEEN PROVED B Y THE ASSESSEE CONCLUSIVELY WHICH IS EVIDENT FROM THE VARIOUS EVIDE NCES FILED BEFORE THE AO IN THE QUANTUM PROCEEDINGS AND ALSO BEFORE THE L D. CIT (A) IN THE PENALTY PROCEEDINGS. IT IS AN UNDISPUTED FACT THAT TH E SALES HAVE BEEN MADE AGAINST C FORM AND THIS SALE HAS BEEN ACCEPTED BY THE SALES TAX DEPARTMENT AND IS ALSO APPEARING AND ACCOUN TED FOR IN THE REGULAR BOOKS OF ACCOUNTS. ONCE THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED, THIS INTER-ALIA MEANS THAT THE ENTIRE PURCHASES AND GROSS PROFIT STANDS ACCEPTED AND ONCE THAT IS SO, THE SALES CA NNOT BE DISTURBED BY HOLDING THAT A PART OF THE SALE IS UNEXPL AINED, WHICH WARRANTS ANY KIND OF SEPARATE ADDITION. HE SUBMITTED THAT, EVEN THOUGH ASSESSEE MAY NOT HAVE FILED THE APPEAL, IT IS AL WAYS OPEN FOR THE ASSESSEE TO CHALLENGE THE FINDING GIVEN IN THE QUAN TUM SIDE DURING THE COURSE OF THE PENALTY PROCEEDINGS AND THIS CANNOT BE THE GROUND FOR LEVY OR CONFIRMING THE PENALTY. 10. APART FROM THE AFORESAID SUBMISSIONS, HE ALSO SUBMITTED THAT HERE IN THIS CASE THE AO HAS NOT SPECIFIED THE CHARGE U NDER WHICH HE ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 12 WANTED TO INITIATE THE PENALTY PROCEEDINGS AND EVEN IN THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C), THE RELEVANT CLAUSE HAS NOT BEEN STRUCK OFF. HE POINTED OUT THAT, NOW IT IS QUITE SETTLED PR OPOSITION BY VARIOUS COURTS THAT IF AO HAS NOT SPECIFIED THE CHARGE AT THE TIME OF INITIATION OR SHOW CAUSE NOTICE, THEN HE CANNOT IMPOSE PENALTY FOR ALTOGETHER DIFFERENT CHARGE. IN SUPPORT HE HAS RELIED U PON THE JUDGMENT OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTOR (2013) 359 ITR 565 ; CIT VS . SSAS EMERALD MEADOWS (2016)73 TAXMANN.COM 248(SC). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS. HERE IN THIS CASE THE ADDITION HAS BEEN MADE BY THE AO FOR SUMS AGGREGATING TO RS. 41,72,465/- ON ACCOUNT OF SALES MADE TO THE TWO PARTIES IN CASH ON THE GROUND THAT SAME IS UNEXPLAINED CASH CREDIT UNDER THE DEEMING PROVISIONS OF SECTION 68. AS DISCUSSED IN THE FOREGOI NG PARAGRAPHS, THE ASSESSEE HAD SHOWN FOLLOWING SALES OF CERAMIC TILES TO TWO PARTIES:- - - -- . - ~ --- S.NO NAME OF PARTY OPENING SALES CASH CHEQUES CLOSI NG BALANCE RECD. RECD./ BALANCE I TRANSFER 1 . SHIVAM EXPORTS (1,19,305) 27,02,939 20,15,500 5 ,11,159 56,975 2. SATENDRA YADAV - 28,73,783 21,56,965 - 7,16,818 TOTAL (1,19,305) 55,76,722 41,72,465 5,11,159 7,73,793 ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 13 THE AO HAS ON THE BASIS OF PAYMENT SHOWN BY M/S. SHIV AM EXPORTS TO THE ASSESSEE IN ITS BOOKS OF ACCOUNTS HAS COME TO TH E CONCLUSION THAT THE ASSESSEE HAS NOT MADE ANY SALES, ALBEIT IT IS UNEXPLAINED MONEY OR UNACCOUNTED CASH INTRODUCED BY THE ASSESSEE I N ITS BOOKS OF ACCOUNTS AS SALES. FROM THE PERUSAL OF THE IMPUGNED OR DERS, IT IS QUITE OSTENSIBLE THAT IN SUPPORT OF THE SALES MADE BY THE ASSES SEE TO THESE PARTIES, ASSESSEE HAS PRODUCED BILLS/ INVOICES REGAR DING SALE OF CERAMIC TILES; COPIES OF VAT RETURN WHERE THIS SALE IS DULY REFLECTED AND SALES TAX DEPOSIT CHALLANS ON SUCH SALES; BANK STATEMEN T WHERE THE SALE PROCEEDS HAS BEEN DEPOSITED DULY TALLYING WITH BA NK BOOK AND CASH BOOK; LEDGER ACCOUNTS OF THE PARTIES, ETC. WITHOU T FINDING ANY FAULT OR DISCREPANCY IN THESE DOCUMENTS, AO CHOSE TO RE LY UPON THE BOOK OF THE THIRD PARTY, WITHOUT HIMSELF CARRYING OUT A NY CROSS EXAMINATION FROM THE SAID PARTY OR CARRYING OUT ANY F RUITFUL INQUIRY. IF THE AO IS RELYING UPON ENTRIES MADE IN THE BOOKS OF AC COUNT OF THE THIRD PARTY FOR DISCARDING ALL THE RELEVANT EVIDENCES OF THE ASSESSEE, THEN ONUS IS VERY HEAVY UPON THE AO TO EXAMINE THE VE RACITY OF THE ENTRIES MADE BY THE THIRD PARTY, WHETHER IT IS TENABLE IN WAKE OF THE EVIDENCES FILED BY THE ASSESSEE OR NOT. APART FROM TH AT, IN THE REGULAR BOOKS OF ACCOUNTS AND AS PER THE SALE BILL THE AMOUN T HAS BEEN DULY SHOWN ON THE CREDIT SIDE OF THE TRADING ACCOUNT AS SALE S IS A TAXABLE RECEIPT OF THE ASSESSEE. IF THE AMOUNT HAS BEEN SHOWN AS TAXABLE ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 14 RECEIPT, WE ARE UNABLE TO UNDERSTAND AS TO HOW SUCH A SALE HAS BEEN ADDED UNDER THE DEEMING PROVISION OF SECTION 68 WHEN NOTHING HAS BEEN BROUGHT ON RECORD THAT SALES IS FICTITIOUS. MORE S O IN THIS CASE WHEN, PURCHASES, OPENING STOCK AND DIRECT EXPENSES O N DEBIT SIDE AND GROSS SALES, CLOSING STOCK ON CREDIT SIDE AND BALANCI NG FIGURE OF GROSS PROFIT AND G.P. RATE HAS NOT BEEN DISTURBED; AND BOOKS OF ACCOUNTS, TRADING RESULTS AND OTHER EVIDENCES HAVE NEITHER BEEN R EJECTED NOR HAS ANY DISCREPANCY BEEN FOUND. HERE THE NATURE OF CREDIT IS SALES AND THE ONUS THAT LIED UPON THE ASSESSEE TO PROVE THE SOURCE OF THE SALE HAS BEEN PROVED BY PRODUCING THE SALE BILLS AGAINST WHIC H IT HAS RECEIVED THE AMOUNT AND HAS SHOWN IT AS PART OF ITS GROSS INCOME . ON THESE FACTS, IT CANNOT BE A SATISFACTION EITHER FOR INITIATION OR FOR LEVY OF PENALTY U/S 271(1) (C) UNDER ANY OF THE LIMB OF THE C HARGE. 12. SO FAR AS THE ARGUMENTS TAKEN FROM THE SIDE OF THE REVENUE THAT, SINCE THE FINDINGS GIVEN IN THE QUANTUM SIDE HAS ATTAINED FINALITY AND THEREFORE, PENALTY ON SUCH ADDITION IS JUSTIFIED AUTOMATICALLY; WE ARE UNABLE TO SUBSCRIBE TO THIS VIEW, BECAUSE IT IS WEL L SETTLED PRINCIPLE THAT PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS AND THE ASSESSEE IN THE PENALT Y PROCEEDINGS MAY ADDUCE ANY FRESH EVIDENCE OR MAY RELY ON SAME M ATERIAL OR THE EVIDENCE TO PROVE THAT HE IS NOT GUILTY OF EITHER FURNI SHING OF INACCURATE PARTICULARS OF INCOME OR FOR CONCEALMENT OF INCOME. HERE ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 15 THE ENTIRE EXPLANATION AND EVIDENCE FILED BY THE ASSESS EE IS NEITHER BEEN FOUND TO BE INCORRECT NOR HAS BEEN PROVED TO BE INCORRECT ON THE BASIS OF ANY MATERIAL ON RECORD, BECAUSE THE INFORMA TION AND THE GENUINENESS OF THE ENTRIES IN THE BOOKS OF ACCOUNTS OF THE THIRD PARTY HAS NOT BEEN PUT TO VERIFICATION OR CROSS EXAMINATION BY THE AO. SIMPLY RELYING ON THE ACCOUNT OF THE THIRD PARTY CANNOT BE THE BASIS FOR MAKING ANY ADDITION IN THE HANDS OF THE ASSESSEE LEAVE ALONE LEVYING THE PENALTY U/S 271(1)(C). THUS, ON MERITS W E DO NOT FIND ANY REASON TO DEVIATE FROM THE CONCLUSION ARRIVED AT BY THE LD. CIT (A) FOR DELETING THE SAID PENALTY. ACCORDINGLY, THE SAME IS AF FIRMED AND RESULTANTLY APPEAL FILED BY THE REVENUE IS DISMISSED. SINCE WE HAVE ALREADY DECIDED THE ISSUE ON MERITS WE ARE NOT GOING I NTO THE LEGAL ISSUE RAISED BY THE LD. COUNSEL. 13. IN THE RESULT APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2018. SD/- SD/- (O.P. KANT) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/01/2018 VEENA ITA NO. 6634/DEL/2016 ACIT VS. M/S. ANANT RAJ INDUSTRIES LTD. 16 COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI