M/s Mukand Cold Storage, Yamunanagar V. ITO, Yamunanagar

ITA 676/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0008 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-07-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 25-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: S K MUKHI
• Keywords: Income from undisclosed sources; Source of fund; Question of law
• Section: 143(3); 68; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NOS. 676 & 677/CHD/2014 ASSESSMENT YEARS: 2003-04 & 2004-05 M/S MUKUND COLD STORAGE, VS. THE ITO, WARD-4 YAMUNANAGAR YAMUNANAGAR PAN NO. AABFM9928Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K MUKHI RESPONDENT BY : SH. S.K.MITTAL DATE OF HEARING : 22.02.2016 DATE OF PRONOUNCEMENT : 29.04.2016 ORDER PER H.L.KARWA, VP THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE CONSOLIDATED ORDER OF CIT(A)-KARNAL DATED 11.12.2013 CONFIRMING THE PENALTY OF RS. 8,04,648/- AND RS. 7,48,496/- LEVIED US/ 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') FOR THE ASSESSMENT YEARS 2003- 04 AND 2004-05. 2. THE ISSUES INVOLVED IN THESE TWO APPEALS ARE SIM ILAR AND, THEREFORE, FOR THE SAKE OF CONVENIENCE THE APPEALS ARE BEING DECID ED BY THIS COMMON ORDER. FIRSTLY, I WILL TAKE-UP FACTS OF THE CASE OF THE AS SESSMENT YEAR 2003-04. 3. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS RUNNIN G A COLD STORAGE. ON PERUSING THE CAPITAL ACCOUNT OF THE PARTNERS, THE A SSESSING OFFICER NOTICED THAT 2 ADDITIONS AMOUNTING TO RS. 11 LAKHS WERE CREDITED I N THE CAPITAL ACCOUNT OF FOUR PARTNERS NAMELY S/SH. P.P. SINGH, BALBIR SINGH, PAR AMJIT SINGH AND SMT. JASMEET KAUR. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH INFORMATIO N AND DOCUMENTARY EVIDENCE IN SUPPORT OF SOURCES OF ADDITION OF RS. 11 LAKHS I N THE CAPITAL ACCOUNT OF FOUR PERSONS. AFTER CONSIDERING THE REPLY OF THE ASSESSE E, THE ASSESSING OFFICER HELD THAT THE FIRM HAD INTRODUCED ITS UNACCOUNTED MONEY IN THE NAME OF THE PARTNERS. CONSEQUENTLY, A SUM OF RS. 11 LAKHS WAS ADDED AS AN UNEXPLAINED INCOME IN THE HANDS OF THE FIRM. THE SAID ADDITION WAS MADE IN TH E ASSESSMENT FRAMED U/S 143(3) OF THE ACT ON 30.12.2005. THE ASSESSEE CHAL LENGED THE ADDITION IN APPEAL BEFORE THE CIT(A), WHO VIDE HIS ORDER DATED 19.12.2 007 UPHELD THE ADDITION. IN SECOND APPEAL, THE TRIBUNAL VIDE ITS ORDER DATED 31 .7.2008, SET ASIDE THE ORDER OF THE CIT(A) AND REMANDED THE MATTER TO THE CIT(A) WI TH THE DIRECTION TO DECIDE THE APPEAL OF THE ASSESSEE AFRESH IN ACCORDANCE WIT H LAW. IN COMPLIANCE OF THE ORDER OF THE TRIBUNAL, THE CIT(A) PASSED A FRESH O RDER ON 13.3.2009, WHEREBY THE ADDITION HAS BEEN SUSTAINED AGAIN. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER OF THE CIT(A) BEFORE THE TRIBUNAL IN ITA NOS. 608 AND 609/CHD/2009 FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 AND THE TR IBUNAL VIDE ITS ORDER DATED 1.6.2010 DISMISSED THE APPEAL OF BOTH THE YEARS. TH E ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND DE SPITE GIVING SEVERAL OPPORTUNITIES TO THE ASSESSEE OF BEING HEARD NO REP LY WAS FILED. THE ASSESSING OFFICER OBSERVED THAT THE APPEAL OF THE ASSESSEE WA S ALREADY DECIDED BY THE TRIBUNAL VIDE ORDER DATED 1.6.2010 IN ITA NOS. 608 & 609/CHD/2009 (FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05) AND, THEREFOR E, HE HELD THAT THE ASSESSEE HAS DELIBERATELY FURNISHED THE INACCURATE PARTICULA RS OF INCOME AND, HENCE, HE HELD THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S 27 1(1)(C) OF THE ACT. 4. THE ASSESSING OFFICER IMPOSED A PENALTY OF RS. 8 ,04,648/- WHICH IS 200% OF THE TAX SOUGHT TO BE EVADED. 3 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND THE LD. CIT( A) CONFIRMED THE PENALTY, OBSERVING AS UNDER:- 6.00 IN ORDER TO APPRECIATE THE FACTS OF THE CASE, IT IS IMPORTANT TO REFER TO THE ORDER OF HON'BLE TRIBUNAL IN APPEAL NO. ITA 608 & 609/CHD/2009, A.Y. 2003-04 & 2004-05 DATED 01.06.20 10 IN WHICH THE HON'BLE TRIBUNAL HAD DISMISSED THE APPEAL OF TH E APPELLANT AS THE APPELLANT HAD NOT PRODUCED THE BOOKS OF ACCOUNT S BEFORE THE LOWER AUTHORITIES AND HAD NOT PRODUCED THE CONCERNE D PARTNERS WHOSE CASH DEPOSITS WERE IN DISPUTES DESPITE THE CI T(A) PROVIDING SUFFICIENT OPPORTUNITIES. FURTHER, THE HON'BLE TRIBUNAL ALSO NOTED THAT THE APPELLANT HAD NOT FURNISHED ANY MATERIAL T O THE SATISFACTION OF INCOME TAX AUTHORITIES TO EXPLAIN T HE SOURCES OF FUNDS IN THE HANDS OF THE ASSESSEE FIRM. TAKING INT O ACCOUNT THESE FACTS, THE HON'BLE TRIBUNAL DISMISSED THE APPEALS O F THE APPELLANT FOR THE 2 ASSESSMENT YEARS, IN THE QUANTUM PROCEEDI NGS . THE RELEVANT PARAS 4, 5, 6, 7 AND 8 FROM THE ORDER OF T HE HON'BIE TRIBUNAL ARE REPRODUCED BELOW:- '4. WE HAVE EXAMINED THE AFORESAID PLEA SET UP BY T HE APPELLANT. IN PRINCIPLE, WE ARE IN AGREEMENT WITH T HE PLEA OF THE ASSESSEE THAT WHERE A PARTNER ADMITS TO HAVE MADE DEPOSITS WITH THE FIRM, THEN AS FAR AS THE FIRM IS CONCERNED, EVEN IF THE SOURCE OF THE PARTNER IS HELD TO BE UNE XPLAINED, SUCH AMOUNT CANNOT BE SUBJECTED TO TAX IN THE HANDS OF THE ASSESSEE FIRM. SO HOWEVER, IN THE PRESENT CASE, THE FACTS STAND ON A DIFFERENT FOOTING. FIRSTLY, THE PROPOSIT ION ADVANCED BY THE APPELLANT IS BASED ON A PREMISE THA T THE PARTNERS CONCERNED HAVE CONFIRMED THE INTRODUCTION OF CASH BY THEM. IN THE PRESENT CASE, THE FINDING OF THE ASSESSING O FFICER IN THE ASSESSMENT ORDER IS THAT THE PARTNERS., AT N O STAGE OF THE PROCEEDINGS HAVE EVER CONFIRMED THE INTRODUC TION OF CASH BY THEM AND EVEN BEFORE THE CIT(APPEALS), A S IS EVIDENT FROM THE EXTRACT REPRODUCED ABOVE, THE ASSE SSEE 4 DID NOT PRODUCE ANY CONFIRMATION FROM THE CONCERNED PARTNERS. IN FACT, THE CIT(A) ALLOWED OPPORTUNITY T O THE ASSESSEE TO PRODUCE THE PARTNERS SO THAT THE ACTUAL POSITION COULD BE ASCERTAINED. HOWEVER, THERE WAS N O COMPLIANCE BY THE ASSESSEE TO THE EXERCISE CARRIED OUT BY THE CIT (APPEALS). WE HAVE ALSO NOTED THE OBSERVATI ON OF THE CIT(APPEALS) THAT MORE THEN ENOUGH OPPORTUNITIE S WERE ALLOWED TO THE ASSESSEE TO PRODUCE REQUISITE EVIDENCE, WHICH HAS NOT BEEN DONE. HAVING REGARD TO THE FACT SITUATION NOTED BY THE CIT(APPEALS) T WE ARE SATISFIED THAT ENOUGH OPPORTUNITIES WERE PROVIDED BY THE CIT(APPEALS). THEREFORE, IN OUR VIEW, THE PROPOSITI ON CANVASSED BY THE ASSESSEE CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. 5. IN THE JUDGEMENT OF M/S METAL & METALS INDIA ( SUPRA), THE PARTNER OF THE FIRM HAD CLAIMED TO HAVE DEPOSIT ED THE MONEY WITH THE FIRM, WHICH WAS TREATED AS UNEXPLAIN ED BY THE ASSESSING OFFICER. THE HON'BLE HIGH COURT NOTED THAT THE FIRM GAVE EXPLANATION ABOUT THE SOURCE OF MONEY , NAMELY ITS PARTNER, AND THE SAID PARTNER HAD ADMITT ED HAVING DEPOSITED MONEY WITH THE FIRM. UNDER THESE CIRCUMSTANCES, IT WAS HELD THAT NO ADDITION IS PERM ISSIBLE IN THE HANDS OF THE ASSESSES FIRM. CLEARLY, THE FAC TUAL MATRIX IN THE PRESENT CASE IS TO THE CONTRARY. HERE IN, THE CONCERNED PARTNERS HAVE NOT MADE ANY CONFIRMATION O F HAVING MADE CASH DEPOSITS WITH THE ASSESSEE FIRM AN D THERE IS NO NEGATION OF SUCH A FINDING BY THE ASSESSEE. T O THE SIMILAR EFFECT IS THE FACT POSITION IN THE CASES OF RAMESH DASS SURESH PAL CHEEKA (SUPRA) AND METACHEM INDUSTR IES (SUPRA) RELIED UPON BY THE APPELLANT. THE SAID CASE S ARE DISTINGUISHABLE ON FACTS AND THEREFORE, THE SAME DO NOT HELP THE CASE OF THE ASSESSEE. 6. IN SO FAR AS THE EXPLANATION FURNISHED BY THE ASSESSEE IS CONCERNED, IT IS NOTICED THAT BEFORE TH E TRIBUNAL NO FRESH MATERIAL OR EVIDENCE HAS BEEN FILED. IT IS EVIDENT THAT THE ONLY PLEA RAISED IS THAT THE CA SH DEPOSITS BY THE PARTNERS HAVE BEEN MADE OUT OF 5 WITHDRAWALS MADE BY THEM FROM THE ASSESSEE FIRM IN EARLIER YEARS FROM ASSESSMENT YEAR 1996-97 TO 1999- 2000. THIS EXPLANATION HAS NOT BEEN ACCEPTED BY THE LOWER AUTHORITIES., PRIMARILY ON THE GROUND THAT THE BOOK S OF ACCOUNT OF THE RELEVANT PERIOD HAVE NOT BEEN PRODUC ED AND EVEN THE CONCERNED PARTNERS WERE NOT PRODUCED, INSPITE OF SUFFICIENT OPPORTUNITIES ALLOWED BY THE CIT(APPEALS). IT IS EVIDENT FROM PARAS 5 & 6 OF THE ORDER OF THE CIT (APPEALS) THAT NO MATERIAL HAS BEEN FURNISHED TO THE SATISFACTION OF THE INCOME TAX AUTHORITIES T O EXPLAIN THE SOURCE OF FUNDS IN THE HANDS OF THE ASSESSES FI RM. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO AFFIR M THE ORDER OF THE CIT(APPEALS) UPHOLDING THE ADDITION OF RS. 11,00,000/- AS UNEXPLAINED INCOME OF THE ASSESSEE F IRM IN TERMS OF SECTION 68 OF THE ACT. IN THE RESULT, APPE AL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 IS DISMISSED. 7. SINCE THE FACTS AND CIRCUMSTANCES IN THE ASSESSMENT YEAR 2004-05 ARE IDENTICAL, OUR DECI SION FOR ASSESSMENT YEAR 2003-04 APPLIES MUTATIS MUTANDI S IN THE OTHER APPEAL ALSO. 8. RESULTANTLY, BOTH THE APPEALS OF TH E ASSESSEE ARE DISMISSED.' ( EMPHASIS SUPPLIED) 6.01 FURTHER, ON THE MISCELLANEOUS APPLICATION FILE D BY THE APPELLANT, THE HON'BLE TRIBUNAL DISMISSED THE 2 M.A S. VIDE ITS ORDER IN M.A. NOS. 55 & 56/CHD/2010 IN ITA NOS. 608 & 609/CH D/2009 DATED 16.04.2013 FOR THE A.YS. 2003-04 & 2004-05 UPHOLDING ITS DECISION IN ITS EARLIER NO. ITA NOS. 608 & 609/CHD/2009 DATED 01.06.2010 THE RELEVANT PARA 5 & 6 OF THE ORDER IS REPRODUCED BELOW:- '5. ON THE PERUSAL OF THE RECORD AND THE ORDE R PASSED BY E TRIBUNAL DATED 1.6.2010 IT TRANSPIRES THAT THE CONTENTION OF THE APPLICANT THAT THE AMOUNT INTRODU CED BY THE PARTNERS CAPITAL COULD NOT BE ASSESSED IN THE H ANDS OF THE APPLICANT FIRM IN VIEW OF THE JUDGMENT OF THE H ON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. 6 METACHEM INDUSTRIES [245 ITR 160 (MP)] AND OTHER JUDGMENTS WERE REFERRED TO BY THE TRIBUNAL UNDER PA RA 3 AT THE BOTTOM OF PAGE 4 AND PAGE 5 OF THE ORDER OF THE TRIBUNAL THE ISSUE HAS BEEN ADJUDICATED UPON BY NOT ING THE FACT THAT WHERE A PARTNER ADMITS TO HAVE MADE D EPOSITS WITH THE FIRM, THEN AS FAR AS THE FIRM IS CONCERNED , EVEN IF THE SOURCE OF THE PARTNER IS HELD TO BE UNEXPLAINED , SUCH AMOUNT CANNOT BE SUBJECTED TO TAX IN THE HANDS OF T HE ASSESSES FIRM. THE TRIBUNAL FURTHER NOTED THAT THE FACTS OF THE CASE STOOD ON DIFFERENT FOOTINGS AND THE ISSUE WAS THEREAFTER DELIBERATED UPON VIDE PARAS 4 TO 6 WHEREIN THE EXPLANATION OF THE APPLICANT VIS-A-VIS THE SOURCE O F INTRODUCTION OF CASH IN THE CAPITAL ACCOUNTS OF THE PARTNERS WAS REJECTED AS THE ASSESSES HAD FAILED TO PRODUCE THE BOOKS OF ACCOUNT OR EVEN THE CONCERNED PARTNERS WERE NOT PRODUCED DESPITE OPPORTUNITIES BE ING ALLOWED BY THE CIT (APPEALS) NO FURTHER EVIDENCE WA S FURNISHED BEFORE THE TRIBUNAL AND THE SAME HAS BEEN NOTED AND AN ADDITION OF RS. 11 LACS HAS BEEN UPHEL D BY THE TRIBUNAL. IN VIEW OF THE ABOVE SAID FACTS WE FI ND NO MERIT IN THE ALLEGATION MADE VIDE PARA 1, WHEREIN IT HAS BEEN ALLEGED THAT THE MATTER HAS BEEN WRONGLY DECID ED AGAINST THE APPLICANT FIRM AND RELIANCE FOR THAT HA S BEEN MADE ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT AND THE HON'BLE MADHYA PRADESH HIGH COURT. BOTH THE DECISIONS BEEN CONSIDERED BY THE TRIBUNAL WHILE ADJUDICATING THE ISSUE IN HAND AND THE RECOURSE MAD E BY THE APPLICANT VIDE PRESENT MISCELLANEOUS APPLICATIO N IS NOT SUSTAINABLE IN VIEW OF THE LIMITED MANDATE OF SECTI ON 254(2) OF THE ACT. THE TRIBUNAL HAS LIMITED POWER O F CORRECTING, ANY APPARENT MISTAKE OF RECORD WHILE DE CIDING THE MISCELLANEOUS APPLICATION FILED UNDER SECTION 2 54(2) OF THE ACT, FURTHER THE SECOND PLEA OF THE APPLICANT T HAT IT HAS NOT PROVIDED SUFFICIENT OPPORTUNITY OF HEARING IS N OT CORRECT AS IS APPARENT FROM THE OBSERVATIONS OF THE TRIBUNAL VIDE LATER PART OF PARA 3 WHEREIN SUBMISSI ONS OF THE APPLICANT HAVE BEEN NOTED AND EVEN RELIANCE PLA CED UPON BY THE LEARNED A.R. FOR THE APPLICANT HAD BEEN 7 COMMENTED UPON. IN TOTALITY OF THE FACTS AND CIRCUM STANCES OF THE CASE, WE DISMISS THE PRESENT MISCELLANEOUS APPLICATIONS FILED BY THE APPLICANT. 6. IN THE RESULT, BOTH THE MISCELLANEOUS APPLICAT IONS FILED BY THE APPLICANT ARC DISMISSED.' (EMPHASIS SUPPLIED) 6.02 ACCORDINGLY, THE HON'BLE TRIBUNAL, WHICH IS THE FINAL FACT FINDING AUTHORITY, IN ITS 2 ORDERS I.E ITA NOS. 608 & 609/CHD/2009 DATED 01.06.2010 AND M.A. NOS. 55 & 56/CHD/2010 IN ITA NOS. 608 & 609/CHD/2009 DATED 16.04.2013 FOR THE A.YS. 2003-04 & 2004-05 HAD UPHELD THE ADDITION OF RS. 11 LACS IN T HE HANDS OF THE APPELLANT AS THE APPELLANT HAD FAILED TO PROVIDE TH E SOURCE OF INTRODUCTION OF CASH IN THE CAPITAL ACCOUNTS OF THE PARTNERS AND AS THE APPELLANT HAD FAILED TO PRODUCE THE BOOKS OF AC COUNT OR EVEN THE CONCERNED PARTNERS WERE NOT PRODUCED DESPITE OPPORT UNITIES BEING ALLOWED BY THE CIT (APPEALS). NO FURTHER EVIDENCE WAS FURNISHED BEFORE THE TRIBUNAL. EVEN DURING THE PENALTY PROCEEDINGS BEFORE THE A.O., THE APPELLANT HAD NOT FILED ANY REPLY DES PITE BEING PROVIDED OPPORTUNITIES. ACCORDINGLY, THE PENALTY OF RS. 8,04,64S/- AND RS. 7,48,496/- LEVIED FOR A.Y. 2003-04 & 2004-0 5 RESPECTIVELY ARE UPHELD. 6. I HAVE HEARD THE RIVAL SUBMISSIONS. SHRI S. K. M UKHI, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE TH E LOWER AUTHORITIES. HE FURTHER SUBMITTED THAT DURING THE ORIGINAL ASSESSME NT PROCEEDINGS FOR ASSESSMENT YEAR 2003-04 BEFORE THE ASSESSING OFFICER, THE ASSE SSEE FIRM PRODUCED BOOKS OF ACCOUNT FOR ASSESSMENT YEARS 1995-96, 1996-97 AND 1 997-98 AND ALSO COPY OF THE LEDGER ACCOUNT OF ALL THE FOUR PARTNERS THROUGH ITS C.A. SHRI SUBASH BHATIA. HE FURTHER POINTED OUT THAT COPY OF THE LEDGER ACCO UNT OF THE PARTNERS WERE ALSO GIVEN DURING THE ASSESSMENT PROCEEDINGS DURING ASSE SSMENT YEAR 2003-04 AND WRITTEN SUBMISSION TO THIS EFFECT WAS ALSO FILED ON 19.12.2005. SHRI S. K. MUKHI, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BOO KS OF ACCOUNT WERE BEING PREPARED BY SHRI SUBHAH BHATIA, CA WHOM THE BILLS A ND REQUISITE VOUCHERS WERE 8 SENT REGULARLY, WHO HAS NOW EXPIRED ON 10.11.2013. AS REGARDS THE SOURCE OF CASH INTRODUCED BY THE PARTNERS IN THE ASSESSEES F IRM, SHRI S. K. MUKHI LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THE FOU R PARTNERS INTRODUCED CAPITAL IN THE ASSESSEE FIRM AS PER THE WITHDRAWALS FROM VA RIOUS FIRMS AS WERE EXPLAINED BEFORE THE AUTHORITIES BELOW. ACCORDINGLY, HE SUBM ITTED THAT NEITHER THERE WAS CONCEALMENT OF FACT NOR THE FIRM WAS LIABLE FOR ANY ADDITION ON ACCOUNT OF INTRODUCTION OF CAPITAL BY THE PARTNERS. HE, THERE FORE, SUBMITTED THAT NO PENALTY US/ 271(1)(C) OF THE ACT IS LEVIABLE IN THIS CASE. 7. WITHOUT PREJUDICE TO ABOVE, SHRI S.K. MUKHI, LD . COUNSEL FOR THE ASSESSEE AS AN ALTERNATIVE SUBMISSION STATED THAT I N THIS CASE THE ASSESSING OFFICER HAS IMPOSED A PENALTY OF RS. 8,04,648/- WH ICH IS 200% OF THE TAX SOUGHT TO BE EVADED AND THE SAME BEING ON HIGHER SIDE MAY BE REDUCED TO MINIMUM LEVIABLE PENALTY I.E @ 100%, WHICH COMES TO RS. 4, 02,324/-. ON THE OTHER HAND, SHRI S. K. MITTAL, LD. DR SUBMITTED THAT IN THIS CASE, THE ADDITION HAS BEEN CONFIRMED BY THE TRIBUNAL. FURTHER, THE MISC. APPLICATION SUBMITTED BY THE ASSESSEE IN THIS CASE HAS ALSO BEEN REJECTED BY THE TRIBUNAL. THE APPEAL FILED BY THE ASSESSEE BEFORE THE HON'BLE PUNJAB & HARYANA H IGH COURT HAS ALSO BEEN REJECTED ON 18.3.2014 IN ITA NO. 266 OF 2013. SHRI S. K. MITTAL, LD. DR POINTED OUT THAT HON'BLE HIGH COURT HAS OBSERVED IN PARA 13 AS UNDER:- 13. FROM THE ABOVE, IT EMERGES THAT THE MONEY INTR ODUCED IN THE NAMES OF THE PARTNERS WAS INFACT EARNED BY THE FIRM FROM ITS BUSINESS OF COLD STORAGE AND WAS ITS UNACCOUNTE D INCOME. FURTHER, NO MATERIAL HAD BEEN PRODUCED TO SHOW THAT PARTNERS HAD INDEPENDENT SOURCE OF INCOME. THE ASSESSEE-FIRM INSPITE OF SEVERAL OPPORTUNITIES HAVING BEEN PROVIDED TO IT TO PRODUCE THE PARTNERS SO THAT CONFIRMATION OF INTRODUCTION O F CASH BY THEM COULD BE VERIFIED, HAD FAILED TO COMPLY WITH I T. FURTHER, THE ASSESSEE HAD NOT FURNISHED THE ADDRESSES OF THE FARMERS 9 FROM WHOM COLD STORAGE RENT IS ALLEGED TO HAVE BEEN RECEIVED AS THE ASSESSEE HAD BEEN CARRYING ON THE BUSINESS O F COLD STORAGE FOR THE LAST AT LEAST MORE THAN 10 YEARS. M OREOVER, NO RECEIPTS IN SUPPORT OF THE ALLEGED RECEIPT OF RENT FROM THE SAID FARMERS HAD BEEN PRODUCED. THE PLEA OF THE ASSESSEE THAT IT WAS THE AMOUNT OF THE PARTNERS AND NOT OF THE FIRM REMAINED UNSUBSTANTIATED. IN VIEW OF THE CONCURRENT FINDINGS OF FACT RECORDED BY THE ASSESSING OFFICER, THE CIT(A) AND T HE TRIBUNAL, WHICH HAVE NOT BEEN SHOWN TO BE PERVERSE OR ILLEGAL IN ANY MANNER, NO SUBSTANTIAL QUESTION OF LAW ARISE S. THE APPEALS ARE ACCORDINGLY DISMISSED. 8. FROM THE ABOVE IT EMERGES THAT THE MONEY INTRODU CED IN THE NAME OF THE PARTNERS WAS IN FACT EARNED BY THE FIRM FROM ITS BU SINESS OF COLD STORAGE AND WAS ITS UNACCOUNTED INCOME. HOWEVER, NO MATERIAL HAS BE EN PRODUCED THAT PARTNERS HAS INDEPENDENT SOURCE OF INCOME. SHRI S. K. MITT AL, LD. DR SUBMITTED THAT IN VIEW OF THE CATEGORICAL FINDINGS GIVEN BY THE HON' BLE JURISDICTIONAL HIGH COURT TO THE EFFECT THAT MONEY INTRODUCED IN THE NAME OF THE PARTNERS WAS EARNED BY THE FIRM FROM ITS BUSINESS OF COLD STORAGES AND WAS ITS UNACCOUNTED INCOME. ACCORDINGLY, TO LD. DR IN THAT VIEW OF THE MATTER N O SECOND VIEW CAN BE TAKEN IN THIS MATTER. HE FURTHER POINTED OUT THAT THE HON 'BLE JURISDICTIONAL HIGH COURT HAS ALSO OBSERVED THAT NO MATERIAL HAD BEEN PRODUCE D BY THE ASSESSEE FIRM TO SHOW THAT PARTNERS HAD INDEPENDENT SOURCE OF INCOM E. THUS, THE HON'BLE HIGH COURT DOUBTED THE CREDITWORTHINESS OF THE PARTNERS AND ALSO THE GENUINENESS OF THE TRANSACTIONS. IN OTHER WORDS, PARTNERS HAVE NO INDEPENDENT SOURCE OF INCOME, THEREFORE, THE HON'BLE HIGH COURT HAS CLEAR LY HELD THAT THE MONEY INTRODUCED IN THE NAMES OF THE PARTNERS WAS UNACCOU NTED INCOME OF THE FIRM FROM ITS BUSINESS OF COLD STORAGES. SHRI S.K. MITT AL, LD. DR FURTHER SUBMITTED THAT IN THE CASE OF UOI VS. DHARMINDRA TEXTILES & P ROCESSORS (2008) 306 ITR 277 (SC), IT HAS BEEN HELD THAT PENALTY IS STRICTLY A CIVIL LIABILITY. HE THEREFORE, SUBMITTED THAT CIT(A) WAS JUSTIFIED IN CONFIRMING T HE IMPUGNED PENALTY. SHRI 10 S.K MITTAL, LD. DR ALSO RELIED ON THE JUDGEMENT O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ATUL MOHAN BINDAL (2008) 317 ITR 1 (SC) WHEREIN IT HAS BEEN HELD THAT PENALTY U/S 271(1)(C) IS NEITHER C RIMINAL NOR QUASI-CRIMINAL, ALBEIT A STRICT LIABILITY. 9. IT IS RELEVANT TO OBSERVE HERE THAT THE ORDER OF THE TRIBUNAL DATED 1.6.2010 PASSED IN QUANTUM APPEAL IN ITA NOS. 608 A ND 609/CHD./2009 RELATING TO ASSESSMENT YEARS 2003-04 AND 2004-05 WAS CHALLEN GED BY THE ASSESSEE BY WAY OF APPEAL BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA NOS. 266 & 267 OF 2013. THE HON'BLE JURISDICTIONAL HIGH COU RT UPHELD THE ADDITION OF RS. 11 LAKHS AND RS. 10,43,000/- INTRODUCED IN THE CAPI TAL ACCOUNT OF THE PARTNERS FOR THE TWO ASSESSMENT YEARS, I.E. 2003-04 AND 2004 -05. IN ITA NOS. 266 OF 2013, ONE OF THE SUBSTANTIAL QUESTIONS OF LAW INVOL VED WAS AS UNDER:- IV) WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE ITAT WAS JUSTIFIED IN CONCURRING WITH THE AUTHO RITIES BELOW AND THEREBY UPHOLDING THE ADDITION OF ` 11,00 ,000/- IN THE HANDS OF FIRM THOUGH THE MONEY BELONGED TO INDI VIDUAL PARTNERS AS WITHDRAWN BY THEM FROM THEIR ACCOUNT IN FIRM FOR EARLIER YEARS FOR WHICH AMPLE EVIDENCES WERE GIVEN IN THE FORM OF LEDGER ACCOUNTS AND THE BOOKS OF THE FIRM? THE HON'BLE HIGH COURT DECIDED THE ABOVE QUESTION A GAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE, OBSERVING AS UNDER:- 13. FROM THE ABOVE, IT EMERGES THAT THE MONEY INTR ODUCED IN THE NAMES OF THE PARTNERS WAS IN FACT EARNED BY THE FIRM FROM ITS BUSINESS OF COLD STORAGE AND WAS ITS UNACCOUNTE D INCOME. FURTHER, NO MATERIAL HAD BEEN PRODUCED TO SHOW THAT PARTNERS HAD INDEPENDENT SOURCE OF INCOME. THE 10 OF 11 ::: DOWNLOADED ON - 27-04-2016 16:20:04 ::: ITA NO.266 OF 2013 (O&M) 11 ASSESSEE-FIRM INSPITE OF SEVERAL OPPO RTUNITIES 11 HAVING BEEN PROVIDED TO IT TO PRODUCE THE PARTNERS SO THAT CONFIRMATION OF INTRODUCTION OF CASH BY THEM COULD BE VERIFIED, HAD FAILED TO COMPLY WITH IT. FURTHER, TH E ASSESSEE HAD NOT FURNISHED THE ADDRESSES OF THE FARMERS FROM WHOM COLD STORAGE RENT IS ALLEGED TO HAVE BEEN RECEIVED AS THE ASSESSEE HAD BEEN CARRYING ON THE BUSINESS OF COLD STORAGE FOR THE LAST AT LEAST MORE THAN 10 YEARS. MOREOVER, NO RECEIPTS IN SUPPORT OF THE ALLEGED RECEIPT OF RENT FROM THE SAID FARMERS HAD BEEN PRODUCED. THE PLEA OF THE ASSESSEE THAT IT WAS THE AMOUNT OF THE PARTNERS AND NOT OF THE FIRM REMAINED UNSUBSTANTIATED. IN VIEW OF THE CONCURRENT FINDINGS OF FACT RECORDED BY THE ASSESSING OFFICER, THE CIT(A) AND T HE TRIBUNAL, WHICH HAVE NOT BEEN SHOWN TO BE PERVERSE OR ILLEGAL IN ANY MANNER, NO SUBSTANTIAL QUESTION OF LAW ARISE S. THE APPEALS ARE ACCORDINGLY DISMISSED. 10. FROM THE ABOVE DECISION OF THE HON'BLE HIGH CO URT, IT IS CLEAR THAT MONEY INTRODUCED IN THE NAMES OF THE PARTNERS WAS EARNED BY THE FIRM FROM ITS BUSINESS OF COLD STORAGE SAND WAS ITS UNACCOUNTED I NCOME. THE HON'BLE HIGH COURT HAS ALSO OBSERVED THAT THE ASSESSEE FIRM FAIL ED TO PRODUCE ANY EVIDENCE TO SHOW THAT PARTNERS HAD INDEPENDENT SOURCE OF INCOME . THE HON'BLE HIGH COURT FURTHER OBSERVED THAT THE ASSESSEE HAD ALSO FAILED TO FURNISH THE ADDRESSES OF THE FARMERS FROM WHOM COLD STORAGE RENT WAS ALLEGED TO HAVE BEEN RECEIVED. THE ASSESSING OFFICER ALSO FAILED TO PRODUCE ANY RECEI PT IN SUPPORT OF THE ALLEGED RECEIPT OF RENT FROM THE SAID PARTNERS. IN THIS CA SE, THE MAIN PLEA OF THE ASSESSEE WAS THAT THE CASH DEPOSITS BY THE PARTNERS HAVE BEE N MADE OUT OF WITHDRAWALS MADE BY THEM FROM THE ASSESSEE FIRM IN EARLIER YE ARS FROM ASSESSMENT YEARS 1997-98 TO 1999-20009. THIS EXPLANATION HAS BEEN RE JECTED UP TO THE LEVEL OF THE TRIBUNAL AND THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONFIRMED THE ORDER OF THE TRIBUNAL PRIMARILY ON THE GROUND THAT BOOKS OF ACCOUNT OF THE ASSESSEE FOR RELEVANT PERIOD HAVE NOT BEEN PRODUCED AND EVEN THE EVIDENCE REGARDING INDEPENDENT SOURCE OF PARTNERS WERE NOT PRODUCED, I N SPITE OF SUFFICIENT 12 OPPORTUNITIES ALLOWED BY THE AUTHORITIES BELOW. IT IS TRUE THAT PENALTY US/ 271(1)(C) IS NOT A PENAL IN NATURE BUT STRICT CI VIL LIABILITY CONSEQUENTLY, AFTER INSERTION OF EXPLANATION TO SECTION 271(1)(C) OF THE ACT THE BURDEN HAS BEEN SHIFTED ON THE ASSESSEE TO SHOW THAT HE HAS NO T CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME. I MAY OBSERVE HERE THAT THE EXPLANATION GIVEN BY THE ASSESSEE REGARDING THE CA PITAL INTRODUCED BY THE PARTNERS HAS NOT BEEN ACCEPTED BY THE HON'BLE JURIS DICTIONAL HIGH COURT AND THE HON'BLE HIGH COURT HAS IN CLEAR TERMS HELD THAT THE MONEY INTRODUCED IN THE NAMES OF THE PARTNERS WAS IN FACT EARNED BY THE ASS ESSEE FIRM FROM ITS BUSINESS OF COLD STORAGES AND WAS ITS UNACCOUNTED INCOME. I T MAY ALSO BE RELEVANT TO OBSERVE HERE THAT NO FURTHER EVIDENCE WAS FURNISHED BEFORE THE TRIBUNAL. EVEN DURING THE PENALTY PROCEEDINGS BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAD NOT FILED ANY REPLY DESPITE BEING PROVIDED OPPORTUN ITY. AT THIS STAGE ALSO, NOTHING WAS FILED TO IMPROVE THE CASE. THUS, IT IS CLEAR THAT ASSESSEE WAS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. AS REGARDS T HE ALTERNATIVE CONTENTION OF SHRI S. K. MUKHI, LD. COUNSEL FOR THE ASSESSEE THA T THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) @ 200 % IS ON HIGHER SIDE. IT IS TRUE THAT THE MAXIMUM SHOULD BE RESERVED ONLY FOR E XEMPLARY BAD CASE . IT IS TRITE LAW THAT THE AUTHORITIES ARE NOT EMPOWERED TO LEVY MAXIMUM AMOUNT OF PENALTY WITHOUT INDEPENDENT EVALUATION AND APPRAISA L. IN THIS CASE THE ASSESSING OFFICER LEVIED HAS PENALTY @ 200% OF THE TAX SOUGHT TO BE EVADED. IN MY OPINION, THE POWER TO IMPOSE PENALTY SHOULD BE EXERCISED JUDICIOUSLY WITH DUE REGARDS TO ALL FACTS AND CIRCUMSTANCES OF EACH CASE AND NOT BE EXERCISED MECHANICALLY WITHOUT ASSIGNING ANY COGENT REASONS . THUS, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT CAS E AND ALSO THE SETTLED LEGAL POSITION, I REDUCE THE PENALTY TO RS. 4,02,624/-, WHICH IS 100% OF THE TAX SOUGHT TO BE EVADED. ACCORDINGLY, I ALLOW THE APPEA L OF THE ASSESSEE PARTLY. 11. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY. 13 ITA NO. 677/CHD./ 2014 12. THE FACTS OF THE PRESENT YEAR ARE ALMOST SIMILA R TO THE FACT OF THE CASE OF ASSESSMENT YEAR 2003-04. IN THIS YEAR, AMOUNT OF RS. 10,43,000/- WAS CREDITED IN THE CAPITAL ACCOUNT OF FOUR PARTNERS NAMELY SH RI S/SH. P.P. SINGH, BALBIR SINGH, PARAMJIT SINGH AND SMT. JASMEET KAUR. THE IM PUGNED ADDITION WAS UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN ITA NO. 267 OF 2013 VIDE ORDER DATED 18.3.2014. THE DECISION GIVEN IN ITA N O. 676/CHD/2014 FOR THE ASSESSMENT YEAR 2003-04 SHALL ALSO APPLY TO THIS AP PEAL WITH EQUAL FORCE. IN THIS CASE ALSO, THE ASSESSING OFFICER IMPOSED PENALTY OF RS. 7,48,496/- WHICH IS 200% OF THE TAX SOUGHT TO BE EVADED. IN VIEW OF THE ORDER PASSED IN ITA NO. 676/CHD/2014, I DIRECT THE ASSESSING OFFICER TO IMP OSE A PENALTY OF RS. 3,74,248/- WHICH IS 100% OF THE TAX SOUGHT TO BE EV ADED. THIS APPEAL IS ALSO ALLOWED PARTLY. 13. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED PAR TLY. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2016 SD/- (H.L.KARWA) VICE PRESIDENT DATED 29 TH APRIL, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 14