M/S MOOMAL MOTORS, Jaipur V. ITO, Kishangarh

ITA 690/JPR/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5418 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH MANGAL JCIT DHK
• Keywords: Income from undisclosed sources; Opportunity of being heard; Bonafide belief; Agreed addition
• Section: 143(3); 133(6); 68

Judgement Text

RAVK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 690/JP/2011 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2007-08 M/S MOOMAL MOTORS, NEAR RAM MANDIR, BEHIND BUS STAND, MADANGANJ, KISHANGARH. CUKE VS. INCOME TAX OFFICER, KISHANGARG. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAOFM 0830 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/02/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08/04/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 26/05/2011 OF THE LEARNED C.I.T.(A), AJMER FOR A.Y. 2007-08. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY O F RS.15,85,386/- LEVIED U/S 271(1)(C) OF THE INCOME TA X ACT, 1961. 2 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO 1.1 THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE PE NALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE INCOME WAS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING AND THE INCOME WAS OFFERED SUO-MOTTO, TO BUY THE PEACE OF MIND AND TO AVOID PROLONGED LITIGATION. THUS UPHOLDING THE PENALTY SO LEVIED DESERVES TO BE DELETED. 1.2 THAT THE PENALTY U/S 271(1)(C) HAS BEEN IMPOSED AND CONFIRMED BY THE LD. CIT(A) WITHOUT MAKING ANY INDEPENDENT ENQUIRY IN PENALTY PROCEEDINGS AND SIMP LY RELYING UPON THE CONCLUSION DRAWN IN ASSESSMENT ORDE R THUS THE PENALTY DESERVES TO BE DELETED. 1.3 THAT THE ASSESSEE HAS VOLUNTARILY SURRENDERED TH E INCOME AND PAID THE DUE TAX THEREON THUS THERE REMAINED NO INCOME ON WHICH TAX SOUGHT TO BE EVADED COULD BE CALCULATED WHICH FACT WAS NOT APPRECIATED BY THE LD. CIT(A). 2. THE SOLE GROUND OF THE APPEAL IS AGAINST CONFIRMI NG THE PENALTY OF RS. 15,85,386/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). IN THIS CASE, ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 21/12/2009 IN WHICH ADDITION ON ACCOUNT OF DEPOSIT IN THE NAME OF VARIOUS PERSONS WERE MADE AT RS. 47.10 LACS U/S 68 OF THE ACT. THE PENALTY PROCEEDINGS U/S 271(1)(C) HAS BEEN INITI ATED BY THE ASSESSING OFFICER FOR CONCEALING AND FURNISHING INACCURATE PA RTICULARS OF INCOME. 3 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO 2.1 THE LD ASSESSING OFFICER BEFORE IMPOSING THE PEN ALTY U/S 271(1)(C) GAVE REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSE SSEE REPLIED VIDE LETTER DATED 12/01/2010, THE SAME HAS BEEN REPRODUC ED BY THE ASSESSING OFFICER ON PAGE 6 TO 8 OF THE PENALTY ORDER AND AFT ER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HAS HELD AS UNDER:- 18.1 THE CONTENTION OF THE ASSESSEE THAT AMOUNT WAS S URRENDERED VOLUNTARILY IS TOTALLY FALSE AND BASELESS BECAUSE I T IS THE DEPARTMENT WHO HAS INVESTIGATED THE MATTER FROM VAR IOUS PARTIES & NOT EVEN SINGLE PARTY WAS FOUND IN EXISTEN CE AS DISCUSSED IN THE FORGOING PARAS. 18.2 SECONDLY, THE OUTCOME OF ENQUIRES WERE MADE AV AILABLE TO ASSESSEE BY SUPPLYING THE COPY OF LETTERS RECEIVED FROM VARIOUS GRAM PANCHAYATS & INQUIRY REPORT OF INSPECT OR. THE ASSESSEE CAME UP WITH SURRENDER WHEN THE RESULTS OF INVESTIGATION AND INQUIRIES CARRIED OUT BY THE DEPA RTMENT HAVE BEEN MADE KNOWN TO THE ASSESSEE ALONGWITH DOCUMENTARY EVIDENCE. 18.3 THE CASE LAWS RELIED UPON THE LD. A/R ALSO DOES NOT COME TO RESCUE THE CASE OF THE ASSESSEE BECAUSE OF THE FOLL OWING REASONS:- A) ALL THE CASE LAWS RELIED UPON ARE RELATED TO THE CASES WHERE SURRENDER WAS VOLUNTARILY & WITH BONAFIDE BELIEF WHILE IN THIS CASE THE SURRENDER WAS NEITHER VOLUNTAR Y NON TO BUY PEACE BUT IT WAS THE INVESTIGATION OF THE 4 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO DEPARTMENT WHICH COMPELLED THE ASSESSEE TO SURRENDER THE AMOUNT FOR TAXATION AS NO OTHER OPTION WAS LEFT. B) SECONDLY, IT WAS NOT AN AGREED ADDITION AS DISCUSSED IN THE PRECEDING PARAS. EVEN OTHERWISE ALS O ESTABLISHMENT OF MENS REA IS NOT PRE-REQUISITE FOR IMPOSITION OF PENALTY AS HELD BY THE HONBLE SUPREM E COURT IN THE CASE DHARMENDRA TEXTILE PROCESSORS VS U OI REPORTED IN [2008] 306 ITR 0277 THE OBJECT BEHIND THE ENACTMENT OF SECTION 271(1)(C ) READ WITH THE EXPLANATION INDICATES THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTR ACTING CIVIL LIABILITY.' HE RELIED ON THE FOLLOWING CASE LAWS:- (I) [2009] 226 CTR (DELHI) 533 - CIT V/S DASS TRADING & HOLDING (P) LTD. (II) [2008] 305 ITR 0029(MP) - DDIT U/S CHIRAG METAL ROLLING MILLS LTD. (III) [2001] 251 ITR 99(SC) - K.P. MADHUSUDAN. (IV) [2008] 302 ITR 0239(KEV) - CIT V/S GURUVIJAY KUR I CO. LTD. (V) [2009] 316 ITR 0058 (MAD)- KOMAL BASHA V/S DCIT THE LD ASSESSING OFFICER HAS HELD THAT ON THE BASIS OF ABOVE FACTS, THE ASSESSEE HAD CONCEALED AND FURNISHED INACCURATE PAR TICULARS OF INCOME AND THEREBY CAUSED LOSS TO THE REVENUE. FURTHER THE ONUS WAS ON THE ASSESSEE TO PROVE THAT THERE IS NO CONCEALMENT BUT ASSESSEE FAILED TO 5 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO PROVE THE SAME DURING THE ASSESSMENT AS WELL AS PENA LTY PROCEEDINGS. FINALLY BE IMPOSED PENALTY AT RS. 15,85,386/-, WHIC H IS 100% OF TAX SOUGHT TO BE EVADED ON CONCEALED INCOME. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD DISM ISSED THE ASSESSEES APPEAL BY OBSERVING AS UNDER:- 4.20 WITH REFERENCE TO PENALTY PROCEEDINGS, THE FO LLOWING PROPOSITIONS CAN BE LAID DOWN ON THE BASIS OF LANGUA GE OF RELEVANT SECTION OF THE IT ACT AND DECISIONS OF V ARIOUS JUDICIAL AUTHORITIES: (1) WHEREVER THERE IS A DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME, THERE IS AN INFERENCE OF CONCEALMENT AS A RULE OF LAW. (2) THE RESPONSIBILITY FOR REBUTTING SUCH INFERENCE IS SQUARELY ON THE TAX PAYER. (3) THE ASSESSEE IS EXPECTED TO OFFER AN EXPLANATION FOR THE DIFFERENCE. ABSENCE OF ANY EXPLANATION, BY ITSELF, WILL MERIT PENALTY (4) THE EXPLANATION WHERE OFFERED, SHOULD NOT BE FOUND TO BE FALSE. (5) MERELY BECAUSE THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE HIS EXPLANATION, PENALTY MAY NOT BE EXIGIBLE, IF SUCH EXPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE 6 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. 4.21 IT IS ALSO HELD THAT PENALTY PROCEEDINGS ARE I NDEPENDENT PROCEEDINGS. A PENALTY ORDER SHOULD CONTAIN REASONS FOR ITS CONCLUSION. BUT THIS DOES NOT MEAN THAT THE AO IS REQUIRED TO BRING ON RECORD ADDITIONAL OR NEW EVIDEN CE, WHICH WAS NOT PART OF REGULAR ASSESSMENT. WHERE THE ASSESSMENT ORDER ITSELF CONTAINS FACTS, WHICH JUSTI FY AN INFERENCE OF CONCEALMENT, THE PENALTY ORDER IS SUSTAINABLE. THIS VIEW DERIVES SUPPORT FROM THE DECIS ION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RAJ KUMAR CHOURASIYA VS CIT, REPORTED IN 288 ITR 329. 4.22 WHEN THE PRESENT CASE IS EXAMINED IN VIEW OF TH IS LEGAL POSITION, IT IS FOUND THAT APPELLANT HAS SHOWN SUM O F RS.47,10,000 IN THE NAME OF VARIOUS PERSONS AS ADVANCES AGAINST BOOKING OF VEHICLES. APPELLANT HAS SHOWN THIS AMOUNT IN HIS BALANCE SHEET FILED BY HIM ALONG WITH THE RETURN CLAIMING THE SAME TO BE GENUIN E DEPOSITS RECEIVED FROM VARIOUS PERSONS. IT WAS ONLY WHEN AO MADE ENQUIRY FROM THESE PARTIES AND INTIMATED APPELLANT ABOUT THE RESULT OF SUCH ENQUIR IES THAT APPELLANT AGREED TO SURRENDER THIS AMOUNT. IN SUCH A SITUATION AO HAS RIGHTLY CONCLUDED THAT APPELLANT FURNISHED INACCURATE PARTICULARS OF HIS INCOME, IN THE RETURN FILED BY HIM. IT CANNOT BE HELD THAT THE SUR RENDER 7 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO OF INCOME BY APPELLANT WAS VOLUNTARY, BECAUSE THE SURRENDER WAS MADE ONLY AFTER DETECTION OF THE SAME BY AO. IN THIS CASE IT IS NOT ESTABLISHED THAT THE CON DUCT AND EXPLANATION OF APPELLANT WAS BONAFIDE, THEREFORE THE CASE FALLS IN CATEGORY (B) OF PARA 4.19 AS MENT IONED ABOVE. THE LEVY OF PENALTY U/S 271(1)(C) IS THEREFOR E JUSTIFIED IN THIS CASE PURSUANT TO THE DECISION OF DHARMENDRA TEXTILES. 4.23 AO HAS RIGHTLY PLACED RELIANCE ON THE FOLLOWING DECISIONS FOR COMING TO THE CONCLUSION THAT PENALTY IS LEVIAB LE IN THIS CASE. (A) [2009] 226 CTR (DELHI) 533 - CIT V/S DASS TRADING & HOLDING (P) LTD. (B) [2008] 305 ITR 0029(MP) - DDIT V/S CHIRAG METAL ROLLING MILLS LTD. (C) [2008] 302 ITR 0239(KEV) - CIT V/S GURUVIJAY KURI CO. LTD. (D) [2009] 316 ITR 0058 (MAD)- KOMAL BASHA V/S DCIT I THEREFORE HOLD THAT AO IS JUSTIFIED IN IMPOSING P ENALTY OF RS.15,85,386 IN THIS CASE AND THE SAME IS CONFIRMED . GROUND NO. 2 IS THUS DISMISSED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT DURING THE YEAR UNDER CONSIDERAT ION, THE ASSESSEE HAS SHOWN CASH DEPOSITS OF RS. 47,10,000/- IN THE NAME O F VARIOUS PERSONS AS 8 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO SHOWN UNDER THE HEAD ADVANCE FROM CUSTOMERS IN BALAN CE SHEET. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ADDRESSES OF CUSTOMERS FROM WHOM ADVANCES WERE RECEIVED WERE FILED AS AVAILABLE IN THE RECORDS OF THE ASSESSEE. THESE ADVANCES WERE RECEIVED FOR BOOKING O F THE VEHICLES FROM CASUAL CUSTOMERS AND WHEN SUPPLIES FROM COMPANY WAS N OT MADE AVAILABLE, ADVANCE MONEY WERE REFUNDED TO THE CUSTOM ERS. COPIES OF ACCOUNT OF SUBSEQUENT YEAR IN WHICH THE ADVANCES HAV E BEEN SQUARED UP WERE ALSO FILED BEFORE THE LD A.O.. IT IS FURTHER SU BMITTED THAT AS PER NORMAL PRACTICE, THE ASSESSEE HAD NOT TAKEN COMPLET E ADDRESS OR CONTACT NUMBER FROM THE CUSTOMERS AT THE TIME OF BOOKING OR REFUND OF AMOUNT. MAJORITY OF ALL CUSTOMERS WERE DRIVERS, SO THEY WERE NOT HAVING BANK ACCOUNTS THUS MARGIN MONEY WAS RECEIVED IN CASH FOR BOOKING OF VEHICLE AND BALANCE AMOUNT WAS EXPECTED FROM FINANCERS AT TH E TIME OF DELIVERY. FURTHER, DUE TO DELAY IN SUPPLY OF VEHICLE, THE ADV ANCE AMOUNT WAS REFUNDED TO THE CUSTOMERS. MERELY FOR THE REASON TH AT NOTICE ISSUED U/S 133 (6) COULD NOT BE SERVED ON THE PARTIES DUE THE REASON OF INCOMPLETE ADDRESSES AND THE ASSESSEE COULD NOT PRODUCED THESE PARTIES IT CANNOT BE HOLD THAT BOOKING ADVANCE RECEIVED BY THE ASSESSEE IS UNACCOUNTED MONEY OF THE ASSESSEE. MORE PARTICULARLY AMOUNT WAS SUBSEQ UENTLY REFUNDED TO THE CUSTOMERS. THE ASSESSEE FURNISHED BEST POSSIBLE ADDRESS OF THE PARTIES 9 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO AND TRIED TO IDENTIFY THE CUSTOMERS WITH ITS BEST EF FORTS. HOWEVER, AFTER THE LAPSE OF 4 YEARS, THE CORRECT WHERE ABOUT OF THE CUS TOMERS WERE NOT AVAILABLE WITH THE ASSESSEE, THUS THE ASSESSEE VOLUN TARILY SURRENDERED THE AMOUNTS TO BUY PLACE OF MIND AND TO AVOID ANY LITIG ATION. DESPITE OF SUCH CO-OPERATIVE GESTURE OF THE APPELLANT, THE LD. AO P ROCEEDED TO INITIATE PENALTY PROCEEDINGS U/S 271(L)(C) OF THE INCOME TAX ACT, 1961 AND IMPOSED A PENALTY OF RS. 15,85,386/- ON ACCOUNT OF THE UNEXPLAINED INCOME OF THE ASSESSEE U/S 68 OF THE INCOME TAX ACT, 1961. WHILE IMPOSING THE PENALTY THE LD. AO FAILED TO MAKE ANY INDEPENDENT INQUIRY DURING THE COURSE OF PENALTY PROCEEDINGS AND SIMPLY RELIED UPON THE INQUIRIES MADE AND CONCLUSIONS DRAWN AT THE TIME OF ASSESSMENT PROCEEDINGS, WHEN IT IS A FACT ON RECORD THAT ASSESS MENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE AND F RESH ENQUIRIES SHOULD HAVE BEEN MADE AND AO SHOULD HAVE GIVEN AN OPPORTUN ITY TO THE APPELLANT OF BEING HEARD AND TO EXPLAIN ITS CASE. B Y NOT DOING SO THE LD. AO HAS PROCEEDED TO CONCLUDE THE ORDER ON HIS SWEET WILL AND WITH A PRE- CONCURRED THOUGHT TO LEVY PENALTY. THE ASSESSEE HAS SURRENDERED THE AMOUNT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ONLY TO BUY PEACE OF MIND AND SHORTAGE OF TIME SPAN DURING WHICH THE JUST IFICATION WAS TO BE FILED. IT MUST BE NOTED THAT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, 10 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO THE APPELLANT HAD SUBMITTED AN AFFIDAVIT ONE PERSON SH. GOPAL SINGH CHOYAL, ONE OF THE WITNESSES. A COPY OF THE SAME WAS SUBMITTED BEFORE THE LD. CIT(A) ALSO. A BARE PERUSAL OF THE SAID AFFI DAVIT WOULD SHOW THAT THE SAID PERSON AS WITNESS HAS CONFIRMED ON OATH ALL THE FACTS AS EXPLAINED BY THE APPELLANT. HE HAS CONFIRMED OF HAVING BOOKED THE EISHERS TRUCK BY ADVANCING THE AMOUNT AND ALSO RECEIVING THE REFUND OWING TO THE NON- DELIVERY OF THE BOOKED TRUCK WITHIN THE STIPULATED T IME PERIOD OF ONE MONTH. IN THE AFFIDAVIT, THE MODE AND MANNER OF ADV ANCING THE MONEY AND RECEIVING THE SAME BACK HAS BEEN EXPLAINED BY T HE SAID WITNESS ON OATH WHICH DULY SUPPORT THE CONTENTIONS OF ASSESSEE. IT IS THEREFORE, SUBMITTED THAT ASSESSEE HAS NO CONTROL OVER THE THI RD PARTY I.E. THE ALLEGED CUSTOMERS WHO WERE NON-RELATED TO THE APPELLANT AND THEY WERE NO MORE IN TOUCH WITH THE ASSESSEE AT THE GIVEN POINT OF TIM E. EXCEPT THE DETAILS AND ADDRESSES AS PROVIDED BY THEM AT THE TIME OF BO OKING, NO OTHER DOCUMENT OR DETAILS WERE AVAILABLE WITH THE ASSESSEE , THUS THE ASSESSEE WAS UNABLE TO PRODUCE FURTHER DETAILS AND THESE PART IES FOR EXAMINATIONS MORE PARTICULARLY THE APPELLANT HAS REPAID THE ADVA NCE MONEY LONG BACK I.E. IN APRIL 2007. THE ASSESSEE DUE TO THE TIME BAR RING LIMIT WAS VERY CLOSE DO NOT HAVE SUFFICIENT TIME TO PRODUCE THESE PARTIE S FOR VERIFICATION, THEREFORE IN ORDER TO AVOID PROLONGED LITIGATION AN D TO BUY THE PEACE OF 11 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO MIND HAD ACCEPTED THE ADVANCE MONEY AS ITS INCOME. IT IS NOT THE CASE THAT AFTER IN DEPTH EXAMINATION AND CROSS VERIFICAT ION BY THE ASSESSEE THE AMOUNT WAS SURRENDERED. FURTHER, IF SUCH AMOUNT RECE IVED FROM THESE CUSTOMERS IS TREATED AS OUT OF UNDISCLOSED INCOME O F THE APPELLANT AND THE SAME FLOWN FROM THE ASSESSEE AS ALLEGED BY LD. AO, IN SUCH A CASE, THE LD. AO HAS MISERABLY FAILED TO BROUGHT ON RECORD AN Y EVIDENCE OR MATERIAL TO ESTABLISH FROM WHAT SOURCES THE ASSESSEE HAS EARN ED ALLEGED UNDISCLOSED INCOME. HE RELIED ON THE FOLLOWING CASE LAWS:- (1) SMT. DURGA DEVI SOMANI IN ITA NO. 672/JP/11, PASSED VIDE ORDERS DATED 31.10.2014. (2) SH. ASHISH GUPTA IN ITA NO. 671/JP/11 VIDE ORDERS DATED 17.10.2014. (3) SHRI ASHOK KUMAR KAMDAR VIDE ITA NO. 684/JP/11. (4) MAK DATA PVT. LTD. VS. CIT REPORTED IN [2014] 1 SCC 674, (5) RELIANCE PETRO PRODUCTS REPORTED IN 322 ITR 158 (6) 170 TAXMAN 471 CIT VS. ASHOK TAKER (DELHI) (7) 300 ITR 40 V.V. PROJECTS AND INVESTMENTS PVT. LT D. VS. DY. CIT (2008) (AP) (8) CIT VS. HARYANA WAREHOUSING CORPORATION [ITA NO. 871 OF 2008, DATED 01.07.091 (PUNJ- & HAR.) (9) 35 DTR 420 ASSTT. CIT VS. INDICA EXPORTS (DEL H ) (10) GOSWAMI SMT. CHANDRALATA 125 ITR 700 (RAJ.) (11) 131 ITR 619 ADDITIONAL COMMISSIONER OF INCOME-T AX V. AGGARWAL MISTHAN BHANDAR (RAJ.) (12) 308 ITR 33 (AT) STAR INTERNATIONAL P. LTD. V. A SSISTANT COMMISSIONER OF INCOME-TAX (LUCKNOW) (13) 251 ITR 9 (SC) COMMISSIONER OF INCOME-TAX V. SU RESH CHANDRA MITTAL 12 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO (14) 265 ITR 329 COMMISSIONER OF INCOME-TAX V. BADRI LAL CHATURBHUJ (RAJ.) THEREFORE, HE PRAYED TO DELETE THE PENALTY CONFIRMED BY THE LD CIT(A). 5. AT THE OUTSET THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD CIT(A) AND ARGUED THAT THE SURRENDER WAS NOT MADE VOLUNTARILY BUT WHEN THE ASSESSEE WAS CORNERED BY THE ASSESSING OFFIC ER ON THE ACCOUNT OF INVESTIGATION THEN HE OFFERED THE AMOUNT FOR TAX ATION. THUS, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE I S ENGAGED IN THE BUSINESS OF ALL TYPES OF AUTOMOBILE VEHICLES, ACCES SORIES AND SPARE PARTS AND ALSO SERVICE CENTRE FOR ALL TYPE OF AUTOMOBILES VEHICLES. THE YEAR UNDER CONSIDERATION IS THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE AS IT STARTED HIS BUSINESS AT THE END OF MARCH, 2006. IT IS COMMO N PRACTICE THAT DRIVERS BOOKED THE REQUIRED VEHICLES WITH THE AUTHORIZED DEA LER TO MAKE AVAILABLE IT. THE ASSESSEE MAINTAINED RECORD OF THESE CUSTOMER S, WHICH HAS BEEN SUBMITTED DURING THE COURSE OF ASSESSMENT. IT IS A FACT THAT ON VERIFICATION OF THESE PERSONS WERE NOT RESPONDED TO THE ASSESSING OFFICER NOTICE ISSUED U/S 133(6) OF THE ACT BUT IS ALSO A F ACT THAT THESE CUSTOMERS ARE LESS EDUCATED AND DO NOT HAVE BANK ACCOUNT PART ICULARLY 13 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO DRIVERS, THEREFORE, THEY BOOKED THESE VEHICLES IN C ASH. THE YEAR UNDER CONSIDERATION IS FIRST YEAR, THEREFORE, IT IS NOT P OSSIBLE TO GENERATE UNACCOUNTED INCOME ON TOTAL TURNOVER OF RS . 1.05 CRORES. EVEN THIS AMOUNT IS UNACCOUNTED, IT MAY BE PERTAINED TO THE OTHER PERSONS, WHICH CANNOT BE ADDED HERE. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BHARAT ENGINEERING AND CONSTRUCTION CO. (197 2) 83 ITR 187 (SC) HAS HELD THAT CASH CREDIT ENTRIES MADE IN THE FIRST YEAR OF BUSINESS, THE FINDING OF TRIBUNAL THAT IT DID NOT REPRESENT INCOM E AS THE COMPANY COULD NOT MAKE PROFIT SOON AFTER IT COMMENCED ACTIVITIES. IN THE CASE OF CIT VS. JAISWAL MOTOR FINANCE (1983) 141 ITR 706 (ALL) HAS H ELD THAT DEPOSITS MADE BY THE PARTNERS IN THE FIRST YEAR OF THE ASSES SMENT OF THE FIRM CANNOT BE ASSESSED AS INCOME OF THE FIRM AND IN CASE OF CI T VS TAJ BORE WELLS [2007] 291 ITR 232 (MAD) HAS HELD THAT FIRST YEAR O F THE ASSESSMENT, AMOUNT CONTRIBUTED BY THE PARTNER CANNOT BE ASSESSE D AS INCOME OF THE FIRM. THE ASSESSEE HAD EXPLAINED THE ENTRIES, WHICH I S BONAFIDE EXPLANATION. FURTHER THE PENALTY PROCEEDIN GS AND ASSESSMENT PROCEEDINGS ARE SEPARATE. THE LD ASSESSING OFFICER I MPOSED PENALTY UNDER THIS SECTION ON THE BASIS OF FINDING GIVEN IN ASSES SMENT ORDER ONLY NO SEPARATE INQUIRY HAS BEEN CONDUCTED TO DISPROVE THE EXPLANATION FURNISHED BY THE ASSESSEE. THE CASE LAWS RELIED UPON BY THE ASS ESSEE ARE SQUARELY 14 ITA NO. 690/JP/2011 M/S MOOMAL MOTORS VS. ITO APPLICABLE ON THE FACTS OF THE CASE. THERE IS NO MAT ERIAL ON RECORD TO SHOW THAT SURRENDERED INCOME WAS CONCEALED INCOME OF THE ASSESSEE. THEREFORE, WE HAVE CONSIDERED VIEW THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT. AC CORDINGLY, WE REVERSE THE ORDER OF THE LD CIT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/04/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 TH APRIL, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S MOOMAL MOTORS, KISHANGARH 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, KISHANGARH 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.690/JP/2011) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR