Chaupal Plywood, Yamunanagar V. ITO, Yamunanagar

ITA 699/CHANDI/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8439 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: RAKESH JAIN
• Keywords: Unexplained cash credit; Gift; Source of fund
• Section: 143(3); 260A; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 699/CHD/2011 ASSESSMENT YEAR: 2005-06 M/S CHOUPAL PLYWOOD, VS. THE ITO, WARD-3, VOLL. NABH YAMUNANAGAR YAMUNANAGAR PAN NO. AAEFC0137C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAKESH JAIN RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 10.02.2016 DATE OF PRONOUNCEMENT : 09.03.2016 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A), KARNAL DATED 24.3.2011 IN CONFIRMING THE PE NALTY OF RS. 4,27,770/- IMPOSED U/S 271(1)(C) OF THE ACT RELATING TO ASSES SMENT YEAR 2005-06. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FIRM SUBMITTED ITS RETURN OF INCOME FOR 2005-06 ON 31.10.2005 DECLARIN G TOTAL INCOME AT RS. 1,790/-. THE ASSESSING OFFICER NOTED THAT AS PER CA PITAL ACCOUNT OF PARTNERS AS APPEARING IN THE BOOKS OF FIRM THERE WAS AN ADDITIO N IN CAPITAL OF THE PARTNERS DURING THE YEAR AMOUNTING TO RS. 17,35,000/-. THE C ASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF WHIC H, ADDITION IN CAPITAL ACCOUNT OF PARTNERS WERE NOTICED AS UNDER:- 2 I) SH. SUNIL CHOUPAL (ADDITION IN CAPITAL RS. 11,70 ,000/-) II) SH. SUDHIR CHOUPAL (ADDITION IN CAPITAL RS. 5 ,65,000/-) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER REQUIRED THE ASSESSEE FIRM TO EXPLAIN THE SOURCES OF ADDITION IN CAPITAL ACCOUNT OF PARTNERS MADE DURING THE YEAR UNDER CONSIDERATION. THE ASSES SEE FIRM VIDE ITS REPLY DATED 7.12.2007 SUBMITTED THE EXPLANATION REGARDING THE SOURCE OF A DDITION IN CAPITAL ACCOUNT OF PARTNERS AS UNDER:- (I) SH. SUNIL CHOUPAL (ADDITION IN CAPITAL RS. 11,70,00 0/-) AMOUNT WITHDRAWN FROM B.S. ENTERPRISES RS. 100000/- SALE OF JEWELLERY RS. 150000/- CASH GIFTS FROM ONE SH. SUNDAR LAL CHOUPAL (DECEASED) RS. 305000/- CASH LOAN RECEIVED FROM SH. RAM KUMAR RS. 125000/- CASH LOAN RECEIVED FROM SH. SHIV DAYAL RS. 125000/- CASH LOAN RECEIVED FROM SH. NIRANJAN SINGH RS. 100000/- CASH LOAN RECEIVED FROM SH. PRITPAL SINGH RS. 100000/- CASH LOAN RECEIVED FROM SH. PHOOL SINGH RS. 100000/- ADDITION OUT OF CURRENT YEAR INCOME RS. 65000/- THE ASSESSING OFFICER ACCEPTED THE EXPLANATION OF T HE ASSESSEE REGARDING THE SOURCE OF ADDITION IN CAPITAL ACCOUNT TO THE EXTENT OF RS. 3,15,000/- (RS. 1,50,000/- + RS. 65,000/-). IN OTHER WORDS, THE AS SESSING OFFICER ACCEPTED THE EXPLANATION OF THE ASSESSEE REGARDING RS. 1 LAKH BE ING THE AMOUNT WITHDRAWN FROM B.S. ENTERPRISES, RS. 1,50,000/- BEING THE SAL E VALUE OF JEWELLERY AND RS. 65,000/- BEING THE ADDITION OUT OF CURRENT YEAR INC OME. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSES SEE REGARDING THE SOURCE OF BALANCE AMOUNT OF RS. 8,55,000/- I.E. CASH GIFTS A ND LOANS. 3 (II) SHRI SUDHIR CHOUPAL (ADDITION IN CAPITAL OF RS. 5,6 5,000/-) THE ASSESSEE VIDE ITS REPLY DATED 7.12.2007 EXPLAIN ED THE SOURCE OF ADDITION IN CAPITAL ACCOUNT AS UNDER:- I) SALE OF JEWELLERY -- RS. 1,50000/- II) OUT OF CURRENT YEAR INCOME RS. 1,01,000/- III) CASH LOANS RECEIVED FROM CERTAIN FRIENDS AND RELATI VES RS. 3,14,000/- OUT OF RS. 5,65,000/-, THE ASSESSING OFFICER ACCEPT ED THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF ADDITION IN CAPITA L ACCOUNT TO THE EXTENT OF RS. 2,51,000/-. HOWEVER, THE ASSESSING OFFICER DID NO T ACCEPT THE EXPLANATION OF THE ASSESSEE REGARDING CASH LOANS RECEIVED FROM FRI ENDS AND RELATIVES TO THE EXTENT OF RS. 3,14,000/- 3. THE ASSESSING OFFICER NOTED THAT THE TOTAL AMOUN T ON ACCOUNT OF ADDITION IN CAPITAL ACCOUNT OF PARTNERS REMAINED UNEXPLAINED TO THE EXTENT OF RS. 11,69,000/- (RS. 8,55,000 IN CAPITAL ACCOUNT OF SHR I SUNIL CHOUPAL + RS. 3,14,000/- IN CAPITAL ACCOUNT OF SHRI SUDHIR CHOUPA L). THE ASSESSING OFFICER AGAIN ASKED THE ASSESSEE TO EXPLAIN WITH EVIDENCE T HE SOURCE OF ADDITION IN CAPITAL AMOUNTING TO RS. 11,69,000/- WHICH REMAINED UNEXPLAINED. HOWEVER, THE ASSESSEE VIDE ITS LETTER DATED 18.12.2007, SURR ENDERED RS. 11,69,000/- AS INCOME OF THE FIRM FROM UNDISCLOSED SOURCES, SUBJEC T TO NO PENALTY U/S 271(1)(C) OF THE ACT. THUS, THE ASSESSING OFFICER MADE THE AD DITION OF RS. 11,69,000/- AS INCOME OF THE FIRM FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT. THE ADDITION WAS MADE IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, DATED 20.12.2007. 4. THE ASSESSING OFFICER INITIATED THE PENALTY PROC EEDINGS US/ 271(1)(C) OF THE ACT AND ISSUED A SHOW CAUSE NOTICE U/S 274 REA D WITH SECTION 271 (1)(C) OF THE ACT TO THE ASSESSEE. THE ASSESSING OFFICER ALLO WED SUFFICIENT OPPORTUNITIES 4 OF BEING HEARD TO THE ASSESSEE. HOWEVER, THERE WAS NO RESPONSE FROM THE ASSESSEE. THE ASSESSING OFFICER PASSED THE PENALTY ORDER U/S 271(1)(C) OF THE ACT ON 18.6.2008 WHEREIN HE HAS HELD THAT FILING OF SUR RENDER LETTER WOULD NOT ABSOLVE THE ASSESSEE FROM LIABILITY OF PENALTY U/S 271(1)(C) OF THE ACT THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE FIRM HAS DELIBERATELY FURNISHED WRONG PARTICULARS OF INCOME IN THE RETURN FILED AND THE VERIFICATION MADE THEREIN IS FALSE AND HELD THAT ASSESSEE IS LIABLE TO PENALT Y U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER LEVIED THE MINIMUM PENALTY OF RS. 4,27,770/- U/S 271(1)(C) OF THE ACT. 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 IMPOSED BY THE ASSESSING OFFICER AND, HENCE, THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. I HAVE HEARD SHRI RAKESH JAIN, LD. COUNSEL FOR T HE ASSESSEE AND SHRI S.K. MITTAL LD. DR AT LENGTH AND HAVE ALSO PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE MAIN CONTENTION OF SHRI JAIN IS THAT THE ASSESS EE FIRM HAS DISCHARGED ITS ONUS BY ESTABLISHING THE IDENTITY OF THE CREDITORS WHO ARE THE PARTNERS OF THE FIRM, CREDITWORTHINESS OF THE CREDITORS / PARTNERS AND GENUINENESS OF THE TRANSACTIONS. HE FURTHER POINTED OUT THAT THE AUTHO RITIES BELOW, PARTICULARLY THE ASSESSING OFFICER HAS ADMITTED THE PART OF THE INVE STMENTS MADE BY THE PARTNERS. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 11,6 9,000/- OUT OF TOTAL CONTRIBUTION OF PARTNERS TO THE EXTENT OF RS. 17,35 ,000/- MADE IN THE ASSESSEE FIRM. HE EMPHASIZED THAT THE CREDITWORTHINESS OF TH E CREDITORS TO ADVANCE THE MONEY CANNOT BE JUDGED WITH REFERENCE TO EACH ENTRY OF THE CREDITOR. HE FURTHER POINTED OUT THAT THE ASSESSEE FIRM HAS STARTED ITS PRODUCTION FROM JANUARY, 2005. IN ORDER TO SUBSTANTIATE THE SAID CLAIM, THE ASSESS EE HAS FILED CERTAIN DOCUMENTS TO SHOW THAT THE ASSESSEE HAS STARTED ITS BUSINESS FROM JANUARY 2005. HE FURTHER 5 POINTED OUT THAT THE ASSESSING OFFICER HIMSELF HAS ADMITTED IN THE ASSESSMENT ORDER AT PAGE 1 THAT THE ASSESSEE FIRM HAS STARTED ITS PRODUCTION DURING JANUARY, 2005. HE FURTHER POINTED OUT THAT THE FIRM HAS RECE IVED CAPITAL FROM PARTNERS DURING THE PERIOD 1.4.2004 TO 13.7.2004 WHICH PERIO D IS PRIOR TO JANUARY, 2005 WHEN THE FIRM STARTED ITS BUSINESS. ACCORDING TO HIM, THE ONUS WAS UPON THE PARTNERS TO EXPLAIN THE SOURCE OF THE CAPITAL INTRO DUCED AND INCASE HAVING FAILED TO DISCHARGE THE ONUS THEN SUCH DEPOSITS COULD BE A DDED IN THE HANDS OF THE PARTNERS ONLY, WHILE ASSESSEE FIRM STARTED ITS PROD UCTION FROM JANUARY, 2005. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS LE VIED IMPUGNED PENALTY OVERLOOKING THAT ASSESSEE FIRM HAS NO OTHER SOURCE S OF INCOME AFTER THE EXECUTION OF PARTNERSHIP DEED ON 7.11.2003 TO DECEM BER 2005 AND THE ASSESSEE HAS NOT UNDERTAKEN ANY BUSINESS OF WHATSOEVER NATUR E UPTO JANUARY 2005. HENCE, THERE CANNOT BE ANY UNDISCLOSED INCOME WHICH CAN BE INTRODUCED BY THE ASSESSEE FIRM THROUGH PARTNERS CAPITAL AND ADDITIONALLY THER E IS NO MATERIAL OF WHATSOEVER NATURE AVAILABLE WITH THE ASSESSING OFFICER TO DREW AN ADVERSE INFERENCE AGAINST THE ASSESSEE. THUS, THERE WAS NO JUSTIFICATION IN T REATING THE PARTNERS CONTRIBUTION TOWARDS CAPITAL AS UNDISCLOSED INCOME OF THE ASSESSEE FIRM. HE THEREFORE, SUBMITTED THAT THERE WAS NO JUSTIFICATIO N IN LEVYING THE PENALTY IN THE HANDS OF THE ASSESSEE FIRM. 7. SHRI S.K MITTAL LD. DR SUBMITTED THAT ONE OF TH E PARTNER SHRI SUNIL CHOPAL VIDE HIS LETTER DATED 18.12.2007 OF THE FIR M HAS SURRENDERED RS. 11,69,000/- AS UNDISCLOSED INCOME OF THE FIRM OF TH E ASSESSMENT YEAR 2005-06. HE, THEREFORE, SUBMITTED THAT IN VIEW OF THE SURREN DER MADE BY THE ASSESSEE FIRM, THE ASSESSING OFFICER WAS RIGHT IN IMPOSING THE PEN ALTY U/S 271(1)(C) OF THE ACT ON THE AMOUNT OF RS. 11,69,000/- . 8. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE VERY OUTS ET, I MAY OBSERVE HERE THAT THE 6 PENALTY AND THE QUANTUM PROCEEDINGS ARE INDEPENDENT AND SEPARATE PROCEEDINGS UNDER THE INCOME-TAX ACT, 1961. THE FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS ARE CERTAINLY RELEVANT AND HAVE PROBATI VE VALUE BUT SUCH FINDINGS ARE MATERIAL ALONE AND MAY NOT JUSTIFY THE IMPOSITI ON OF PENALTY IN A GIVEN CASE BECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PR OCEEDINGS ARE DIFFERENT FROM THOSE THAT ARISE IN ASSESSMENT PROCEEDINGS. IT IS TRUE THAT THE PENALTY CAN BE IMPOSED IN A GIVEN CASE BUT THE ENTIRETY OF CIRCUMS TANCES MUST BE TAKEN INTO ACCOUNT. IN THE CASE OF CIT V ISHTIAQ HUSSAIN (1998 ) 232 ITR 673 (ALL.), THE HON'BLE ALLAHABAD HIGH COURT HELD THAT THE FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS WOULD BE RELEVANT AND ADMISSIBLE MATERI ALS IN PENALTY PROCEEDINGS, BUT THOSE FINDINGS CANNOT OPERATE AS RES JUDICATA B ECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PROCEEDINGS ARE DIFFERENT FROM THO SE IN THE ASSESSMENT PROCEEDINGS. IN THE INSTANT CASE, IT HAS TO BE SEE N AS TO WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME OR GUILTY OF FURNIS HING OF INACCURATE PARTICULARS OF INCOME. ACCORDING TO ASSESSING OFFICER, THE ASS ESSEE FIRM HAS WILLFULLY FURNISHED WRONG PARTICULARS OF INCOME IN THE RETURN . THE CASE OF THE REVENUE IS ENTIRELY BASED ON THE SURRENDER LETTER DATED 18.12. 2007 SUBMITTED BY SHRI SUNIL CHOUPAL, ONE OF THE PARTNERS OF THE ASSESSEE FIRM W HICH READS AS UNDER:- 18.12.2007 TO THE INCOME TAX OFFICER, WARD-III, YAMUNANAGAR SUB: ASSESSMENT PROCEEDINGS IN THE CASE OF M/S CHO LPOL PLYWOOD ASSESSMENT YEAR 2005-06. RESPECTED SIR, I, HEREBY SURRENDER THE FOLLOWING AMOUNTS SUBJECT TO NO PENALTY 7 A) ADDITION IN THE CAPITAL ACCOUNT OF SHRI SUNIL CHOPA L PARTNER M/S CHOPAL PLYWOOD IN THE FY 2004-05 IS RS. 11,7000 .00 OUT OF THIS I HEREBY SURRENDER RS. 8,55,000/- AS LO AN INTRODUCED IN THE CAPITAL A/C OF SHRI SUNIL CHOPAL. B) ADDITION IN THE CAPITAL ACCOUNT OF SHRI SUDHIR CHOP AL PAYRNER M/S CHOPAL PLYWOOD N THE FY 2004-05 IS RS. 565000/- . OUT OF THIS I HEREBY SURRENDER RS. 31400 0 AS CASH LOAN INTRODUCED IN THE CAPITAL A/C OF SHRI SUDHIR C HOPAL. THUS, I SURRENDER RS. 11,69,000/- AS UNDISCLOSED IN COME OF THE FIRM FOR THE ASSESSMENT YEAR 2005-06 SUBJECT TO NO PENALTY. THE AMOUNT SURRENDERED IN THE CASE OF FIRM IS TO COOPERATE THE DEPTT & PURCHASE PEACE OF MIND. PLEASE DO THE NEEDFUL AND OBLIGE. THANKING YOU, SD/- (S.K. GOEL) 9. IN VIEW OF THE ABOVE LETTER, THE REVENUE AUTHORITIES CONCLU DED THAT THE FIRM ITSELF HAS SURRENDERED THE INCOME AS INCOME OF THE FIRM. FURTHERMORE, THE ASSESSING OFFICER STATED THAT THE OFFER OF SURRENDE R IS NOT APPLICABLE BECAUSE THE SAME WAS MADE AFTER DETECTING / POINTING OUT THE UN EXPLAINED CREDIT IN THE CAPITAL ACCOUNT OF THE PARTNERS BY THE REVENUE. IT IS ALSO OBSERVED THAT THE REVENUE AUTHORITIES RELIED ON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER, WHEREIN IT WAS MENTIONED THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THE CAPACITY OF THE PARTNERS TO INTRODUCE PART OF THE C APITAL. THE REVENUE HAS ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT ACCEPT ANCES OF PART OF THE CREDIT CLEARLY ESTABLISH THAT THE FIRM HAS DISCHARGED ITS ONUS. IN THIS REGARD, THE CIT(A) HAS STATED THAT THERE IS NO SUCH PROVISION IN THE A CT THAT IN THE CASE OF ACCEPTANCE OF PART OF THE CREDIT AS GENUINE, THE EN TIRE CREDIT IS TO BE TAKEN AS GENUINE. THE CIT(A) HAS ALSO REJECTED THE CONTENTIO N OF THE ASSESSEE THAT ADDITION ON ACCOUNT OF UNEXPLAINED CAPITAL CANNOT B E MADE IN THE CASE OF THE 8 FIRM BEING IT IS THE FIRST YEAR OF THE FIRM. ACCORD ING TO CIT(A), THE ASSESSEE FIRM ITSELF OFFERED THE AMOUNT AS UNEXPLAINED CAPITAL IN TRODUCED IN THE HANDS OF THE PARTNERS AS INCOME OF THE FIRM. SHRI S.K. MITTAL LD . DR SUPPORTED THE ABOVE REASONS GIVEN BY THE REVENUE AUTHORITIES WHILE HOLD ING THE ASSESSEE GUILTY U/S / 271(1)(C) OF THE ACT. IT IS WORTHWHILE TO STATE HERE THAT THE CASE OF THE ASSESSEE IS THAT DURING THE YEAR UNDER CONSIDERATION, THE PARTNERS HAVE INTRODUCED C APITAL IN THE BOOKS OF THE ASSESSEE FIRM. ACCORDING TO ASSESSING OFFICER THER E WAS ADDITION IN THE CAPITAL ACCOUNT OF PARTNERS NAMELY SHRI SUNIL CHOUPAL AMOUN TING TO RS. 11,70,000/- AND RS. 5,65,000/- IN THE CAPITAL ACCOUNT OF SHRI SUDHI R CHOUPAL. THE DETAILS OF THE CAPITAL INTRODUCED AND SOURCE OF CAPITAL OF SHRI SU NIL CHOUPAL AS STATED BY THE ASSESSEE ARE AS UNDER:- DATE SOURCE FORM WHOM AMOUNT RECEIVED BY PARTNERS AMOUNT REMARKS DATE CHQ NO./CASH THROUGH WHICH PAYMENT TO FIRM BY PARTNER AMOUNT 4.4.2004 GIFT FROM SH. SUNDER LAL CHAUPAL IN CASH 85,000 DISPUTED BY ASSESSING OFFICER 4.4.2004 CASH 85,000 6.4.2004 CASH WITHDRAWN FROM B.S. ENTERPRISES 1,00,000 ACCEPTED BY ASSESSING OFFICER 6.4.2004 CASH 1,00,000 20.4.2004 GIFT FROM SH. SUNDER LAL CHAUPAL IN CASH 1,00,000 DISPUTED BY ASSESSING OFFICER 20.4.2004 CASH 1,00,000 26.4.2004 WHEAT SALE IN CASH 15,000 ACCEPTED BY ASSESSING OFFICER 26.4.2004 CASH 15,000 1.5.2004 GIFT FROM SH. SUNDER LAL CHAUPAL IN CASH 1,20,000 DISPUTED BY ASSESSING OFFICER 1.5.2004 CASH 1,20,000 31.5.2004 SALE OF JEWELLERY & RECEIVED THROUGH CHEQUE 1,50,000 ACCEPTED BY ASSESSING OFFICER 31.5.2004 CHQ NO.404182 1,50,000 11.7.2004 CASH LOAN RECEIVED FROM RAM 1,25,000 DISPUTED BY ASSESSING 12.7.2004 CHQ NO.410301 2,50,000 9 KUMAR CASH LOAND RECEIVED FROM PHOOL SINGH 1,25,000 OFFICER DISPUTED BY ASSESSING OFFICER 13.7.2004 CASH LOAN RECEIVED FROM NIRANJAN SINGH AGRICULTURE INCOME IN CASH 1,00,000 50,000 DISPUTED BY ASSESSING OFFICER ACCEPTED BY ASSESSING OFFICER 13.7.2004 CHQ NO. 410302 1,50,000 15.7.2004 CASH LOAN RECD FROM PRITPAL SINGH CASH LOAN RECEIVED FROM PHOOL SINGH 1,00,000 1,00,000 DISPUTED BY ASSESSING OFFICER DISPUTED BY ASSESSING OFFICER 15.7.2004 CHQ NO. 410302 2,00,000 SIMILARLY, THE DETAILS OF CAPITAL INTRODUCED AND SO URCES OF CAPITAL OF SHRI SUDHIR CHOUPAL, THE SUBMISSIONS OF THE ASSESSEE ARE AS UND ER:- DATE SOURCE FORM WHOM AMOUNT RECEIVED BY PARTNERS AMOUNT REMARKS DATE CHQ NO./CASH THROUGH WHICH PAYMENT TO FIRM BY PARTNER AMOUNT 2.05.2004 WHEAT SALE IN CASH 15,000/- ACCEPTED BY ASSESSING OFFICER 2.05.2004 CASH 15,000/- 28.5.2004 SALE OF JEWELLERY 1,00,000/- ACCEPTED BY ASSESSING OFFICER 28.5.2004 CHQ NO. 160446 1,00,000 12.7.2004 SALE OF JEWELLERY AGRICULTURAL INCOME IN CASH CASH LOAN FORM FRIENDS & RELATIVES 50,000/- 86,000/- 64,000/- ACCEPTED BY ASSESSING OFFICER ACCEPTED BY ASSESSING OFFICER DISPUTED BY ASSESSING OFFICER 12.7.2004 CHQ NO. 160417 2,00,000 28.5.2004 CASH LOAN FROM FRIENDS & RELATIVES 2,50,000/- DISPUTED BY ASSESSING OFFICER 13.7.2004 CHQ NO. 160448 2,50,000 10 10. ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS CLE AR THAT ASSESSING OFFICER MADE THE ADDITION OF RS. 8,55,000/- IN THE HANDS OF THE FIRM OUT OF RS. 11,70,000/- ON ACCOUNT OF CAPITAL INTRODUCED BY SHR I SUNIL CHOUPAL. SIMILARLY, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 3,14 ,000/- IN THE HANDS OF THE FIRM OUT OF RS. 5,65,000/- ON ACCOUNT OF CAPITAL IN TRODUCED BY SHRI SUDHIR CHOUPAL. IT APPEARS THAT ASSESSEE TOOK A PLEA BEFOR E THE CIT(A) THAT ACCEPTANCE OF PART OF THE CREDITS CLEARLY ESTABLISHED THAT FIR M HAS DISCHARGED ITS ONUS. THE SAID PLEA HAS BEEN REJECTED BY THE CIT(A) STATING T HAT THERE IS NO SUCH PROVISION IN THE INCOME TAX ACT THAT IN CASE OF ACCEPTANCE O F PART OF THE CREDIT AS GENUINE, THE ENTIRE CREDIT IS TO BE TAKEN AS GENUIN E. IN MY OPINION, THESE FINDINGS HAVE NO RELEVANCY IN THE PENALTY PROCEEDIN GS. HOWEVER, IN QUANTUM PROCEEDINGS, WHILE MAKING THE ADDITION ON ACCOUNT O F UNEXPLAINED CASH CREDITS, SUCH FINDINGS MAY BE RELEVANT. IN THE INSTANT CASE, THE REVENUE AUTHORITIES HAVE ACCEPTED THAT OUT OF RS. 17,55,000/-, RS. 5,66,000/ - HAS BEEN DEPOSITED BY THE PARTNERS IN THEIR RESPECTIVE CAPITAL ACCOUNT. IN OT HER WORDS, THE REVENUE AUTHORITIES BELOW HAVE ACCEPTED PARTLY THAT THE PAR TNERS HAVE DEPOSITED THE MONEY IN THEIR RESPECTIVE CAPITAL ACCOUNT. NOW, THI S ASPECT OF THE MATTER IS REQUIRED TO BE SEEN TOGETHER WITH OTHER CIRCUMSTAN CES OF THE CASE. IT APPEARS THAT THE ASSESSING OFFICER ASKED THE ASSESSEE FIRM TO ESTABLISH THE GENUINENESS OF OTHER CREDITS AMOUNTING TO RS. 8.55 LACS AND RS. 3.15 LAKHS. IN THIS REGARD, THE ASSESSEE FIRM SUBMITTED THE AFFIDAVITS OF FIVE PERSONS FROM WHOM SHRI SUNIL CHOUPAL CLAIMED TO HAVE TAKEN THE LOANS AND OF SMT. JANAK DULARI FROM WHOM GIFT OF RS. 3.00 LAKHS CLAIMED TO HAVE BEEN RECEIVE D. THE ASSESSING OFFICER ASKED THE ASSESSEE FIRM TO PRODUCE THE ABOVE SIX PE RSONS TO ENABLE HIM TO VERIFY THE GENUINENESS OF ITS CLAIMS BUT THE ASSESSEE FIR M FAILED TO PRODUCE THESE PERSONS. SIMILARLY, THE ASSESSEE FIRM ALSO SUBMITTE D THE AFFIDAVITS OF ALL THE PERSONS FROM WHOM SHRI SUDHRI CHOUPAL (PARTNER) HA D TAKEN LOANS. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THESE PERSONS IN ORD ER TO VERIFY THE GENUINENESS OF THE CASH LOANS AND, THEREFORE, THE ASSESSING OFF ICER DREW THE ADVERSE 11 INFERENCE AGAINST THE ASSESSEE FIRM. IN THE INSTANT CASE, THE ASSESSEE MADE THE SURRENDER OF RS. 11,69,000/- IN ORDER TO COOPERATE WITH THE DEPARTMENT AND PURCHASE PEACE OF MIND WHICH IS CLEARLY STATED IN T HE LETTER DATED 18.12.2007 . SHRI RAKESH JAIN, LD. COUNSEL FOR THE ASSESSEE CONT ENDED THAT THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE FIRM TO FURNI SH INACCURATE PARTICULARS OF INCOME AND THE PARTNERS OF THE FIRM NAMELY SHRI SUN IL CHOUPAL AGREED TO SURRENDER CAPITAL INTRODUCED BY THE PARTNERS AS A M EASURE OF AVOIDING LONG, COSTLY AND PROTRACTED LITIGATION, THEREFORE, SHRI R AKESH JAIN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WAS NOT JUSTIFIED. HE ALSO POINTED OUT THAT AS PER THE PART NERSHIP DEED DATED 7.11.2003, NO PARTNER WAS AUTHORIZED TO MAKE ANY STATEMENT, DE CLARATION AND SURRENDER IN INCOME TAX PROCEEDINGS ON BEHALF OF THE OTHER PARTN ERS OF THE FIRM. ACCORDING TO HIM, THE PARTNER WAS NOT AUTHORIZED TO MAKE THE SUR RENDER WHICH MAY BE AGAINST THE PROVISIONS OF INDIAN PARTNERSHIP ACT, 1932. AT THIS STAGE, I MAY OBSERVE HERE THAT THERE IS YET ANOTHER ASPECT OF THE MATTER WHIC H NEEDS TO BE DISCUSSED IN THE SUCCEEDING PARAGRAPHS OF THIS ORDER. IN THIS CASE, THE ASSESSEE RAISED A PLEA BEFORE THE LD. COMMISSIONER (APPEALS) THAT ADDITION ON ACCOUNT OF UNEXPLAINED CAPITAL CANNOT BE MADE IN THE CASE OF THE FIRM BEIN G IT IS THE FIRST YEAR OF THE FIRM. IT APPEARS THAT THE LD. COMMISSIONER HAS REJE CTED THIS PLEA WITHOUT ASSIGNING ANY COGENT REASONS. IT IS NOTICED THAT TH E ASSESSEE FIRM HAS STARTED ITS PRODUCTION FROM JANUARY 2005, WHICH FACT IS EVIDEN T FROM THE PURCHASE AND SALE BILLS AND ASSESSMENT ORDER UNDER HARYANA VAT ACT, 2 003. THE CONTENTION OF SHRI RAKESH JAIN, LD. COUNSEL FOR THE ASSESSEE IS T HAT THE FIRM HAS STARTED ITS BUSINESS FROM JANUARY 2005. IN THE ASSESSMENT ORD ER AT PAGE-1, THE ASSESSING OFFICER HAS ADMITTED THIS FACT THAT THE ASSESSEE ST ARTED ITS PRODUCTION DURING JANUARY, 2005. THE RELEVANT OBSERVATIONS MADE BY T HE ASSESSING OFFICER AT PAGE 1 OF THE ASSESSMENT ORDER READS AS UNDER;- THE ASSESSEE FIRM HAS DEBITED RS. 18505/- ON ACCOU NT OF BANK CHARGES, DETAILS HAVE BEEN FILED. THE ASSESSEE FIRM HAS 12 STARTED ITS PRODUCTION DURING JAN. 2005. AS SUCH BA NK CHARGES UP DECEMBER, 2004 AMOUNTING TO RS. 17,670/- BEING P RE- OPERATIVE EXPENSES IS DISALLOWED. 11. THERE IS NO MATERIAL ON RECORD TO CONTROVERT TH E ABOVE CONTENTION OF SHRI RAKESH JAIN, LD. COUNSEL FOR THE ASSESSEE. IT IS AL SO WORTHWHILE TO MENTION THAT THE ASSESSEE FIRM HAS RECEIVED CAPITAL FROM PARTNE RS DURING THE PERIOD 1.4.2004 TO 13.7.2004, AS PER THE DETAILS REPRODUCED HEREIN ABOVE, I.E. BEFORE THE ASSESSEE FIRM STARTED ITS BUSINESS IN JANUARY, 2005. THUS, IT WAS FOR THE PARTNERS TO EXPLAIN THE SOURCE OF THE CAPITAL INTRODUCED AND IN CASE OF HAVING BEEN FAILED TO DISCHARGE THE ONUS, THEN SUCH DEPOSITS COULD BE ADD ED IN THE HANDS OF THE PARTNERS OF THE FIRM; PARTICULARLY WHEN THE ASSESS EE FIRM STARTED ITS BUSINESS IN JANUARY, 2005. THERE IS NO EVIDENCE ON RECORD TO SH OW THAT THE ASSESSEE FIRM HAD OTHER SOURCES OF INCOME AFTER EXECUTION OF PARTNERS HIP DEED ON 7.11.2003 TO JANUARY, 2005, WHEN IT STARTED PRODUCTION OF PLYWOO D. THE CONTENTION OF THE ASSESSEE IS THAT IT HAD NOT UNDERTAKEN ANY BUSINESS OF WHATSOEVER NATURE UPTO JANUARY 2005, HENCE, THERE CANNOT BE ANY UNDISCLOSE D INCOME WHICH CAN BE INTRODUCED THROUGH PARTNERS CAPITAL. SHRI RAKESH JA IN LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PARTNERS INTRODUCED THE CAP ITAL IN THE BOOKS OF THE ASSESSEE FIRM BEFORE THE ASSESSEE FIRM STARTED ITS PRODUCTION, THEREFORE, DEPOSITS CANNOT BE TAKEN TO BE INCOME OF THE FIRM FROM UNDIS CLOSED SOURCES. IN THE CASE OF INDIA RICE MILLS V CIT (1996) 218 ITR 508 (ALL) , THE HON'BLE HIGH COURT HELD (HEAD NOTE) AS UNDER:- THE TRIBUNAL SHOULD HAVE TAKEN NOTE OF THE FACT TH AT ALL THE DEPOSITS AGGREGATING TO RS. 1,43,000 REPRESENTED TH E CAPITAL CONTRIBUTION OF THE PARTNERS IN THE FIRM AND THEY W ERE MADE BEFORE THE FIRM STARTED ITS BUSINESS. IT WAS FOR TH E PARTNERS TO EXPLAIN THE SOURCE OF THE DEPOSITS AND IF THEY FAIL ED TO DISCHARGE THE ONUS, THEN SUCH DEPOSITS COULD BE ADD ED IN THE HANDS OF THE PARTNERS ONLY. THE TRIBUNAL ERRONEOUSL Y CAME TO THE CONCLUSION THAT THE DEPOSITS REPRESENTED THE UN DISCLOSED 13 INCOME OF THE ASSESSEE-FIRM. THE APPROACH OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IN THIS CASE S EEMS TO BE CORRECT WHO CLEARLY HELD THAT UNEXPLAINED DEPOSI TS IN NO CASE, COULD BE THE INCOME OF THE ASSESSEE-FIRM BECA USE THE FIRM STARTED ITS BUSINESS ONLY AFTER THE CREDITS HA D BEEN MADE IN ITS BOOKS. THE TRIBUNAL WAS NOT CORRECT IN LAW IN INVOKING S. 68/69 AND TREATING THE SUM AS INCOME FROM UNDIS CLOSED SOURCE OF THE PETITIONER-FIRM WHEN THE PETITIONER FIRM HAD NOT YET EVEN COMMENCED ITS BUSINESS CIT VS. KAPUR BROS. (19790 10 CTR 280 : (1979) 118 ITR 741 (ALL): TC42R . 1396 DISTINGUISHED. IN THE ABOVE CASE , THE HON'BLE ALLAHABAD HIGH COURT RULED THAT THE PAR TNERS OF THE ASSESSEE FIRM MADE CAPITAL CONTRIBUTION BEFORE THE FIRM STARTED IT BUSINESS AND THEREFORE, THE ONUS WAS UPON THE PARTNERS TO EX PLAIN THE SOURCE OF DEPOSITS. THE HON'BLE HIGH COURT HAS CATEGORICALLY HELD THAT THESE UNEXPLAINED DEPOSITS IN NO CASE, COULD BE THE INCOME OF THE ASSESSEE FIR M. SIMILARLY, THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF ABHYUDAYA PHAR MACEUTICALS VS. CIT (2013) 350 ITR 358 (ALL.) ( HEAD NOTE,) HELD AS UNDER;- TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE UNE XPLAINED CASH CREDIT RECORDED IN THE ASSESSEES BOOKS BE ADD ED IN THE HANDS OF THE ASSESSEE. THERE WAS NO MATERIAL BEFORE THE TRIBUNAL TO HOLD THAT THE CAPITAL INTRODUCED BY THE MINOR PARTNER AT THE TIME OF STARTING OF THE BUSINESS, WA S INCOME OF THE ASSESSEE-FIRM. THE TRIBUNAL ERRONEOUSLY CAME TO THE CONCLUSION THAT THE DEPOSITS REPRESENTED UNDISCLOSE D INCOME OF THE ASSESSEE-FIRM. ALL THE THREE AUTHORITIES BELOW COMMITTED THE SAME MISTAKE AND IN THIS REGARD THEIR ORDERS CA NNOT BE ALLOWED TO STAND. 12. AT THIS STAGE, I MAY ALSO REFER TO THE DECISION OF THE HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. KEWAL KRISHAN & PARTNERS (2009) 18 DTR 121 (RAJ.) WHEREIN THE HON'BLE HIGH COURT HELD THAT CAPITAL CONTRIBUTION MADE BY THE PARTNERS ON THE FIRST DAY OF COMMENCEMENT OF BUSINESS COULD NOT BE 14 ADDED IN THE HANDS OF THE FIRM U/S 68 OF THE ACT. THE HON'BLE HIGH COURT FURTHER HELD THAT ADDITION IF AT ALL CAN BE MADE U/ S 69 IN THE HANDS OF THE PARTNERS, IF THEY FAILED TO DISCHARGE THE ONUS. IN THE INSTANCE CASE, FIRST SALE BILL OF THE ASSESSEE FIRM IS DATED 1.1.2005. ADMITTEDLY , THE ASSESSEE FIRM IS MANUFACTURING AND TRADING IN PLYWOOD. THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT THE ASSESSEE FIRM HAD STARTED ITS PRO DUCTION FROM JANUARY 2005. THERE IS NO DISPUTE THAT THE PARTNERS INTRODUCED TH E CAPITAL IN THE ASSESSEE FIRM DURING THE PERIOD BETWEEN 1.4.2004 TO 31.7.2004, WH ICH IS BEFORE THE FIRM STARTED ITS BUSINESS IN JANUARY, 2005. THUS, AUTHOR ITIES BELOW WERE NOT JUSTIFIED IN HOLDING THAT UNEXPLAINED DEPOSITS ARE INCOME OF THE ASSESSEE FIRM. IT IS CLEAR FROM THE FACTS OF THE PRESENT CASE THAT THE ASSESS EE FIRM STARTED ITS BUSINESS ONLY AFTER THE CREDITS HAVE BEEN MADE IN ITS BOOKS. THUS, IN MY OPINION, IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) O F THE ACT. 13. SHRI RAKESH JAIN, LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE DECISION OF THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CAS E OF CIT V CHENNUPATI TYRE & RUBBER PRODUCTS IN ITA NO. 190 OF 2003 DATED 21.1 0.2014, WHEREIN THE HON'BLE HIGH COURT CONCLUDED THAT WHERE THERE WAS N O INTENTION ON THE PART OF THE ASSESSEE TO CONCEAL THE INCOME AND ASSESSEE HAD AGREED TO OFFER SUNDRY CREDITS WHICH WERE CARRIED FORWARD FROM THE PREVIOU S YEAR AS INCOME AS A MEASURE OF PURCHASING PEACE, IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WAS NOT JUSTIFIED. IN THE INSTANCE CASE ALSO, THE CONTE NTION OF THE REVENUE IS THAT ONE OF THE PARTNERS OF THE ASSESSEE FIRM HAS SURRENDER ED RS. 11,69,000/- AS UNDISCLOSED INCOME OF THE FIRM FOR THE YEAR UNDER C ONSIDERATION . IN MY CONSIDERED OPINION, THIS STAND OF THE REVENUE IS N OT TENABLE IN VIEW OF THE JUDGEMENT OF THE HON'BLE HIGH COURT OF ANDHRA PRADE SH REFERRED TO ABOVE. IN THE SAID CASE, THE ASSESSING OFFICER DOUBTED THE CR EDITWORTHINESS OF THE SUNDRY CREDITS OF RS. 5,67,840/- AND 5,60,160/-, SAID TO B E FROM SUPER TYRE RETREADS AND ANDHRA RUBBER FACTORY. THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT 15 FOUND TO BE SATISFACTORY BY THE ASSESSING OFFICER. THEREUPON THE ASSESSEE AGREED FOR TREATING THOSE TWO AMOUNTS AS INCOME. ACCORD INGLY, THE ADDITION WAS MADE IN THE ASSESSMENT ORDER AND TAX WAS PAID ON THE SAI D ADDITION. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT, PROPOSING TO LEVY PENALTY, IN RESPECT OF ABOVE TWO AMOUNTS. THE ASSES SING OFFICER IMPOSED THE PENALTY U/S 271(1)(C) OF THE ACT. ON APPEAL, THE CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE HOLDING THAT THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO HIDE THE INCOME. THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL. THE APPEAL WAS DISMISSED BY THE TRIBUNAL. THE REVENUE CHALLEN GED THE ORDER OF THE TRIBUNAL IN APPEAL U/S 260A OF THE ACT BEFORE THE H ON'BLE HIGH COURT OF ANDHRA PRADESH. THE HON'BLE ANDHRA PRADESH HIGH COURT REJE CTED THE APPEAL OF THE REVENUE, OBSERVING AS UNDER;- THE PRINCIPLE THAT RUNS CUTTING ACROSS ANY SYSTEMS OF LAW IS THAT BEFORE PERSON IS VISITED WITH PUNISHMENT OR PENALTY , THE WRONGFUL ACT ON HIS PART MUST BE ESTABLISHED. IF NOT A DELI BERATE INTENTION, AT LEAST, INTENTION, AS SUCH, MUST BE PROVED TO BE EXISTING. THE INTENTION OF THIS NATURE MAY NOT BE EQUATED TO THE CONCEPT OF MENS REA. AT THE SAME TIME, THE MINIMUM CONTRAST WITH A N INSTANCE OF MERE OMISSION, OR FAILURE MUST BE MADE. OTHERWISE, EVERY INADVERTENT OMISSION, OR A BONA FIDE UNDERSTANDING OF A PARTICULAR PROVISION, WHICH IS NOT ACCEPTED BY THE INCOME TAX OFFICER MAY EXPOSE THE ASSESSEE TO PENALTY. IF THAT TIME IS PU RSUED, ACT MAY TURN OUT TO BE THE ONE OF THE COLLECTION OF PENALTI ES THAN THE INCOME TAX. RECENTLY, IN I.T.T.A.NO.180 OF 2003, WE OBSER VED AS UNDER: THE LEVY OF PENALTY CANNOT BE RESORTED TO AS A MATT ER OF COURSE. BY THEIR VERY NATURE, THE RETURNS ARE BOUND TO BE A T VARIANCE FROM WHAT IS CONTEMPLATED UNDER THE ACT OR THE ESTIMATES OF THE ASSESSING OFFICERS. MANY A TIME, THE UNDERSTANDING OF A GIVEN PROVISION IN A PARTICULAR WAY, ITSELF WOULD LEAD TO A CONSIDERABLE DIFFERENCE AS TO THE INCOME OR THE CORRESPONDING TA X. THE VERY FACT THAT QUITE LARGE NUMBER OF REMEDIES IN THE FOR M OF APPEALS AT VARIOUS STAGES IS PROVIDED FOR, DISCLOSES THAT EVEN THE 16 UNDERSTANDING OF THE ASSESSING OR ADJUDICATORY AUTH ORITIES; NOT ABSOLUTE. THE LEVY OF PENALTY IS NOT GOING TO LEAVE THE MATTER AT THAT. IT WOULD EXPOSE THE ASSESSEE TO PROSECUTION A LSO BY TREATING HIM AS AN ECONOMIC OFFENDER. AN ASSESSEE CAN BE MA DE TO SUFFER SUCH FAR REACHING CONSEQUENCES, IF ONLY FACTS OF TH E CASE SUPPORT, AND IT EMERGES THAT THE ASSESSEE HAD A CLEAR INTENT ION TO SUPPRESS THE INCOME. LEARNED COUNSEL FOR THE APPELLANT PLACED RELI ANCE UPON THE JUDGMENT OF THE SUPREME COURT IN MAK DATA P. LTD. V . COMMISSIONER OF INCOME TAX . THEIR LORDSHIPS HELD THAT ONCE AN ITEM OF INCOME WAS FOUND TO HAVE BEEN CONCEALED, TH E MERE FACT THAT THE ASSESSEE HAS VOLUNTARILY DISCLOSED IT THER EAFTER, DOES NOT ABSOLVE HIM FROM BEING PROCEEDED UNDER SECTION 271( 1)(C) OF THE ACT. WE RESPECTFULLY FOLLOW THAT. HOWEVER, IT IS IMPORTANT TO UNDERSTAND THE PURPORT OF VERY WORD CONCEALMENT. T HAT CAN OCCUR, ONLY WHEN THE PERSON IS IN FULL KNOWLEDGE OF THE STATE OF AFFAIRS AND EVEN WHILE BEING UNDER OBLIGATION TO MA KE IT KNOWN TO OTHERS, AND IN PARTICULAR THE AUTHORITIES UNDER THE ACT FAILS OR REFUSES TO DO SO. IT IS THEN, AND ONLY THEN, THAT HE CAN BE SAID TO HAVE CONCEALED AND ONCE THE FACTUM OF CONCEALMENT I S PROVED, HIS ATTEMPT TO VOLUNTARILY DISCLOSE IT DOES NOT SAVE HI M. IN THE INSTANT CASE, WE DO NOT FIND ANY INGREDIENTS OF CONCEALMENT . WE DO NOT FIND ANY BASIS TO INTERFERE WITH TH E ORDER PASSED BY THE TRIBUNAL. THE APPEAL IS ACCORDINGLY DISMISSED. THERE SHALL BE NO ORDER AS TO COSTS. THE MISCELLANEOUS PETITION FILED IN THIS APPE AL SHALL ALSO STAND DISPOSED OF. IN THE ABOVE JUDGEMENT, THE HON'BLE HIGH COURT OF A NDHRA PRADESH HAS CONSIDERED THE JUDGEMENT OF THE HON'BLE SUPREME COU RT IN MAK DATA P. LTD V. CIT, (2013) 358 ITR 593 (SC) AND RULED THAT WHERE T HERE WAS NO INTENTION ON THE PART OF THE ASSESSEE TO CONCEAL INCOME AND THE ASSESSEE HAD AGREED TO OFFER SUNDRY CREDITS WHICH WERE CARRIED FORWARD FROM THE PREVIOUS YEAR AS INCOME AS 17 A MEASURE OF PURCHASING PEACE, IMPOSITION OF PENAL TY U/S 271(1)(C) OF THE ACT WAS NOT JUSTIFIED. IN THE INSTANT CASE ALSO, THE AS SESSEE HAD CLEARLY DISCLOSED THE REASONS ON ACCOUNT OF WHICH, IT AGREED TO TREAT THE CONTRIBUTION MADE BY THE PARTNERS TOWARDS CAPITAL AS ITS INCOME. IN MY OPIN ION, THERE WAS ALMOST A MEASURE TO PURCHASE PEACE. IT IS NOT A CASE WHERE THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 14. VIEWED FROM ANY ANGLE, IN THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE, NO PENALTY US/ 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME CAN BE VALIDLY LEVIED IN THIS CASE. IN THAT VIEW OF THE MATTER, I CANCEL THE IMPUGNED PENALTY. 15. BEFORE PARTING WITH THIS CASE, I MAY OBSERVE HE RE THAT THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AGAINST THE ASSESSMENT ORD ER PASSED BY THE ASSESSING OFFICER. HOWEVER, THERE WAS A DELAY OF 5 MONTHS AND 19 DAYS IN FILING THE APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DID NOT CONDONE THE DELAY IN FILING THE APPEAL BEFORE HIM. HENCE, HE HAS NOT GIV EN ANY FINDINGS ON THE MERITS OF THE CASE. WHEN THE MATTER CAME UP BEFORE THE TRI BUNAL, THE TRIBUNAL WHILE UPHOLDING THE ORDER OF CIT(A) PASSED IN QUANTUM APP EAL HELD THAT THE CIT(A) WAS JUSTIFIED IN REJECTING THE APPEAL OF THE ASSESS EE SINCE THE ASSESSEE FAILED TO SHOW ANY SUFFICIENT CAUSE FOR THE DELAY OCCURRED IN FILING THE APPEAL BEFORE CIT(A). 16. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.03.2016 SD/- (H.L.KARWA) VICE PRESIDENT DATED : 09 TH MARCH, 2016 RKK 18 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 19