TMI Blog1995 (6) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted. Confirmations have not at all been filed for the loans in the names of Shri Des Raj and Smt. Santosh Rani Jain. Vide letter dated 7-1-1987, it has been submitted by the assessee that when business was so large small loans were received in routine course which were duly accounted for. Vide explanation dated 27-1-1987 it had been further submitted that the assessee received large number of deposits from the public against the serial receipts and interest had been paid by cheques and hence the credit should be accepted as genuine. The Assessing Officer mentioned that all the loans under consideration were by cash and that they were not deposits under any Public Deposit Scheme and that there was no evidence for the assessee having issued any public advertisement and received these deposits. The Assessing Officer held that confirmation filed for the loan in the name of Miss Asha Jain was not proper. Moreover, the confirmation signed by Sushma Jain was undated. The Assessing Officer further observed that no explanation had been submitted-regarding the capacity of the party who advanced the loans and that none of the parties have been assessed to income-tax. He further observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness of the credits in the names of six parties, that the assessee had filed confirmatory letters in respect of three creditors and produce deposit receipts registers, that penalty proceedings were akin to criminal proceedings, that merely because the assessee's explanation in regard to the genuineness of cash credits was not accepted by the revenue in assessment proceedings it would not give rise to any conclusion that the assessee had suppressed income, that there should be material on record to prove the nature of the income and that it was taxable, that penalty could not be levied solely on the basis of reasons given in the assessment order, that there was no finding in the penalty order that the credits were bogus, that the addition might be good for assessment proceedings, that in penalty proceedings something more had to be done by the revenue and that admittedly no such thing had been done in the assessee's case. Accordingly it was admitted that the Assessing Officer was not justified in imposing the penalty under section 271(1)(c). 5. The CIT(A) confirmed levy of the penalty by observing as under :-- " I have examined the contentions of the assessee's A.R. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er book. In the case of Shri Des Raj also, Rs. 3,000 was given by cheque This can be seen at page 13 where copy of his account is given. In the case of Asha Jain, her mother Smt. Sushma Jain has signed the confirmation letter. The Assessing Officer noted that the confirmation letter signed by Smt. Sushma Jain on behalf of her daughter Asha Jain was undated. Even the confirmation letters from Smt. Maina Devi and Smt. Ratan Mala Jain placed at pages 6 and 7 of the paper book were also undated. Confirmation letters in respect of the creditors - Shri Des Raj, Smt. Santosh Rani Jain and Shri Hans Raj Mehta were not filed. In the confirmation letters full addresses have been given. Copies of accounts of all the six creditors with full addresses are filed before the Assessing Officer. Thus, the identity of the creditors, creditworthiness of the creditor and the genuineness of the transactions have been proved. The assessee has discharged the onus put on it by the Act. Whether the creditors are assessed to income-tax or not is irrelevant. During the course of the assessment proceedings the Assessing Officer never asked for production of the creditors. It is not the case of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Banaras Textorium v. CIT [1988] 169 ITR 782 (All.). Though not specifically invoked by the Assessing Officer, Explanation 1 to section 271(1) applies. For this proposition, reliance is placed on the decision of the Tribunal dated 3-2-1995 in the case of D.R. Thapar v. ITO in IT Appeal No. 5320 (Delhi) of 1990 copy of which has been filed before the Tribunal. 8. in reply, the assessee's counsel stated that the assessee requested the Assessing Officer in its reply dated 11-2-1989 to give it an opportunity to lead evidence in regard to the genuineness of credits, if the Assessing Officer is not satisfied with the submissions made therein. The assessee's counsel further urged that the Assessing Officer should have informed the assessee that he was not satisfied with the submissions made by the assessee and that he should lead evidence in regard to genuineness of the credits as prayed by it. The Assessing Officer has not done so. Hence the assessee cannot be blamed. 9. 1 have considered the rival submissions, case law cited and perused the papers filed before me. As already stated in para 2 there were cash credits in the names of six parties. The assessee filed confirmation let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such person, if such explanation is bona fide and all the facts relating to the same and material to the computation of his total income have been disclosed by him." The proviso was omitted with effect from 10-9-1986. 11. In the present case, the assessee explained that the impugned cash credits represented loans from, six parties names of whom have been mentioned in para 2. The assessee filed confirmation letters in respect of three creditors, viz., Miss Asha Jain, Smt. Maina Devi and Smt. Rattan Mala Jain. So, it cannot be said that the assessee is not able to substantiate its explanation in respect of the loans from Miss Asha Jain, Smt. Maina Devi and Smt. Ratan Mala Jain. It has to be seen whether it can be said that the assessee has not been able to substantiate its explanation in respect of the other three creditors, namely, Shri Des Raj (Rs. 5,000), Smt. Santosh Rani (Rs. 2,000) and Shri Hans Raj Mehta (Rs. 4,500). In the case of Shri Hans Raj Mehta the amount of Rs. 4,500 was given by two cheques - No. 547825 for Rs. 2,500 and No. 547826 for Rs. 2,000. This can be seen from pages 11 and 12 of the paper book filed by the assessee. There is no material brought on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
