TMI Blog2013 (8) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... at the addition has been made under the deeming provision of section 68 is no bar for the levy of penalty. Penalty proceedings u/s 271(1)(c) – Held that:- Assessee has been able to adduce some evidences toward establishing the credits as representing genuine liabilities - Accepting or rejecting the assessee's claim is based on appreciation of those evidences, forming part of the assessee's explanation, and for which reference is made to a series of decisions by the apex court, as follows - In sum, decision in the instant case is based purely on findings of fact; the law in the matter being well settled and trite: CIT v. Atul Mohan Bindal [2009 (8) TMI 44 - SUPREME COURT]; Union of India v. Dharmendra Textile Processors [2008 (9) TMI 52 - SUPREME COURT] etc. - Penalty deleted. - Decided in favaor of assessee. - I.T.A. No.3849/Mum/2011 - - - Dated:- 2-8-2013 - Shri B. R. Mittal, JM And Shri Sanjay Arora, AM,JJ. For the Appellant : Shri Vimal Punmiya For the Respondent : Ms. Neeraja Pradhan ORDER Per Sanjay Arora, A. M. This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-20, Mumbai ('CIT(A)' for short) date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the balance loans aggregating to Rs.18.35 lacs, for which the addition/s was confirmed by the first appellate authority, it restored the matter back to the A.O. to verify likewise; the assessee claiming the same to being also brought forward loans, holding as: "8. Aggrieved by the order of the Ld. CIT(A), assessee preferred an appeal before us. The Ld. Counsel for the assessee Shri Vimal Punmiya submitted a Paper book and from which we find that the amount of Rs.11,00,000/- from Shri Nick Lakhani, Rs.3,75,000/- from India Trdg. Corpn., Rs.1,60,000/- from Nakul Jain and Rs.2,00,000/- Premiere Road Services Ltd. are shown as opening balance. Similar to the finding of the Ld.CIT(A) the case of Saroj Gupta S. P. Capital Financing Ltd., we direct the AO to verify whether these are opening balances and if they are found to be opening balances the addition is to be deleted. 2.2 The A.O., in the second round, found that not only the loans from the four parties for a total of Rs.18.35 lacs were current loans, the balance loans of Rs.2.15 lacs from the two parties afore-referred also represented fresh loans obtained during the year, so that the addition came to be made at Rs.20.50 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily factual, i.e., whether the assessee has been able to satisfactorily prove the impugned credits as to their representing the assessee's genuine liabilities or not. If and to the extent it has been, its return of income does not bear any concealment or inaccurate furnishing of any particulars of income, so that no penalty u/s.271(1)(c) could be levied. The law placing the onus to prove the credits on the assessee, a failure to do so would invite addition in its respect as unexplained income u/s.68. Further, that the addition has been made under the deeming provision of section 68 is no bar for the levy of penalty; the substance of the income being actual funds, reflected in the assessee's own accounts, and the legal fiction extends only to the deeming thereof, in the absence of a satisfactory explanation as to their nature and source, as its income. The legal position is not disputed, case law on which is legion. 4.2 So however, as the penalty proceedings are separate and distinct proceedings, the factual findings of the assessment proceedings, though relevant and persuasive, cannot be considered as conclusive, and the assessee could and, rather, is obliged to furnish an expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We decide accordingly. iii) Nakul Jain - Rs.1,60,000/- : A loan of Rs.2 lacs was taken on 28.09.2002 per an account payee cheque, of which Rs.40,000/- stands repaid. The Revenue has treated the balance of Rs.1.60 lacs as not explained. Now, it cannot be that while the amount repaid represents a genuine loan, the part of it which continues to outstand is not so. The assessee has also received legal notice u/s.138 dated 19.08.2004 and 07.09.2004 toward dishonor of cheques issued in part payment (at Rs.20,000/- each), qua which notices for hearing and attendance (dated 29.11.2004) have also been received from the relevant criminal court (PB pgs.56-59). The legal notices also bear reference to the amount initially advanced, i.e., Rs.2 lacs. No case for levy of penalty is clearly made out. We decide accordingly. iv) Saroj Gupta - Rs.1,75,000/- The A.O. found on the basis of the tax audit report for A.Y. 2002-03 (Annexure - 6 thereto) that the entire loan of Rs.3.50 lacs received from the said creditor in that year had been squared up. The loan of Rs.1.75 lacs, i.e., to the extent it outstands as on 31.03.2003, is a fresh loan, obtained during the relevant previous year. In fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25.01.2004 for Rs.2 lacs (PB pg.63). The assessee's case and bona fides are, thus, established. The penalty is, accordingly, deleted. 4.4 Before parting with the order, we may clarify that the assessee has per its written submissions cites a host of case law. The said reliance, if it may be called so, is without adverting to the facts of those cases and how are those applicable and comparable with that of the instant case. The addition made to the returned income, for which the penalty stood levied, is u/s.68. Explanation, if any, offered in establishing the genuineness of the credits, is essentially a matter of fact. The only explanation offered by the assessee in the quantum proceedings, which is itself a matter of fact, was that the said credits in fact pertain to an earlier year, and which was found on verification as incorrect on facts, so that the additions stood confirmed. In the penalty proceedings, the assessee has been able to adduce some evidences toward establishing the credits as representing genuine liabilities. Our decision, either accepting or rejecting the assessee's claim, is again based on appreciation of those evidences, forming part of the assessee's explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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