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ACIT 23 (1) Mumbai Versus Kusum K Jain

2015 (7) TMI 599 - ITAT MUMBAI

Penalty levied u/s. 271(1)(c) - unaccounted loan advancing - CIT(A) deleted penalty levy - Held that:- In the quantum order, it has been found by the Tribunal that the confirmation of the addition by the learned CIT(A) was based on incorrect facts. Therefore, the quantum was set aside to the file of the AO. The relevant observations of the Tribunal have already been reproduced in the above part of this order. The assessee has filed ample evidence in respect of each person from whom she has recei .....

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in For the Respondent : Shri Jayant R Bhatt ORDER Per I P Bansal, Judicial Member : This appeal is filed by the Revenue. It is directed against the order passed by the CIT(A) dated 01.10.2013 for A.Y. 2005-06. The grounds of appeal read as under: Whether on the facts and in circumstances of the case and in law the Ld. CIT(A) was right in deleting penalty levied u/s. 271(1)(c) of the Income-tax Act 1961 of ₹ 12,09,516/- without appreciating that quantum addition was made on the basis of inf .....

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ji 5,00,000 Laxmanlal 5,00,000 Mohan Shingh 5,00,000 Rupalalji 5,00,000 Vijay Singh 5,00,000 Gordhan Singh 5,00,000 Mod Singh 5,00,000 Total 35,00,000 It was the case of the assessee that these amounts were given to the aforementioned persons in earlier years for the purpose of mining, which were received back by the assessee during the year under consideration. However, the AO disbelieved such version of the assessee and added a sum of ₹ 36,80,000/-, which included the aforementioned amou .....

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arting from assessment year 1997-98 onwards have also been looked into. It is seen from the balance sheet of Ms. Kusum Jain on 31.03.1997 that the amount of ₹ 35 lakhs is reflected under the head loans and advances as found and stated above. However, detail schedule for the same is not forming part of the audited accounts filed by the appellant. Same is the case for assessment year 1998-99 where the amount of ₹ 35 lakhs is appearing under the head loans and advances however again par .....

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pellant that in case of Shri Jagdish Gameti copy of agreement (through unregistered) dated 14.07.2004 has been filed in support of the claim that the appellant received back also ₹ 5 lakhs from Shri Jagdish Gameti. 17. Then records of earlier year available in form of audit report have also been checked. It is seen from the audit reports filed along with return for assessment year 1996-97 that rent for pocklain machine has been debited at ₹ 3,69,600/- in the trading account of Lovely .....

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the amount given and received from them satisfactorily. The only thing in her favour was that the transaction was made in cash because there were no bank branch in the near by area where these persons are residing and working. Though the appellant herself is in a city like Mumbai she could not substantiate with any evidence the withdrawal if any made by her to that extent made for that year including bank statements, cash book claimed to be maintained by business and capital account for relevant .....

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s that ₹ 5,00,000/- were returned by one of debtors named Shri Jagdish Gameti on 14.07.2004 which goes against appellant. (2) Along with this the whole issue revolved around the make believe story of appellant was that it was done because intensive labour was required to work on the site and they have to be paid in cash only for the reason that in initial stage of mining the extraction of sub soil and soft strata is not possible with the help of machines i.e. Pocklain machine and JVC as it .....

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ant was already carrying mining job and after lapse of permitted period she applied for renewal of license. Consequently, the mining rights were renewed further for another twenty years from 1999 to 2090 (2019) vide order dated 01.07.1997. Thus by no stretch of imagination it can be presumed that license being renewed in the year 1997, still 1997 was initial year of mining when mining job could be done only with manual labourers and hence the theory advanced by the appellant is found totally uns .....

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mpugned penalty has been levied by the AO. The aforementioned order of the CIT(A) was challenged by the assessee in further appeal, which has been decided by the Tribunal vide its order dated 17.06.2015 and it was found that aforementioned findings of the CIT(A) in the quantum proceedings were contrary to the facts available on record as the aforementioned amount of ₹ 35 lacs was not outstanding in the balance sheet for A Y 2005-06. Therefore, the order passed by the learned CIT(A) was set .....

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e view entertained by Ld CIT(A) was wrong. Accordingly he submitted that the explanation given by the assessee was not properly appreciated by the tax authorities by considering the personal books of account of the assessee. 6. On the contrary, the Ld D.R strongly supported the order of Ld CIT(A). 7. Having heard rival submissions, we find merit in the submission of the assessee that the factual aspects have not been properly appreciated by the tax authorities. We notice that the AO did not refe .....

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of the AO with the direction to examine this issue afresh by duly considering the personal financial statements and/or books of accounts of the assessee and take appropriate decision in law. 8. During the course of hearing, the Ld A.R also placed reliance on certain case law to contend that the refund of advance amount given in earlier years would not attract the provisions of sec. 68 of the Act. Since we have set aside the matter to the file of the AO, the assessee is free to bring those case l .....

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as pleaded that the assessee had furnished ample evidence to prove that what was received by the assessee from the above mentioned seven persons were amounts paid by the assessee in earlier years and on completion of work the amounts were received back by the assessee. The evidence filed before the AO, as per the submissions recorded by the learned CIT(A) is as under: During the course of assessment proceedings as well as during the course of appellant proceedings and also during the penalty pro .....

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our ready reference. The appellant has also filed confirmation of accounts appearing in the assessee s book duly confirmed by the Shree Mohan Singh Rajput. Appellant had also requested AO If you need You can also verify the genuinely of the above transaction by issuing the summons or notice u/s. 131 or 133(6) of the income tax act and verify accordingly 2. GORDHAN SING RAJPUT : The amount was given to him on 05/1/98 to carry out the initial working and that they were given mobilization advance i .....

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3. JAGDISH GAMETI : The amount was given to him on 20/7/98 to carry out the initial working and that they were given mobilization advance in term of deposit and he were required to handle the extraction activities which interalia include arrangements of the workers required. The copy of agreement attached herewith for your ready reference. The appellant has also filed confirmation of accounts appearing in the assessee s books duly confirm by him. Appellant has also requested AO if you need You .....

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nt has also filed confirmation of accounts appearing in the assessee s books duly confirm by him. Appellant has also requested AO if you need You can also verify the genuinity of the above transaction by issuing the summons or notice u/s. 131 or 133(6) of the income tax act and verify accordingly. 5. LAXMILAL GAMETI : The amount was given to him on 19/7/97 to carry out the initial working and that they were given mobilization advance in term of deposit and he were required handle the extraction .....

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/97 to carry out the initial working and that they were given mobilization advance in term of deposit and he were required to handle activities which interalia include arrangements of the workers required. The copy of agreement attached herewith for your ready reference. The appellant has also filed confirmation of accounts appearing in the assessee s books duly confirm by him. Appellant has also requested AO if you need You can also verify the genuinity of the above transaction by issuing the s .....

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ks duly confirm by him. Appellant has also requested AO if you need You can also verify the genuinity of the above transaction by issuing the summons or notice u/s. 131 or 133(6) of the income tax act and verify accordingly. Appellant also requested the AO that she had attached all possible documentary evidence as required for proving genuineness of advances and realization of advances . In case if he goodself needed to verify of said advances he may issue summons under section 131 of Income Tax .....

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h various parties the appellant could get her principal amount back which she had deposited in her bank account. During the assessment proceedings the appellant was asked to justify such cash deposits in her bank account which was duly explained. However the AO has disregarded the explanation given in this regard and has made addition of ₹ 36,80,000/- being 35,00,000/- received from those who were being given advances by her in the F Y 97-98, which was in turn given as loan given to Shri K .....

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s well as the appellant could also produce various parties before the AO. However, the same has not been considered by the AO on some technical grounds without appreciating the actual facts of the case and, therefore, the AO has violated the principles of natural justice. Similarly the AO has also failed to appreciate that the appellant is a lady and that calling her to produce the people would not be possible without any legal rights and therefore it was on AO to have issued summons of commissi .....

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hich was stated to be the amount received back by the appellant from advances given by her in earlier years. It is also true that the appellant had been showing such advances as outstanding year after year and that during the year under consideration the appellant has reduced the aforesaid debt as outstanding. Thus, there is a reduction of advances to the extent of amount shown to have been received by the appellant. These facts are neither controverted nor disproved. The appellant has also expl .....

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the penalty despite additions were confirmed on the ground that in the balance sheets of 2004 and 2005 the amounts of debtors were found to be reduced to the extent of such cash being deposited in the bank account. In the appellant s case also the appellant has explained the source to be refund of advance which are also found to be reduced from the outstanding appearing in preceding previous year. As also in the instant case, the parties from who, the amount were said to be received back had als .....

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