TMI Blog2015 (11) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the ld. CIT(A), Ajmer dated 27-05-2011 for the assessment year 2007-08 wherein the substantial ground of appeal raised by the assessee is that the ld. CIT(A) has erred in confirming the penalty of ₹ 1,51,930/- levied u/s 271(1)(c) of the Act. 2. Brief facts of the case are that in the quantum proceedings, credit balance shown in the books of accounts of the assessee in the name of M/s. Mayank Fabrics was held bogus and the amount of ₹ 5,18,000/- was treated as assessee s income u/s 41(1)(a) of I.T. Act and added to the total income by the AO. The matter was carried in appeal before the ld. CIT(A) without any success and the matter has since attained finality as no further appeal was filed before the Tribunal. The AO thereafter levied penalty of ₹ 1,51,930/- u/s 271(1)(c) of the Act which the assessee appealed unsuccessfully before the Ld CIT(A). The assessee is now before us against the levy of said penalty. 2.1 Before we proceed to examine the matter of levy of penalty, it would be relevant to note the facts which have a bearing on the matter in more detail, the AO s action and response/explanation of the assessee. 2.2. During the course of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,38,000 Therefore, in order to verify the correctness of assessee's claim and that of M/s. Mayank Fabrics, information u/s 133(6) of the Act was called from Branch Manager, SBI, Madanganj-Kishangarh requesting them to provide the details of account holder from whose account the above cheques were issued and credited into assessee's account. Similarly, M/s. Mayank Fabrics was again requested to supply a copy of their bank statement for the above period i.e. from 01-04-2005 to 15-04-2005. A reply was received vide letter No. BM dated 10-11-2009 from Branch Manager, State Bank of India, Madanganj-Kishangarh stating that the above cheques were issued by M/s. Vikas Industries, Subhash Colony, Madanganj-Kishangarh. In the meantime, M/s. Mayank Fabrics have also filed copy of their bank statement maintained with Oriental Bank of Commerce for the period 1-04-2005 to 15-04-2005. On examination of the same, it is found that no cheque has been issued to M/s. Agarwal Texcom Industry in these dates. 2.5. The above facts were made known to the assessee and in response, the assessee filed a written reply on 20-11-2009as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s. Mayank Fabrics to the assessee and thus, were received by assessee from M/s. Mayank Fabrics and accordingly were credited in its name in the books of assessee. Merely because the cheques were not issued by M/s. Mayank Fabrics but were endorsed by it to the assessee, it cannot be alleged that the amount was not received by assessee in view of the fact that receipt of the amount by assessee was not doubted since the same has been received through banking channel. Further, the party issuing cheques is an existing concern identity of which is not doubted and thus the source of the amount stands proved. Thus, it remains a fact that the amount was in fact received by assessee through cheque and was partly repaid in the F.Y. 2005-06 and complete repayment was done in subsequent years. Thus, it cannot be alleged that the assessee has shown a false liability in its books of accounts. Further neither in the year under appeal nor in preceding assessment year, any entry in respect of any funds from M/s. Vikas Industries is written in the books of assessee. 2.9 The ld. AR further submitted that the law is well settled that though the finding recorded in the assessment orders are rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Raj.) (viii) ACIT vs. ARBRIL Pharmaceuticals (P) Ltd. 70-ITD-206/212 (viii) ITO vs. Gurcharan Singh Co. (Chd.) 72 TTJ 774 (ix) CIT vs. Ashok Takar ,170 Taxman 471 (Del.) (x) CIT vs. Haryana Warehousing Corp. (ITA No. 871 of 2008- Punj. Har.) (xi) ACIT vs. Malu Electrodes (P) Ltd. , 127 TTJ 599 (Nag.) (xii) Addl. CIT vs. Agarwal Misthan Bhandar, 131 ITR 619 (Raj.) (xiii) CIT vs. Suresh Chandra Mittal, 251 ITR 9 (SC) 2.11 The ld. DR relied on the orders of the AO and the ld CIT(A). 2.12 We have heard the rival contentions and perused the material available on record including the written submission of the assessee. In the instant case, the AO has made an addition of ₹ 5.18 lacs claiming the same to be a bogus liability and added the same to the total income of the assessee u/s 41(1)(a) of the Act. In this regard, from the perusal of the balance sheet, it is noted that the assessee's has shown particulars of M/s. Mayank Fabrics amounting to ₹ 5.18 lacs under the head sundry creditors . The particulars of trade credits in name of M/s Mayank Fabrics were thus apparent and visible on the face of the balance sheet. During the course of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would apply in a case where there has been remission or cessation of liability during the year under consideration subject to the conditions contained in the statute being fulfilled. Additionally, such cessation or remission has to be during the previous year relevant to the assessment year under consideration. In the present case, both elements are missing. There was nothing on record to suggest there was remission or cessation of liability that too during the previous year relevant to the assessment year 2007-08 which was the year under consideration. It is undoubtedly a curious case. Even the liability itself seems under serious doubt. The Assessing Officer undertook the exercise to verify the records of the so called creditors. Many of them were not found at all in the given address. Some of them stated that they had no dealing with the assessee. In one or two cases, the response was that they had no dealing with the assessee nor did they know him. Of course, these inquiries were made exparte and in that view of the matter, the assessee would be allowed to contest such findings. Nevertheless, even if such facts were established through bi-parte inquiries, the liability as it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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