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TMI Blog2015 (11) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... and sale of marble slab & tiles under the name and style of M/s. Rajasthan Marbles. The assessment of the assessee was completed by the AO vide his order dated 8-12-2009 determining taxable income of the assessee at Rs. 6,29,620/- as against returned income of Rs. 2,34,330/-. During the course of assessment proceedings, the AO observed that the assessee had shown sundry credit balance of Rs. 3,95,288/- in the name of Ramesh Marble Udyog. The AO made enquiry u/s 133(6) of the Act from M/s. Ramesh Marble Udyog and they intimated that they did not have any transactions with the assessee during financial year 2006-07 and therefore, there was no accounts of the assessee in their books of account. The AO after making enquiry came to the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s treated as assessee's income u/s 41(1)(a) of I.T. Act, hence added to the total income.'' 2.2 The AO observed that the assessee had concealed and furnished the inaccurate particulars of income. Thus the AO levied the penalty of Rs. 1,20,959/- u/s 271(1)(c) of the Act vide penalty order dated 8-06-2010. 2.3 Aggrieved by the order of the AO, the assessee preferred first appeal before the ld. CIT(A) who had confirmed the penalty imposed by the AO vide para 4.22 of his order as under:- ''4.22 When the present case was examined in view of this legal position, it is found that appellant had claimed bogus liability in respect of sundry credits balance of Rs. 3,95,288/- in the returned file by him. It was only when AO made enquiry from Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR submitted that during assessment proceedings, information u/s 133(6) was called for by the AO from M/s. Ramesh Marble Udyog who had stated as under:- ''There are no any kind of transaction with M/s. Rajasthan Marbles, Madanganj, Kishangarh during the F.Y. 2006-07. So there are no any type of account with the concern / firm.'' The ld. AR submitted that the assessee had no control over the affairs of third party i.e. the creditor who is non-related to the assessee and the assessee was also not in a position to explain as to how and in what manner it had recorded the transactions with the assessee in its books of account and under these circumstances in order to buy the peace of mind the assessee had accepted the closing balance in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned party by treating the same as non-verifiable at his own sweet will. The ld. AR of the assessee also relied on following decisions on this issue. (1) Narangs International Hotels (P) Ltd. vs. DCIT , Circle- 1 (2), Mumbai, 137 ITD 53 2. National Textiles vs. CIT , 249 ITR 125 (Guj.) 3. Smt. Durga Devi Somani (ITA No. 672/JP/2011 dated 31-10-2014), Jaipur Bench. 4. Ashish Gupta (ITA No. 671/JP/2011 dated 17-10- 2014), Jaipur Bench 5. Ashok Kumar Kamdar (ITA No. 684/JP/2011 SMC), ITAT Jaipur Bench In the end, the ld. AR of the assessee prayed for deletion of penalty amounting to Rs. 1,20,959/- u/s 271(1)(c) of the Act confirmed by the ld. CIT(A) 2.5 The ld. DR relied on the orders of the lower authorities. 2.6 We have heard the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Gujarat High Court in the case of CIT vs Bhogilal Ramjibhai Atara in Tax Appeal No. 588 of 2013. In the instant case, the facts are that for the assessment year 2007-08, the assessee filed return of income which showed, besides others, a sum of Rs. 37.52 lacs by way of his debt. The Assessing Officer inquired into such outstanding dues of the assessee. The assessee supplied details of 27 different creditors. The Assessing Officer issued summons to all these so called creditors and questioned them about the alleged credit to the assessee. In detail, the Assessing Officer in his order of assessment recorded that number of parties were not found at the given address. Many of them stated that they had no concern with the assessee. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey 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 stands perhaps holds that there was no cessation or remission of liability and that therefore, the amount in question cannot be added back as a deemed income under section 41(c) f the Act. This is one of the strange cases where even if the debt itself is found to be nongenuine from the very inception, at least in terms of section 41(1) of the Act there is no cure for it. Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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