TMI Blog2015 (11) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... that the ld. CIT(A) has erred in confirming the penalty of ₹ 1,20,959/- u/s 271(1)( c) of the Act. 2.1 Brief facts of the case are that the assessee is engaged in the business of purchase 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 ₹ 6,29,620/- as against returned income of ₹ 2,34,330/-. During the course of assessment proceedings, the AO observed that the assessee had shown sundry credit balance of ₹ 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 conclusion that the liability ofamount of ₹ 3,95,288/- shown by the assessee in the name of M/s. Ramesh Marble Udyog as bogus which he has treated as assessee's income and added the same by following observations. 2.2 The above denia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. Under the present scheme of things only a miniscule percentage of returns are selected for scrutiny and in all other cases, income declared by the assessee is accepted u/s 143(1) without making any further enquiry. Appellant was well aware of this and tried to take undue advantage of this scheme of the Department. It is obvious that if his case was not selected for scrutiny, he would have never surrendered the amount of s 3,95,288/-. In this case, it is not established that the conduct and explanation of appellant was bona fide, therefore, the case falls in category (b) of para 4.19 as mentioned above. Therefore, levy of penalty u/s 271(1)(c) is therefore, justified in this case pursuant to the decision of Dharmendra Textiles. 2.4 During the course of hearing, the ld. AR of the assessee submitted that during the year under consideration the assessee was having opening credit balance of ₹ 4,40,288/- payable to one party i.e. M/s. Ramesh Marble Udyog and after reducing the payment made at ₹ 45,000/- through account payee cheque during the year, the assessee had shown closing balance at ₹ 3,95,288/- in the balance sheet. The ld. AR submitted that during ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 1,20,959/- u/s 271(1) 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 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 ₹ 3.95 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. Ramesh Marble Udyog amounting to ₹ 3.95 lacs under the head sundry creditors . The particulars of trade credits in name of M/s. Ramesh Marble Udyog were thus apparent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation 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 stands perhaps holds that there was no cessation or remission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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