9911796707
TMI Blog2016 (1) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... efly stated the facts of the case are that the assessee is a Private Limited Company engaged in the business of dyeing and printing of art silk cloth. The return of income was filed on 30.12.2006 at a total income of Rs. 4,87,760/-. Assessee's case was selected for scrutiny and notice u/s 143(2) of the Act was issued on 10.09.2007 and duly served upon the assessee. However, nobody attended and submitted any details in response to the said notice and subsequently, notice u/s. 142(1) of the Act with detailed questionnaire was issued on 12.11.2008 and served upon the assessee on 28.11.2008. Apart from receiving the part submission from assessee, nothing else was submitted in reply to the questionnaire issued by the Assessing Officer and he had no other option except to proceed to frame the assessment u/s.144 r.w.s 143(3) of the Act and accordingly assessed the income of the assessee at Rs. 1,49,02,450/- after making the addition of Rs. 1,44,14,687/-. 2.1 Aggrieved assessee went in appeal before the CIT(A) but assessee company failed to file any proper submission and evidence during the appellate proceeding. However, on the basis of material available on record, ld. CIT(A) gave a reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the CIT (A) and dismiss the appeal of the assessee." Further as assessee could not succeed before the CIT(A), Assessing Officer proceeded to initiate the penalty proceedings by issuing a show cause u/s.274 r.w.s. 271(1)(c) of the Act. During the course of penalty proceeding, assessee submitted detailed replies in order to prove that there was no concealment of income on its part but due to other constraints and closure of business, were not able to submit at the time of assessment proceedings. However, Assessing Officer did not give any cognizance to the information and supporting documents furnished before him by taking a view that as the assessee failed to discharge the onus during the assessment proceedings, therefore, the same cannot be entertained during the penalty proceedings u/s. 271(1)(c) of the Act and accordingly, imposed the penalty of Rs. 38,94,372/-. 2.3. Aggrieved to the order u/s.271(1)(c) of the Act passed by the Assessing Officer, assessee went in appeal before the ld. CIT(A). Assessee furnished detailed arguments, supporting documents, various judicial pronouncements before the CIT(A) and stated that due to heavy losses in assessee's group companies, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted proper evidences to prove that the additions made by the Assessing Officer at the time of framing the assessment order were not justified. 4.1 Out of total additions made in assessment proceedings completed u/s.144(4) r.w.s. 143(3) of the Act, Assessing Officer confirmed the penalty in respect of concealment of income at Rs. 1,15,73,170/- on account of following: i. Disallowance on account of work-in-progress Rs. 5,67,708/- ii. Disallowance on account of unsecured loan Rs. 18,18,804/- iii. Disallowance on account of sundry creditors Rs. 46,16,297/- iv. Disallowance on account various expenses Rs. 45,70,661/- Total Rs.1,15,73,170/- 4.2 During the course of proceedings u/s.271(1)(c) of the IT Act, assessee has submitted detailed reply along with copies of ledger account, audited financial statements, details of various expenses, confirmation letter etc. as available on record in paper book from page nos. 1 to 225, which if had been examined by the lower authorities on merits, then there may had been a situation, wherein Assessing Officer either may had restrained from imposing penalty or reduced the penalty. We have gone through the reply of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, when the A.O. was passing the order u/s.271(1)(c), he should have given cognizance to the relevant supporting evidence furnished by the assessee to prove the identity, creditworthiness and genuineness of the unsecured loan taken. To the contrary, A.O. did not find it relevant to examine these documents to finalize the penalty proceedings rather keeping the same view as taken during proceedings u/s.144 of the Act that the assessee has not furnished the required details at the time of regular assessment proceedings. Further, Hon'ble Jurisdictional High Court in the case of National Textile vs. CIT (supra) has held as under :- "The provisions of section 68 of the Income-tax Act, 1961, permitting the Assessing Officer to treat unexplained cash credits as income are enabling provisions for making certain additions where there is failure by the assessee to give an explanation or where the explanation is not to the satisfaction of the Assessing Officer. However, the addition made on this count would not automatically justify imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961, by recourse only to Explanation 1 below section 271(1)(c). In order to just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther effort to come to the conclusion that the cash credits could in no circumstances have been amounts received as temporary loans from various parties. Admittedly the assessee in the quantum proceedings failed to produce the accountant but the Department also in penalty proceedings made no effort to summon him. Therefore, it was a case where there was no circumstances to lead to a reasonable and positive inference that the explanation that cash credits were arranged as temporary loans was false. The facts and circumstances were equally consistent with the hypothesis that they could have been sundry loans in small amounts obtained from different parties. Therefore, the imposition of penalty was not justified." In the case of CIT vs. Jalaram Oil Mills (supra), Hon'ble Jurisdictional High Court has held as under :- "The Explanation to section 271(1)(c) of the Income-tax Act, 1961, provides that in case there is a difference, as statutorily provided, between the total income returned by any person and the income assessed, such person shall have to prove that the failure to return the correct income was not due to any fraud or any gross or willful neglect on his part. In the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... animus, i.e. conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. In the case of assessee who was having a sufficient reason for his non appearance before the A.O. during assessment proceedings u/s.143(3) r.w.s 144 due to heavy losses, closure of business and acute shortage of staffs, for which, quantum has been decided against him up to the level of Tribunal. However, during penalty proceedings initiated u/s.271(1)(c), assessee has furnished complete details of the unsecured loan of Rs. 12 lacs taken by account payee cheque from its sister concern M/s Poonam Dyeing & Printing Mills Pvt. Ltd. But, A.O. as well as CIT(A) has not given cognizance to the documents available on record and decided the issue on the basis of their observations made during assessment and appellate proceedings in regard to original additions made by A.O. 6.2 We, therefore, respectfully, relying upon the decisions of Hon'ble Jurisdictional High Court in case of National Textile vs. CIT (supra) and CIT vs. Jalaram Oil Mills (supra) as well as to our discussions made above, are of the confirmed view that proceedings u/s. 271(1)(c) of the Act are separate proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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