TMI Blog2016 (5) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. Assessing Officer cannot draw an inference that assessee has furnished inaccurate particulars of income because records were duly submitted and no independent enquiry was carried out by the Assessing Officer to prove that balance standing under the head sundry creditors were not genuine The assessee has duly shown complete details of sundry creditors in its return of income for this year under appeal and in past also and addition for unverifiable purchases have been made without conducting any independent enquiry therefore, it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee. - ITA No.1151/Ahd/2012 - - - Dated:- 1-4-2016 - Shri Rajpal Yadav, JM, Shri Manish Borad, AM For The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of unverifiable purchases. Ld. CIT(A) confirmed the addition of ₹ 28,70,422/- for unverifiable purchases and restricted the addition u/s 40(a)(ia) of the Act at ₹ 8,21,089/-. 3. Thereafter penalty order u/s 271(1)(c) of the Act was framed imposing penalty of ₹ 13,50,810/- for furnishing inaccurate particulars of income at ₹ 36,91,811/- (Rs.8,21,089 + ₹ 28,70,422). Aggrieved, assessee went in appeal before ld. CIT(A) against imposition of penalty u/s 271(1)(c) of the Act who thereby deleted penalty imposed on addition sustained u/s 40(a)(ia) of the Act and confirmed the penalty imposed on sustained addition for unverifiable purchases at ₹ 28,70,422/- which prorate works out at ₹ 10,50,354/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 73.46 lacs during the year. Due to reduction in working capital facility by bank, the company could not make payments to its creditors at proper time. However it tried its level best to reduce the balance of its creditors. In the earlier year, the balance of creditors was of ₹ 54.91 lacs which were reduced to ₹ 28.70 lacs during the year. All the creditors are old creditors and does not pertain to year under consideration. The company was unable to make payments and due to this, the confirmations were not obtained, however, the creditors are all genuine and the complete list was also given to the Assessing Officer. The assessing officer didn't issue any notice u/s. 133(6) of the Act to any creditor. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd with the assessing authority and no defect has been pointed out in these details. The only reason given by ld. Assessing Officer at the time of making addition was the failure on the part of assessee to produce the confirmations of the sundry creditors. Examining this aspect in the light of provisions of section 271(1)(c) of the Act wherein it has been provided that penalty has to be imposed in case of furnishing inaccurate particulars of income, we find that the particulars provided for the sundry creditors are basically related to the purchases made by the assessee in the earlier years as well as during the year under appeal. Purchases are supported with the bills issued by the suppliers and the purchases of the assessee have not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty. For making addition u/s. 41(1), it has to be proved that the assessee has obtained some benefit in respect of the trading liability by way of remission / cessation of the amount in question. It is not in dispute that addition u/s. 41(1) is made in this case in respect of old balances carried forward from the earlier years and even the same were carried forward in subsequent assessment year 2009-10. The assessee has been, thus, able to offer an explanation which should not be found to be bogus or false. Hon'ble Supreme Court in the case of CIT vs. Sugauli Sugar Works Pvt. Ltd., 236 ITR 518 held that unilateral action cannot bring about a cessation or remission of liability. In this case, since the assessee has shown outstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not concealed the particulars of income. The Id. CIT(A) was, therefore, justified in canceling the penalty. In view of the above discussion, we do not find any merit in the departmental appeal. The same is accordingly dismissed. We clarify that findings in this order are relevant to penalty matter only. 9. We find that the above decision of the co-ordinate bench squarely covers the facts of the assessee s case under appeal before us and respectfully following the same we are of the view that as the assessee has duly shown complete details of sundry creditors in its return of income for this year under appeal and in past also and addition for unverifiable purchases have been made without conducting any independent enquiry therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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