9911796707
TMI Blog2014 (8) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 was treated as unexplained investment and added to the returned income. Further, an amount of Rs. 25 lakhs was also brought to tax treating it as undisclosed additional investment in the land by the assessee since the receipt of Rs. 1.00 crore found during the survey was not admitted by the assessee and others. On further appeal before the ITAT, the Tribunal vide its order dated 25.01.2012 confirmed both the additions made in the assessment order. Penalty proceedings were initiated holding that the assessee failed to prove the creditworthiness of the creditors and sources for further investment of Rs. 25 lakhs. The penalty of Rs. 47,96,550 was levied u/s. 271(1)(c) of the Act. 3. The assessee questioned the validity of the order u/s. 271(1)(c) on the issue of limitation as the order u/s. 271(1)(c) was passed beyond the time prescribed under the proviso to section 275 of the Act. According to him, the penalty order should have been passed within one year from the end of the financial year in which order of the CIT(A) is received. In this case, the order was passed after 1.6.2003 whereas the order of the CIT(A) was received on 15.2.2011. The CIT(A) held as follows: "As could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision in the case of Loknath Chowdhary vs. CIT, 155 ITR 291 (Cal) and had levied penalty in this case. The CIT(A) further held that the assessee furnished the information with reference to the creditors and five out of seven of such creditors were examined by the AO during the assessment proceedings and the said parties were shown to have confirmed the transactions. The CIT(A) observed that it was only the inference or interpretation of the AO that the genuineness of transaction was not established, the CIT(A) pointed out that the said transactions were in cash and the said transactions were not governed by any written agreements/deeds and the additions were made on the basis conclusions drawn by the AO on the creditworthiness of the creditor based on the statements recorded from 5 creditors and the confirmations furnished by the assessee in case of two creditors. It was observed by the CIT(A) that as per the AO, the creditors have not furnished the related information to prove that they have known sources of income to explain the credits and as per the information brought on record, during the course of assessment proceedings, five of the creditors were examined by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans raised etc., were neither called for nor examined by the AO, to judge upon their creditworthiness. The CIT(A) opined that the conclusions were drawn by the AO based on the letters/confirmations filed by the assessee and, therefore, the addition resulting out of treatment of such credits as unexplained, may not end up in proving the concealment for the purpose of levy of penalty. The CIT(A) pointed out that the case-law relied upon by the AO while finalising the penalty order appears to be distinguishable on facts, as the said decision deals with the unexplained investments on account of valuation of property, whereas in the present case, the issue is related to the treatment of credits as unexplained, based on either the confirmations furnished by the assessee or the examination of the parties/ creditors, who explained their sources for credits, but were not acceptable to the A.O. The CIT(A) held that based on the facts of the case and the ratio of the judicial decisions referred to, namely (i) M/s. Action for Welfare and Awakening the Rural Environment (AWARE) (supra) and (ii) M/s. Natco Pharma Ltd. (supra), the additions made in quantum proceedings are different from penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment, which was indicated in the undated receipt (page 95). The AR further argued that the AO failed to examine the vendors and on payment of Rs. 1.00 crore on 21.12.2006, a sale deed was entered into by the assessee & others and vendors in respect of land, admeasuring Ac. 10.15 guntas and the same will prove that Rs. 1.00 crore vide the undated receipt, was not a separate payment. 10. The AR further argued that the relief was granted by CIT(A) on addition of Rs. 25,00,000/-, in the quantum proceedings, which was reversed by ITAT and hence where two views are possible, penalty is not leviable. The other argument of the AR was that the addition in quantum proceedings were based on inferences and is different from penalty proceedings and AO cannot levy penalty without dislodging stand of assessee. The AR also relied on certain judicial decisions as listed below, on the issue of penalty not leviable, where two views are possible: a) CIT v. Late G.D.Naidu and others (165 ITR 63) (Mad); b) CIT v. Calcutta Credit Corporation, (166 ITR 29) (Cal); c) CIT v. Amarnath, (143 CTR 148 ) (All); d) Alpha Associates v. DCIT (66 TTJ 758) (Bom); and e) DCIT v. Rahoul Siemens Engg. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of the financial year in which the order is received and thereby the order passed beyond the period id void ab initio. In the assessee's case the order of the CIT(A) is dated 31.12.2010. Therefore, the order levying penalty could be passed only before 31.3.2012 and not beyond this date. It was also brought to our notice that the letter calling for explanation itself was issued only on 11.7.2012 which is beyond the date of limitation and the assessee had requested for keeping the proceedings in abeyance since it was already barred by limitation. Section 275 reads as follows: Bar of limitation for imposing penalties. 275. [(1)] No order imposing a penalty under this Chapter shall be passed- [(a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the [***] Commissioner (Appeals) under section 246 [or section 246A] or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the [***] Commissioner (Appeals) or, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. It was not barred by limitation." 16. Respectfully following the above said decision Ground No. 2 is treated as dismissed. 17. With respect to ground No. 3, it was argued by the learned counsel for the assessee Sri A.V. Raghu Ram that the Departmental authorities had wrongly taken the three receipts found in pages 94, 95 and 96 of the Paper Book. According to the counsel, the assessee had received a sum of Rs. 3.9 crores signed by all parties at page 94 and with respect to undated receipt at page 95 it was contested that the same was only a temporary receipt signed by two vendors only and on 21.12.2006 when the sale deed of the land was executed admeasuring 11.15 guntas an amount of Rs. 1 crore which had been mentioned earlier at page 95 are confirmed by the receipt at page 96. In short, the total amount received was only Rs. 3.9 + 1 crore i.e., Rs. 4.9 crores and not 5.9 crores as arrived at by the AO since he had taken the amount at Rs. 1 crore twice. It was also brought to our notice that at page 91 the vendors had committed to register 18 acres whereas only 11.15 acres were ultimately registered. The agreement entered on 18.11.2006 was cancelled and the vendors h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. 24. The Department in its appeal ITA No. 1770/Hyd/ 2013 raised the following grounds: 1. The order of Ld. CIT(A) is erroneous both on law and facts. 2. The Ld. CIT(A) has erred in allowing the relief instead of appreciating the fact that the penalty was levied on the basis of facts and circumstances of the case and also on the ground that, the assessee has never reflected the said transactions in the returns of income filed. 3. The Ld. CIT(A) has erred in allowing the relief without considering the facts and circumstances of the case and also that the assessee has concealed the particulars of the total income. 4. The Ld. CIT(A) has erred in allowing relief on the ground that the assessee has made inaccurate particulars in the return of income filed. 25. We are of the opinion that the additions made in quantum proceedings are different from penalty proceedings. Relying on the decision of Khoday Eswaraiah & Sons (supra) we hold that merely disbelieving the explanation of the assessee the Revenue cannot come to the conclusion that the assessee concealed the income or furnished inaccurate particulars of income. The assessee has filed confirmatory letters and the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
