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2016 (9) TMI 797 - ITAT BANGALORE

2016 (9) TMI 797 - ITAT BANGALORE - TMI - Unexplained credit - Held that:- Admittedly the assessee has shown ₹ 1 lakh in the cash book as withdrawal from the Axis Bank however, on verification the Assessing Officer found that there is no such entry in the account. The assessee then explained that this was a mistake committed by the Accountant and the amount involved is loan taken from two persons namely (1) Yagati Naganna & (2) Nerlige Karinayak. The assessee has also explained that the sa .....

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claim then further enquiry / investigation could have been conducted by the Assessing Officer. Instead of conducting further enquiry, the Assessing Officer has out rightly rejected the explanation as well as confirmation produced by the assessee. Accordingly in view of the facts and circumstances of the case we find that this issue requires a proper verification and examination. If need arises the creditors may be examined by the Assessing Officer on being production by the assessee. - Addit .....

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rmation letters from the creditors. It is manifest from the record that when the Assessing Officer questioned the genuineness of the claim the assessee attempted to manufacture the evidence in support of the claim by producing pre-dated agreements on subsequently purchased stamp papers. Therefore the evidence produced by the assessee is after thought and created only after the Assessing Officer has questioned the genuineness of the claim. In the absence of any contemporaneous supporting evidence .....

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free loans which is not acceptable except in case of a close relatives nobody will advance loan without interest. The burden of proving the onus is on the assessee to produce the creditors specifically when the facts and circumstances clearly raise the suspicion on the very genuineness of the claim. Accordingly, we find that the assessee has failed to discharge his onus to prove the genuineness of the claim. This ground of the assessee is dismissed. - Penalty levied under Section 271(1)(c) .....

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assessment order under Section143(3) of the Income Tax Act, 1961 (in short 'the Act') and penalty order passed under Section 271(1)(c) of the Act for the Assessment Year 2010-11. 2. First we take up the quantum appeal of the assessee wherein the assessee has raised the following grounds : 1. The learned CIT (Appeals) erred in passing the order in the manner which he did. 2. The learned CIT (Appeals) erred in confirming the addition made of ₹ 1 lakh towards cash credit and ought to .....

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as supported by confirmation letters. Thus, the addition of ₹ 6,46,000 has to be deleted. 5. Without prejudice, the addition/disallowance is excessive, arbitrary and unreasonable and liable to be deleted into. 6. The learned CIT (Appeals) erred in confirming the interest under Section 234A and 234B of the Act. 7. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed. 3. Ground No.1 is general in nature and does .....

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see, the assessee submitted that in the cash book the Accountant wrongly typed as Axis Bank whereas it is loan taken from two persons namely Sri Yagati Naganna of ₹ 50,000 and Sri Nerlige Karinayak of ₹ 50,000. The assessee has also explained that the above amounts have been repaid to these two creditors on 21.7.2009 and 22.7.2009 respectively. The Assessing Officer did not accept this explanation of the assessee and made an addition of ₹ 1 lakh as unexplained cash credit. On a .....

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resentative further submitted that the assessee has also filed the confirmation which was not accepted by the authorities below and the assessee is ready to produce the creditors for examination of the Assessing Officer. The Assessing Officer has made addition because of this mistake committed by the Accountant in the books showing this amount as withdrawn from Axis Bank instead of loan taken from these two creditors. 6. On the other hand, the ld. DR has submitted that only when the Assessing Of .....

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Officer found that there is no such entry in the account. The assessee then explained that this was a mistake committed by the Accountant and the amount involved is loan taken from two persons namely (1) Yagati Naganna & (2) Nerlige Karinayak. The assessee has also explained that the said amount was repaid by the assessee on 21.7.2009 and 22.7.2009 respectively. The Assessing Officer did not choose to verify the facts explained by the assessee and disallowed the explanation at threshold. It .....

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confirmation produced by the assessee. Accordingly in view of the facts and circumstances of the case we find that this issue requires a proper verification and examination. If need arises the creditors may be examined by the Assessing Officer on being production by the assessee. 8. Ground No.3 is regarding addition of ₹ 2.5 lakhs towards unexplained cash credit. 9. The assessee claimed to have received ₹ 2.5 lakhs from various persons as per cash book. The assessee filed certain doc .....

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sible for printing and distribution of stamp paper. It was clarified that the same were issued in the market on 31.12.2010 onwards. When this fact was pointed out to the assessee, the assessee explained that the original agreement was written on a plain paper and later on the same was written on the stamp paper. The Assessing Officer did not accept this explanation and held that the alleged agreement is after thought as the assessee even did not produce the original agreement. Accordingly, the A .....

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e claim the assessee produced two agreements dt.2.4.2009 and 5.4.2009. However the stamp paper used for these agreements belong to the series of the stamp paper which were available only on 31.12.2010 onwards. Apart from these agreements the assessee has not produced any other supporting documents except confirmation letters from the creditors. It is manifest from the record that when the Assessing Officer questioned the genuineness of the claim the assessee attempted to manufacture the evidence .....

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lagers. 12. The assessee has shown loan of ₹ 19,000 each from 34 persons amounting to ₹ 6,46,000. The Assessing Officer question the strange situation when 34 persons lent money to the assessee in a span of four days of an identical amount of ₹ 19,000 each. The assessee filed confirmation letters from the creditors but all stereo typed letters dated between 21.7.2012 to 31.7.2012. The Assessing Officer further noted that all the confirmations were written in the same hand writi .....

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epresentative as well as learned Departmental Representative and considered the relevant material on record. Except the alleged confirmations as produced before the Assessing Officer, no other evidence has been produced by the assessee. The Assessing Officer had enough reason to doubt the genuineness of the transaction as it is apparent that the assessee shown loan of ₹ 19,000 each from 34 persons. This fact itself shows that it is all well thought out claim of the assessee to escape the r .....

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e assessee is dismissed. 14. Before parting with the matter, we take note of the fact that the assessee has also shown agricultural income of ₹ 3,20,995 which has been accepted by the Assessing Officer therefore the addition sustained by us on account of unexplained credit to the extent of the agricultural income stand explained and therefore the assessee will get the benefit of source of the cash credit to the extent of the amount of ₹ 3,20,995. 15. In the result, the appeal of the .....

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ppreciated that the amount received from the parties were identifiable and confirmations were also produced and accordingly confirming the additions under Section 68 of the Act was unjustifiable much less the penalty confirmed under Section 271(1)(c) of the Act on alleged concealment was opposed to law and liable to be deleted. 4. The learned CIT (Appeals) ought to have appreciated that even if the explanation furnished was not acceptable, still there could be no conclusion as to the concealment .....

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er Section 274 read with section 271(1)(c) of the Act in a mechanical manner, the penalty order passed under Section 271(1)(c) of the Act is not sustainable in the eye of law. 2. The appellant begs to submit that the decision of the jurisdictional High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Karn) is squarely applicable and therefore the impugned order of the authorities below is required to be set aside. 18. We have heard the learned Authorised R .....

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65. Since the additional grounds raised by the assessee does not require any fresh investigation of facts therefore, in the facts and circumstances of the case and in view of the judgment of Hon'ble Supreme Court in the case of NTPC Ltd. Vs. CIT 229 ITR 383, the additional ground raised by the assessee is admitted for adjudication. 19. The assessee has filed the notice issued under Section 274 r.w.s. 271(1)(c) of the Act and submitted that the Assessing Officer has not specified the default .....

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ciple as laid out in the case of CIT Vs. Manjunatha Cotton & Ginning Factory (supra). 20. On the other hand, the ld. DR has relied upon the orders of authorities below. 21. Having considered the rival submissions and material on record, it is noted that the Assessing Officer has initiated the penalty proceedings by issuing a notice under Section 274 r.w.s. 271 dt. 3.12.2012. The grounds of proposed penalty under Section 271(1)(c) of the Act has been mentioned in the notice as under : Have co .....

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is for concealment of income or furnishing of inaccurate particulars of income. Sending printed form where all the grounds mentioned in the section 271(1) are mentioned would not satisfy the requirement of law. By considering the said decision, the Hon'ble jurisdictional High Court in the subsequent decision dt.25.1.2016 in the case of M/s. Safina Hotels Pvt. Ltd. Vs. CIT & Another (supra) has held in paras 9 to 11 as under : 9. The Judgment of Manjunath Cotton and Ginning's case (s .....

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r Section 274 of the Act should specifically state the grounds mentioned in Section271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. (q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. (r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be .....

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