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Supreme Steel & General Mills, Versus DCIT, Central Circle-5, New Delhi.

2015 (9) TMI 1469 - ITAT DELHI

Penalty u/s 271(1)(c) - Addition u/s 68 - Held that:- Failure of M/s G.R. Overseas to appear before the Assessing Officer after denying the payment had a most crucial angle which the Assessing Officer simplistically ignored’. The above recording amply proves that the assessee did require the cross examination of M/s G.R. Overseas, which has eventually not taken place. As regards the other two parties, the assessee contended that they were small parties, whose whereabouts were not ascertainable. .....

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laimed to have been received during the year, goes to show that the explanation of the assessee about the receipt of such amount was a possible one albeit not satisfactory. The Tribunal has also noticed in the quantum order that: ‘it was obligatory on its part to produce the parties or give their proper addresses to the Department.’ It further observed that: ‘it failed to discharge its burden cast by section 68.’ The above observations of the Tribunal along with the position as discussed above, .....

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of assessee. - ITA No.2612 & 2599/Del/2013 - Dated:- 18-9-2015 - SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM Assessee By : Shri K. Sampath, Advocate Department By : Smt. Rashmita Jha, ACIT, DR ORDER PER R.S. SYAL, AM: These two appeals by the assessee relate to the assessment years 2006-07 and 2007-08. Since these appeals have been tagged, we are disposing them with a common order for the sake of convenience. 2. First, we take up the appeal for assessment year 2007-08, which is directed against th .....

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s GR Mechanical Works Ltd. - ₹ 8,00,000/-. The AO observed that the assessee was not having any fresh business dealings with these two parties and the payments were shown to have been received in cash against the old outstanding balances. The assessee was called upon to furnish complete address of these parties. From the details provided by the assessee, information u/s 133(6) was called for from these parties. The letters sent to these parties were not received back unserved. On 19.12.200 .....

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8377; 15.25 lac was received from them. This led to the making of addition of ₹ 15.25 lac. The ld. CIT(A) observed that similar addition was made for the assessment year 2006-07, which was confirmed by him and the same also came to be approved by the Tribunal. He, therefore, upheld the addition so made by the AO. The assessee is against the sustenance of addition. 4. After considering the rival submissions and perusing the relevant material on record, it is observed that during the previou .....

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he assessee even declined an opportunity of cross examination given to it. These facts indicate that there is no cogent material evidencing the receipt of a sum of ₹ 15.25 lac from these two parties. It is further observed that similar position prevailed in the immediately preceding assessment year, that is, 2006-07. In such earlier year also, the assessee received cash sums in similar circumstances from three parties, one of which is, M/s G.R. Overseas Pvt. Ltd. The AO made the addition a .....

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6- 07, which is against the confirmation of penalty imposed by the AO u/s 271(1)(c) of the Act. We find that the Tribunal has elaborately discussed the factual matrix of the case and came to the conclusion that M/s GR Overseas P. Ltd., denied having made cash payment to the assessee and M/s Nasir Ahmad & Sons and Zabar Ahmad & Sons neither filed any confirmations nor their postal address was furnished by the assessee, which led the Tribunal to the conclusion that: the assessee s explanat .....

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ifferent from the confirmation of addition. The mere fact that an addition has been confirmed by the Tribunal in quantum proceedings does not ipso facto lead to the confirmation of penalty. If this had been position, then there was no need to have separate penalty proceedings. A penalty can be imposed if the AO makes out a case of concealment of income or furnishing of inaccurate particulars of income by the assessee. Where an assessee tenders an explanation which remains unproved, it cannot be .....

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nalty. The Hon ble Calcutta High Court in Durga Kamal Rice Mills vs. CIT (2004) 265 ITR 25 (Cal), relying on National Textiles 249 ITR 125 (Guj), has held that there is a difference in Facts not proved' and Facts disproved'. It further held that penalty can be levied only for the latter. Similar view has been taken in CIT vs. Vidyagauri Natvarlal & Ors (1999) 153 CTR (Guj) 546. 8. Turning to the facts of the instant case, we find that the assessee s contention about the brought forwa .....

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: assessee had specifically insisted that M/s G.R. Overseas be directed to appear before the Assessing Officer along with its books of accounts such that the factum of its having paid the cash to the Appellant could be established from the scrutiny of the books of account. M/s G.R. Overseas abstained from appearing before the Assessing Officer and so managed not to produce its books of account and the Assessing Officer did precious little to enforce the attendance of M/s G.R. Overseas. Failure o .....

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