TMI Blog2017 (10) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... re, hold that the impugned penalty proceedings are bad in law and cannot be sustained. - Decided in favour of assessee. - ITA No. 5988/Del/2016 - - - Dated:- 27-10-2017 - SH.G.D.AGARWAL, HON BLE PRESIDENT AND SH.K.N.CHARY, JUDICIAL MEMBER For The Appellant : Sh. Ashwani Kumar, Adv. For The Respondent : Sh. S.S.Rana, CIT DR ORDER PER K.N.CHARY, JUDICIAL MEMBER Aggrieved by the order dated 29.09.2016 in appeal No.84/13-14 passing by the Commissioner of Income Tax (Appeal) [in short CIT(A) ]-28, New Delhi for 2006-07 Assessment Year, assessee preferred this appeal on the following grounds:- That the order dated 29.09.2016 passed u/s 250(6) of the Income Tax Act, 1961 is against law and facts on the file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- during the relevant year and after giving an opportunity of being heard to the assessee, the AO concluded that in respect of six of the eligible creditors, the assessee failed to prove their identity, their creditworthiness and the genuineness of the transactions, as such the AO concluded that the transactions in respect of such creditors are all sham as such by invoking provisions u/s 68 of the Act, the AO made an addition to the tune of ₹ 2,40,00,000/- among other things. The details of such alleged creditors are as follows:- 1. Sonal Gupta Rs.35,00,000/- 2. Gauri Gupta Rs.27,25,000/- 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of ₹ 2,40,00,000/-. On that, when the Revenue approached the Income Tax Appellate Tribunal, a Co-ordinate Bench of this Tribunal vide order dated 14.06.2010 remitted matter back to the file of the Ld.CIT(A) of giving specific finding as to whether the creditworthiness of these loan creditors was established or not. On the matter being remanded, Ld. CIT(A) vide order dated 17.01.2013 confirmed the additions made in the assessment order, holding that the assessee has not provided any details like balance sheet, regular source of income or the reason why such huge amount of loan was given without interest as such the creditworthiness of the parties was not established. Subsequent appeals by the assessee to the ITAT and Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Factory, 359 ITR 565 (Kar), drawing a penalty proceedings for one offence and finding the assessee guilty cannot be sustained in law. 7. Per contra, it is the argument of the Ld. DR that the addition made by the AO, was finally confirmed by the Ld. CIT(A), ITAT and also the Hon ble High Court as such there cannot be any doubt that even though the parties did not have the creditworthiness the loans to the assessee, only in order to route the assessee s own funds through such creditors, the assessee devised these unsecured loans and thereby they are guilty of furnishing of inaccurate particulars as such in view of the additions reported in K.P.Madhusudhanan vs CIT [2001] 118 Taxman 324 (SC)/[2001] 251 ITR 99 (SC)/ [2001] 169 CTR 489 (SC); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2, 3, 4 and 5. .. 9. It, therefore, is amply clear that the Assessing Officer has not specified whether the notice was issued for concealment of particulars of income or for furnishing of inaccurate particulars of income. We have carefully perused the material papers on record in the light of the statements made on behalf of the assessee including the judgment relied upon by him in the case of CIT vs Manjunatha Cotton Ginning Factory, 359 ITR 565 (Kar). Vide paragraph 60, the Hon ble Karnataka High Court has held as follows :- 60. Clause (c) deals with two specific offences, that is to say, concealing particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical with the ground on which the penalty was imposed, the imposition of penalty is not valid. The validity of the order of penalty must be determined with reference to the information, facts and materials in the hands of the authority imposing the penalty at the time the order was passed and further discovery of facts subsequent to the imposition of penalty cannot validate the order of penalty which, when passed, was not sustainable. 10. The Hon ble Karnataka High Court in CIT vs SSA s Emerald Meadows, [2016] 73 taxmann.com 241 (Karnataka) has followed the Division Bench judgment in the case of CIT vs Manjunatha Cotton Ginning Factory, 359 ITR 565 (Kar). Hon ble Supreme Court in SSA s Emerald Meadows (supra) dismissed the SLA pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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