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TMI Blog2015 (1) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... 98/B/2014 2007-08 271E (violation of 269T) 6,75,000 199/B/2014 2007-08 271D (violation of 269SS) 6,45,000 Accepting cash loan from Shri Ashok Bhimappa Naik 200/B/2014 2008-09 271D (violation of 269SS) 5,00,000 201/B/2014 2009-10 271D (violation of 269SS) 6,40,000 202/B/2014 2010-11 271D (violation of 269SS) 11,83,000 3. Facts apropos are that assessee, a society running educational institution for B.Ed. & D.Ed. courses was subject to a survey u/s. 133A of the Income-tax Act, 1961 [in short "the Act"] on 6.10.2010. At the time of survey, it was noted that assessee was not maintaining proper books of account. It seems the Principal of the institution deposed that proper books of account were not being maintained. Receipt books, expenditure bills, etc., found at the premises were impounded by the department during the course of survey. When notices u/s. 148 were issued for these years, assessee requested the AO to provide copies of impounded documents including registers and receipts. This request was made by the assessee on 24.3.2011. Returns for all these years were filed by the assessee on 30.8.2011, pursuant to such notices. In the interregnum, it seem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O could have had done a verification of Books of account with the revised consolidated receipt & payment account. The books clearly showed that there were no cash loans or cash repayment of loans. As per assessee, verification could have been done with impounded records. Assessee pointed out that there was not even one document or paper found at the time of survey, which could lead to a conclusion that there was acceptance or repayment of loans in cash. As per assessee, the lower authorities simply went by financial statements originally filed with returns of income, without making a proper verification thereof with impounded books of account. 7. Ld. CIT(Appeals), finding that assessee had taken a stand that its impounded records were not verified and there were no cash loans or repayment and also due to the fact that assessee filed revised consolidated statement for all the years, sought a remand report from the AO. AO in such remand report, it seems, stated that books of account prepared afresh were test-checked with the impounded material and found to be in order. AO also noted that date of receipt and payment of loans were not ascertainable from the impounded records. Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndings of the JCIT, Bijapur Range, Bijapur arrived at in his aforesaid remand report as far as the issue of acceptance and repayment of cash loans is concerned. In this view of the matter, there is no case for levy of penalties u/s 271D or u/s 271E. Therefore, the penalty of Rs. 6,50,000/- u/s 271D levied by the JCIT, Bijapur Range, Bijapur is deleted." 8. Now before us, grounds taken by the revenue read as under:- "(1) In the facts and circumstances of the case, the CIT(Appeals) erred in admitting additional evidences in the form of fresh financial statements viz Balance- sheet, Receipts and Payments A/c and Income & Expenditure Account in contravention of Rule 46A since the case did not satisfy any condition mentioned in Rule 46A(l) of the I.T. Rules, 1962. (2) In the facts and circumstances of the case, the CIT(Appeals) erred in accepting as correct the revised unaudited financial statements signed by an incompetent person, which are wholly different from the audited financial statements prepared in the year 2005, 2006, 2007, 2008, 2009, 2010 and 2011 and filed with the returns of income, without examining the auditor thereby violating Rule 46A(4) of the I.T. Rules, 1962. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is relevant to any ground of appeal ; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission." 10. Sub-clause (c) of sub-rule (1) clearly mentions that assessee could produce evidence before the CIT(Appeals) if there was sufficient cause, which prevented it from producing such evidence before the AO. Here, documents were impounded and were with the department. Assessee had prepared financial statement, which were not cross-verified by the AO with the impounded records. The time within which assessee was forced to prepare these documents was only a short period of six months. Therefore, there is much strength in the argument of the assessee that it was not left with any time to properly verify the impounded records and prepare financial statements. Having recognized this error, assessee later sought to rectify the earlier statements by preparing a fresh set of fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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