TMI Blog2021 (7) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars of income and the penalty order so passed cannot be vitiated on the ground of uncertain charge and non-application of mind as so contended by the ld AR. Unsecured loan receipts - Assessee has submitted before the Tribunal that the payment have been received through cheque, all creditors have confirmed the amount and filed their confirmations, all the transactions have been entered in the books of accounts and bank balance show sufficient funds and basis such contentions, the Tribunal had remanded the matter to the file of the AO with the direction that where the assessee has filed the confirmations before the AO, then the AO in case of any doubt will issue summons to these creditors to verify the correctness thereof. We find that there is no further enquiry or summons issued by the AO to the specified creditors and the findings as given in the original order were reiterated by the AO in the order passed pursuant to directions of the Tribunal. In the above background, we therefore agree with the contention of the ld AR that once the explanation has been submitted by the assessee along with necessary confirmation and other evidences, the onus shifts on the AO to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2011 and given that the penalty order has been passed on 22.03.2013, hence, as far as the above two additions are concerned, they have become barred by limitation on 31.03.2011 and cannot be made a part of the order of penalty passed on 22.03.2013. These two items may, therefore, be deleted from the impugned penalty order. Regarding the third addition of ₹ 8,30,000 is concerned, it was submitted that the only basis on which the penalty was levied was that the addition of ₹ 8,30,000/- had been confirmed by the CIT(A) as well as the ITAT and the ITO did not consider the explanation submitted by the assessee in right perspective. It was further submitted that the show-cause notice issued by the AO was vague and didn t specify whether the penalty was proposed on concealment of particulars of income or for furnishing inaccurate particulars of income and in light of various authorities, the same shows non-application of mind by the AO and on this ground as well, the penalty so levied deserve to be set-aside. Further, the ld AR submitted that the contentions so advanced are reiterated in the written submissions which may be considered and the contents thereof read a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Set-aside back to AO for re-examination 2. Unsecured loans below ₹ 20,000/- taken in cash 2,79,000/- Assessee did not file appeal against the said appeal before either the CIT(A) or ITAT 3. Unsecured loans through cheque but genuineness not proved 8,30,000/- Set-aside back to AO for re-examination 4. Unexplained advances against flat bookings 10,05,301/- Addition confirmed by ITAT 5. Disallowance u/s 40A(3) 1,33,200/- Addition confirmed by ITAT Total 38,28,001/- In view of the items at S.No. 1 3 above being set-aside back to the file of the AO, the ITO, Ward 3(1) passed an order u/s 143(3)/250/set-aside on 06.12.2010 at a total income of ₹ 37,26,110/- in which the amounts of ₹ 15,80,000/- and of ₹ 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , or [Principal Commissioner] or Commissioner, whichever is later;] Now since in the first round, the order of the AO was passed on 28.12.2007 and of the Commissioner(Appeals) was passed on 12.09.2008, the penalty order should have been passed, as per the Proviso to section 275(1) on: a)`either on or by 31.03.2008, or b) on or by 31.03.2010, whichever is later. If we consider the main section 275(1), then the relevant dates would be: a) either on or by 31.03.2008, or b) on or by 31.03.2011, whichever is later. Hence, the order of penalty ,as far as addition of ₹ 2,79,000/- and of ₹ 10,05,301/- confirmed by the CIT(A) was concerned, should have been passed, in any case, by 31.03.2011. It was passed on 22.03.2013, hence, as far as the above two additions are concerned, they have become barred by limitation on 31.03.2011 and cannot be made a part of the order of penalty passed on 22.03.2013. These two items may, therefore, be deleted from the impugned penalty order. 4. Now what is left is only the addition of ₹ 8, 30,000/- which is the total of the credits received by the following creditors: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not explain the identity and creditworthiness of the transactions as discussed in length in foregoing paras.....................................................The addition made on account of unsecured loan taken through cheque amounting to ₹ 8,30,000/- and on account of......................had been confirmed by the ld. CIT(A) as well as the Hon'ble ITAT which also established that the assessee had introduced its unaccounted money in its books of accounts in the shape of cash credits. Further, the facts of the case law quoted by the AR of the assessee are completely different from the instant case. Thus it is clear that the assessee company had introduced its undisclosed income to the extent of ₹ 21,14,801/- (₹ 2,79,000/-+ ₹ 8,30,000+₹ 10,05,301). Thus it is clear that the only basis on which the penalty was levied was that the addition of ₹ 8,30,000/- had been confirmed by the CIT(A) as well as the ITAT. The ITO did not consider the explanation submitted by the assessee which is reproduced at para 9(2) of the order in these words: 9.2) Unsecured loan taken through cheques amounting to ₹ 8,30,000/-: During t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 832(Pat.); 2) CIT v. Tata Services Ltd.[1980] 122 ITR 594(Bom.); 3) CIT v. Motilal Co. [1990] 184 ITR 288 (Cal.). It may also be submitted that the presumption under the Explanation can be displaced by the assessee proving that the failure to return correct income did not arise from any fraud or gross or wilful neglect and the quantum of proof necessary would be that required in a civil case, namely, preponderance of probabilities. This proposition has been laid down in a catena of decisions , some of which are as under: a) CIT v. Nathulal Agarwala Sons [1985] 153 ITR 292 (Pat.) (FB); b) CIT v. Pawan Kumar Dalmia [1987] 168 ITR 1 (Ker.); c) CIT v. Gurudayalram Mukhlal [1991] 190 ITR 39 (Gau.); d) CIT v. Bimal Kumar Damani [2003] 261 ITR 87 (Cal.). As far as the present case is concerned, it is abundantly clear that after the identity of the creditor and the genuineness of the transaction were established, the only issue was the creditworthiness of the creditor. Since the money had come through the banking channel, so the AO could have made necessary inquiries from the bank to establish the creditworthiness. The b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney received through creditors was actually the undisclosed income of the company. The books of account of the company have not been held to be unreliable, or incomplete or incorrect. Hence, whatever income is being shown in the hands of the company has been taken to be correct. In this situation, it cannot be held, without any evidence whatsoever, that the credits belonged to the company, and not to the creditors. GROUND NO. 2 OF APPEAL: The second ground of appeal is that the AO has not specifically mentioned in the notice u/s 271(1) (c) whether the penalty is for inaccurate particulars of income or for concealment of particulars of income. A copy of the notice of penalty as received from the AO is enclosed as Annexure A/4. A bare perusal of the said notice makes it clear that the AO has not struck out the inapplicable part of the said notice, and so it is not clear whether the penalty notice has been issued for filing inaccurate particulars of income or for concealment of income. There are now a plethora of decisions on the issue that if the correct limb of the penalty notice is not ticked , or the inapplicable part of the notice is not struck off, the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logy of the event in the case of the assessee for the A.Y. 2005-06 are submitted as under:- Sr. No. Date Event Remarks 1. 28.12.2005 ITR filed declaring income of Rs. Nil. Book profit u/s 115JB show at ₹ 20,443/- 2. 28.12.2007 Assessment completed U/s 143(3) at a total income of ₹ 37,26,110/-. Additions made on account of:- i. Unexplained cash credits of ₹ 15,80,000/- ii. unsecured loans in cash of ₹ 2,79,500/- iii. Unsecured cash credits of ₹ 8,30,000/-. iv. Unexplained credits of ₹ 10,05,301/-. v. Disallowance u/s 40A(3) ₹ 1,33,200/- 3. 12.09.2008 Ld. CIT(A) dismissed the appeal in ITA No. 795/2007-08 4. 24.04.2009 ITA No. 1500/JP/2008 Hon ble ITAT partly set aside and remand the matter to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2344;िम्नवत किया जा रहा है- 5.1 अपील का प्रथम आधार 1 The learned AO has erred in the facts and circumstances of the case by imposing penalty u/s 271(1)(c) read with section 68 of Income Tax Act, 1961 on their grounds, firstly on Unsecured loans taken by the assessee below ₹ 20,000/- which were not proved to be false by the learned AO. As such first of all the assessee because of his engagement in various business activities did not have time to produce all these persons to substantiate their identity as well as for the reason that assessee wanted to buy peace with department. It is not the case where the Assessing Officer has proved the unsecured loan to be false. There is a difference between the facts not proved and facts proved false and according to law penalty can be imposed only when the facts are proved false. 2- Secondly on the unsecured loans taken through cheques amounting to ₹ 8,30,000/- hence proves the identity of the lenders and genuinene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee before the Hon ble High Court and the matter has thus attained finality with the passing of the Tribunal order dated 24.04.2009. 10. In respect of addition of ₹ 8,30,000/- on account of unsecured loan, the assessee preferred an appeal before the ld CIT(A) and thereafter, before the Tribunal wherein the Tribunal set-aside the matter to the AO and in the set-aside proceedings, the AO again made the addition vide order dated 6.12.2010. The addition so made by the AO in the set-aside proceedings were again challenged before the ld CIT(A) who has confirmed the said addition and no further appeal has been preferred by the assessee before the Tribunal. The matter has thus attained finality with the passing of the ld CIT(A) order dated 19.09.2011. 11. In respect of all the aforesaid three matters, the AO has levied the penalty u/s 271(1)(c) vide his order dated 22.03.2013. The contention which has been advanced by the ld AR is that as far as levy of penalty on first two matters is concerned, the same is barred by limitation u/s 275 of the Act as the first matter has attained finality with the passing of the assessment order u/s 143(3) dated 28.12.2007 and second ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever period expires later 14. What is therefore relevant to determine is whether the relevant assessment order in course of which action for imposition of penalty has been initiated is subject matter of appeal before the ld CIT(A) and/or before the Tribunal and whether the proceedings have been completed and attained finality or not. In the instant case, it is not disputed that the penalty has been initiated in respect of all the three issues during the course of assessment proceedings with passing of the assessment order u/s 143(3) dated 28.12.2005 and the order so passed by the AO has thereafter been subject matter of appeal before the ld CIT(A) and thereafter, before the Tribunal and in the set-aside proceedings, again the subject matter of appeal before the ld CIT(A). The emphasis of the legislature is on the assessment order which is subject matter of appeal and not on the individual matters which may or may not be subject matter of appeal as there cannot be individual penalty orders for individual additions rather the penalty order has to be passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other) would be, in the opinion of the Court one such event which leaves the legal position inchoate and unsatisfactory. Instead, an interpretation that permits certainty should be adopted. Viewed as such, the CIT's order provided a fixed date from which to reckon the end of the period of limitation-some time in early July 1994. The absence of an appeal by the assessee (against the CIT(A)'s appellate adjudicatory order) meant that at least with respect to the amount that it had accepted in the adjudicatory order as an addition, the penalty proceedings survived. As far as the other issue was concerned, perhaps there was no occasion for a further penalty proceeding given that the issue might have been rendered debatable, even in the eventuality of an order favouring the revenue. In other words, as far as deletion was concerned, the assessee definitely was not aggrieved. 16. In the instant case, the ld CIT(A) has passed the order on 19.09.2011 and the penalty order has thereafter been passed by the AO on 22.03.2013 which is well within the limitation period of one year from the end of financial year in which the order of the ld CIT(A) has been received by the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars of income' or furnishing of inaccurate particulars of income'. In such circumstances, he may use slash between the two expressions at the time of initiation of penalty proceedings. However, during the penalty proceedings, he must get decisive, which should be reflected in the penalty order, as to whether the assessee is guilty of 'concealment of particulars of income' or 'furnishing of inaccurate particulars of such income'. Uncertain charge at the time of initiation of penalty, must necessarily be substituted with a conclusive default at the time of passing the penalty order. If the penalty is initiated with doubt and also concluded with a doubt as to the concealment of particulars of income or furnishing of inaccurate particulars of such income etc., the penalty order is vitiated. If on the other hand, if the penalty is initiated with an uncertain charge of 'concealment of particulars of income/furnishing of inaccurate particulars of income' etc., but the assessee is ultimately found to be guilty of a specific charge of either 'concealment of particulars of income' or 'furnishing of inaccurate particulars of income', then no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 7,73,859/-. 21. We therefore find that uncertain charge at the time of initiation of penalty proceedings is followed by a certain charge and definite finding at the time of passing the penalty proceedings as to the concealment of particulars of income and the penalty order so passed cannot be vitiated on the ground of uncertain charge and non-application of mind as so contended by the ld AR. 22. Now, coming to other contention advanced by the ld AR relating to levy of penalty relating to unsecured loan amounting to ₹ 8,30,000/-. In this regard, we find that the AO has levied the penalty stating that addition has been confirmed by the ld CIT(A) and the Tribunal which establishes that the assessee had introduced its accounted money in its books of accounts in shape of cash credit. We however find that the assessee carried the matter in appeal before the Tribunal and the Tribunal has set-aside the matter to the file of the AO and the relevant findings are contained at para 6 to 9 of the Tribunal order dated 24.04.2009 which read as under:- 6. The AO noted that during the year the assessee company had taken unsecured loan of ₹ 75,000/- from Shri Das ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been entered in the books of accounts and bank balance show sufficient funds and basis such contentions, the Tribunal had remanded the matter to the file of the AO with the direction that where the assessee has filed the confirmations before the AO, then the AO in case of any doubt will issue summons to these creditors to verify the correctness thereof. And, in the set-aside proceedings, we find that there is no further enquiry or summons issued by the AO to the specified creditors and the findings as given in the original order were reiterated by the AO in the order passed pursuant to directions of the Tribunal. In the above background, we therefore agree with the contention of the ld AR that once the explanation has been submitted by the assessee along with necessary confirmation and other evidences, the onus shifts on the AO to disprove the same by bringing contrary evidence on record and which in the instant case, has not been disproved by the AO and therefore, mere non-acceptance of the explanation so submitted by the assessee can be made a basis for addition in the quantum proceedings, however, the same cannot result in levy of penalty u/s 271(1)(c) of the Act. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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