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TMI Blog2015 (8) TMI 1554X X X X Extracts X X X X X X X X Extracts X X X X ..... he identity of the purchasers but the assessee failed to do so. This led the Assessing Officer to conclude that assessee firm had introduced unaccounted cash in its books of account in the garb of the cash sales. He, therefore, made addition under section 68 of the Act on account of unexplained cash credits to the tune of Rs. 3.12 Cr and initiated the penalty proceedings under section 271(1)(c) of the Act. The assessment framed by the Assessing Officer was upheld by the ld. CIT(Appeals) as well as by the ITAT Chandigarh Bench. The Assessing Officer, therefore, levied penalty under section 271(1)(c) of the Act on the ground that assessee had concealed the particulars of its income to the extent of Rs. 3.12 Cr by crediting the income from undisclosed sources to its books of account in the garb of cash sales. 3. The penalty order was challenged before ld. CIT(Appeals) and it was submitted that cash sales amounting to Rs.3.12 Cr only out of the total sales of Rs. 94.54 Cr and that the said cash sales were duly disclosed and accounted for in the books of account. It was argued that all the sales were backed by the sales bills, sales tax paid challans and Sales Tax Return filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty under section 271(1)(c) of the Act. 5. The ld. counsel for the assessee reiterated the submissions made before the authorities below and submitted that the cash sales were very meager as against the total sales made by assessee of Rs. 94.54 Cr. He has submitted that since substantial question of law has been admitted, the issue becomes a debatable issue and as such penalty is not leviable. He has relied upon decision of the Bombay High Court in the case of CIT Vs Nayan Builders & Developers 368 ITR 722 in which it was held as under ; "Held, dismissing the appeal, that the imposition of penalty was found not to be justified and the appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on the assessee's appeal in quantum proceedings and the substantial questions of law which had been framed therein. Thus, there was no case made out for imposition of penalty and the penalty was rightly set aside." 6. He has submitted that penalty proceedings are distinct from assessment proceedings. The additions confirmed in the quantum proceedings cannot be the basis for imposition of penalty as is held in the case of Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. counsel for the assessee also submitted that since complete details were filed and books of account were examined, therefore, on mere addition, penalty will not be levied in the matter. 7. On the other hand, ld. DR relied upon orders of the authorities below and submitted that cash sales have been made in the month of September,2006 only which has created a doubt in the minds of the authorities below and on scrutiny, it was found that cash sales have been booked for explaining the unaccounted cash of the assessee. The ld. DR referred to the order of the ITAT dated 19.10.2011 in ITA 204/2011 confirming the addition on this issue and submitted that Explanation-I to Section 271(1)(c) of the Act is therefore, clearly attracted in the case of the assessee. The ld. DR relied upon decision of the Hon'ble Supreme Court in the case of Union of India & Others V Dharmendra Textiles Processors & others 306 ITR 277 in which it was held as under : "Explanations appended to section 271(l)(c) of the Incometax Act, 1961, indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The object behind the enactment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the cash sales have been accepted by the sales tax authorities. The authorities below dis-believed the explanation of the assessee with regard to cash sales made to different parties because their complete details are not noted in the bills. It was also noted that since no complete particulars of the purchasers are mentioned in the sale bills, therefore, cash sales are not subjected to verification. This was the sole reason for making the addition as well as levying the penalty under section 271(1)(c) of the Act against the assessee. The Hon'ble Bombay High Court in the case of R.B. Jessa Ram Fateh Chand V CIT 75 ITR 33, and similarly, Kerala High Court in the case of M. Durai Raj V CIT 83 ITR 484, held that the books of account cannot be rejected if in cash sales, names and address of the purchasers are not mentioned. There is no need to mention name and address in the cash sales. These judgements support the version of the assessee that mere dis-believing the explanation of the assessee would not be enough to levy the penalty under section 271(1)(c) of the Act against the assessee for merely not mentioning the complete details of the purchaser in the cash sale bills. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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