TMI Blog1995 (8) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied the gist of the information collected by him and asked the assessee to produce the cash creditors. He even offered to the assessee to cross-examine the parties who had allegedly given credits to the assessee-firm. It appears that these parties appeared again and resiled from the earlier statements recorded by the AO. They were re-examined by the AO but they stood their ground by taking the plea that at the earlier occasion when the statements were recorded, they were scared and had given statements adverse to the assessee. The AO out of the 47 cash credits, accepted 10 cash credits as genuine on the strength of the confirmatory letters. It may be mentioned that the assessee-firm had filed confirmation letters in respect of all the 47 cash credits. The AO, however, found certain peculiar features, inasmuch as, all the credits were in cash, no interest had been paid on these cash credits, all the creditors were agriculturists, the amounts had been allegedly recorded in the cash book at the end of the day and the names of the creditors were written in different ink. After examining the case, the AO came to the conclusion that 37 cash credits had not been explained, the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. For this proposition, the learned Departmental Representative relied on the Punjab Haryana High Court decision in the case of CIT vs. Suraj Bhan (1986) 50 CTR (P H) 156 : (1986) 159 ITR 709 (P H) in which it was held that the ratio of Anwar Ali's case which was based on the provisions of Indian IT Act, 1922 was no longer relevant for construction of s. 271(1)(c) of the IT Act, 1961 as amended upto date. 5. The learned Departmental Representative emphasised that all the creditors had not been produced before the AO, that 10 more creditors were produced at the instance of the learned CIT(A) during the penalty proceedings and that it was the duty of the assessee to produce the parties particularly when there was every reason to believe that the cash credits were not genuine. It was also submitted that the assessee surrendered a sum of Rs. 9 lacs only when it was put in a tight corner by the AO. It was submitted that the cash credits appeared invariably at the end of the day in the cash book and the names of the creditors were also recorded in different ink. It was elaborated that no interest had been charged on these cash credits and all the cash creditors were agriculturi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. In a nut shell, the learned Departmental Representative submitted that this was a fit case for levy of penalty under s. 271(1)(c) and that the learned CIT(A) had erroneously deleted the same. 10. Shri Sudhir Sehgal, the learned counsel for the assessee, submitted that return for asst. yr. 1982-83 had been filed on 24th Sept., 1982 but the case was taken up for assessment only five or six months before it was to become barred by limitation. It was submitted that it was only in February, 1985 that the AO informed the assessee that 23 creditors had stated that they had not advanced the loans to the assessee firm. It was submitted that the last date for completing the assessment for asst. yr. 1982-83 was 31st March, 1985 and hence whatever the assessee could do despite the time constraints was done by it and all the necessary co-operation was extended to the Department. The learned counsel for the assessee submitted that the assessee had filed confirmation in respect of all the 47 cash credits, that the AO had accepted 10 cash credits as genuine on the strength of the confirmatory letters only, that the 23 statements recorded by the AO were done at the back of the assessee, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to the assessee's letter addressed to the ITO, District I(3), Ludhiana, a copy of which is placed at pages 9 to 12 of the assessee's compilation. In the said letter, the assessee stated that they were filing a revised return surrendering a sum of Rs. 9 lacs and that this surrender was being made subject to no penalty and interest under various sections of the IT Act including immunity from prosecution. The learned counsel for the assessee further referred to petition dt. 19th March, 1985 filed before the learned CIT, Patiala a copy of which is placed at pages 13 and 14 of the assessee's compilation. It was pointed out that in para 7 of the said petition, it was submitted that the case was getting barred by limitation on 31st March, 1985 and that it was not possible to produce all the persons as desired by the ITO and hence an offer of Rs. 9 lacs was being made for settlement of tax affairs through the good offices of the learned CIT. It was further pointed out that in para 8 of the said petition, it was clearly stated that the surrender was being made only to purchase peace of mind. 12. The learned counsel for the assessee made a statement at the bar that he had personally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification for levying penalty under s. 271(1)(c) either. 13. The learned counsel for the assessee relied on the Supreme Court decision in the case of Sir Shadilal Sugar General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) for the proposition that from the assessee agreeing to addition it does not follow that the amount agreed to be added was concealed income and there may be a hundred and one reasons for such admission. Similarly reliance was placed on the Calcutta High Court decision in the case of CIT vs. Amalendu Paul (1983) 34 CTR (Cal) 134 : (1984) 145 ITR 439 (Cal) for the proposition that on conditional admission, no penalty under s. 271(1)(c) was justified. The learned counsel for the assessee relied on the M. P. High Court decision in the case of CIT vs. Punjab Tyres (1986) 56 CTR (MP) 7 : (1986) 162 ITR 517 (MP) for the proposition that even in case of agreed addition on account of unexplained investment the Department had to prove by independent evidence in addition to the evidence already brought on record from various sources during the assessment proceedings that the amount represented the concealed income of the assessee. Reliance was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully considered the rival submissions as also the facts on record. We find that there were 47 cash credits recorded in the books of the assessee for asst. yr. 1982-83. The assessee firm had filed all the 47 confirmations from the creditors. The AO had recorded the statements of 23 such creditors at the back of the assessee in their villages on the spot. Later on, when 20 of them had been produced for cross-examination, they categorically stated that they had actually advanced the loans to the assessee firm and that they were too scared to tell the truth when their original statements were recorded. All such creditors have given details of the agricultural lands possessed by them and all of them have substantial agricultural income. It is, therefore, not correct to say that the cash creditors had no capacity to advance the moneys to the assessee firm. It is significant to note that the AO himself had accepted 10 cash creditors as genuine merely on the strength of confirmatory letters. It may be that these cash creditors were agriculturists, that they had not charged interest, that they had advanced the loans in cash, that the entries of their cash credits appeared at the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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