9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (8) TMI 482 - AT - Income TaxUnexplained credit u/s 68 - The addition made to the returned income, for which the penalty stood levied, is u/s.68 Held that - Explanation, if any, offered in establishing the genuineness of the credits, is essentially a matter of fact - The only explanation offered by the assessee in the quantum proceedings, which is itself a matter of fact, was that the said credits in fact pertain to an earlier year, and which was found on verification as incorrect on facts, so that the additions stood confirmed Decided against the Assessee. Issue involved is primarily factual, i.e., whether the assessee has been able to satisfactorily prove the impugned credits as to their representing the assessee s genuine liabilities or not.If and to the extent it has been, its return of income does not bear any concealment or inaccurate furnishing of any particulars of income, so that no penalty u/s.271(1)(c) could be levied. The law placing the onus to prove the credits on the assessee, a failure to do so would invite addition in its respect as unexplained income u/s.68. Further, that the addition has been made under the deeming provision of section 68 is no bar for the levy of penalty. Penalty proceedings u/s 271(1)(c) Held that - Assessee has been able to adduce some evidences toward establishing the credits as representing genuine liabilities - Accepting or rejecting the assessee s claim is based on appreciation of those evidences, forming part of the assessee s explanation, and for which reference is made to a series of decisions by the apex court, as follows - In sum, decision in the instant case is based purely on findings of fact; the law in the matter being well settled and trite CIT v. Atul Mohan Bindal 2009 (8) TMI 44 - SUPREME COURT ; Union of India v. Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT etc. - Penalty deleted. - Decided in favaor of assessee.
Issues Involved:
1. Unexplained cash credits. 2. Disallowance of interest. 3. Penalty proceedings under Section 271(1)(c). Detailed Analysis: 1. Unexplained Cash Credits: The assessee, a company engaged in manufacturing and selling readymade garments, filed its return for the assessment year 2003-04 declaring a loss of Rs.183.65 lacs. The initial assessment under Section 143(3) was completed at a loss of Rs.150.61 lacs, with additions for unexplained cash credits (Rs.20.50 lacs) and disallowance of interest (Rs.12.53 lacs). Upon appeal, the Tribunal remanded the case to the Assessing Officer (A.O.) for further verification. The A.O. confirmed the addition of unexplained credits amounting to Rs.20.50 lacs. The assessee claimed these were old balances, but the A.O. found them to be current loans. 2. Disallowance of Interest: The initial assessment included a disallowance of interest amounting to Rs.12.53 lacs. However, the primary focus of the Tribunal's judgment was on the unexplained cash credits and the subsequent penalty proceedings, with no detailed discussion on the disallowance of interest. 3. Penalty Proceedings under Section 271(1)(c): The penalty proceedings were revived following the A.O.'s confirmation of the unexplained cash credits. The assessee argued there was no concealment or inaccurate furnishing of particulars of income, claiming the loans were genuine and supported by legal notices from creditors. The Tribunal assessed each credit individually: - Nick Lakhani (Rs.11,00,000/-): No confirmation or legal notice was provided. The Tribunal upheld the penalty due to lack of evidence. - Indian Trading Corpn. (Rs.3,75,000/-): Legal notices and tax audit report confirmed the genuineness of the credit. The penalty was deleted. - Nakul Jain (Rs.1,60,000/-): Legal notices and part repayment validated the loan. The penalty was deleted. - Saroj Gupta (Rs.1,75,000/-): The loan was found to be current, with no supporting evidence provided. The penalty was upheld. - S. P. Capital Financing Ltd. (Rs.40,000/-): Legal notices confirmed the genuineness of the loan. The penalty was deleted. - Premier Road Services Ltd. (Rs.2,00,000/-): Legal notices and account payee cheque confirmed the loan. The penalty was deleted. Conclusion: The Tribunal concluded that the penalty under Section 271(1)(c) was applicable only for unexplained credits where the assessee failed to provide satisfactory evidence. The appeal was partly allowed, with penalties upheld for credits from Nick Lakhani and Saroj Gupta, while penalties for credits from Indian Trading Corpn., Nakul Jain, S. P. Capital Financing Ltd., and Premier Road Services Ltd. were deleted. The decision was based on the factual findings and the assessee's ability to substantiate the genuineness of the credits.
|
