2019 (5) TMI 187 - AT - Income Tax

Addition of loan creditors - proof of documents in respect of names, address and PAN Nos. of the lenders - addition for want of identity of lenders in the form of Adhar Card - HELD THAT - Assessee has submitted all possible evidences under his hand before the authorities below in the form of names and addresses and PAN of creditors except one person. Further, the Assessing Officer proceeded to make addition without any verification from the respective creditors even on random basis. The CIT(A) also dismissed the appeal of the assessee for want of Adhar Card ignoring the vital evidence submitted by the assessee in the form of names and address, PAN and confirmation of the creditors. The assessee has discharged its onus by providing all relevant details and documents and confirmation from the respective persons. In this situation, I find that the onus cast upon the assessee has been discharged by giving a cogent and reliable details such as names, addresses, PAN nos and confirmation from the creditors. Therefore, if the department did not agree with the explanation, then the onus was on the department to verify the facts. In the instant case, such onus which shifted on the department has not been discharged. I also find that keeping aside all the information and details furnished by the assessee, the Assessing Officer proceeded to make the addition, which was confirmed by the CIT(A) on the sole ground that the assessee has not furnished Adhar Cards of the creditors. - Decided in favour of assessee. Penalty u/s 271(1)(c) - HELD THAT - Taking support from judicial precedent in the case of K.C. Builders vs. ACIT 2004 (1) TMI 7 - SUPREME COURT wherein held that where the additions made in the Assessment Order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment, and therefore, in such a case, no such penalty can survive and the same is liable to be cancelled. In view of the foregoing, appeal filed by the assessee is allowed.

Summary

Issues:
1. Appeal against the order of the Commissioner of Income Tax(Appeals) for the assessment year 2010-11 regarding penalty u/s.271(1)(c) of the Act.
2. Appeal against the order u/s. 143(3) of the Act for the assessment year 2010-2011.

Analysis:

Issue 1: Penalty u/s.271(1)(c) of the Act
The appellant challenged the addition of ?7,34,000 made by the Assessing Officer, contending that all necessary details were submitted to establish the identity, creditworthiness, and capacity of the creditors who provided hand loans. The appellant argued that despite providing names, addresses, and PAN numbers of the creditors, the authorities erred in confirming the addition for lack of Aadhar Card details. The Assessing Officer and CIT(A) did not verify the information provided by the appellant, leading to a conclusion that the onus was on the department to verify the facts. The Tribunal held that the appellant had submitted sufficient evidence, and the authorities' decisions were not justified. As the appellant established the identity, creditworthiness, and genuineness of the transactions, the addition was deemed unwarranted, and the Tribunal allowed the appeal.

Issue 2: Order u/s. 143(3) of the Act
The Tribunal, having allowed the appeal against the addition made by the Assessing Officer and confirmed by the CIT(A), found no basis for the penalty under section 271(1)(c) of the Act. Citing the case of K.C. Builders vs. ACIT, the Tribunal noted that when additions forming the basis for penalty are deleted, there is no justification for levying the penalty for concealment. Therefore, the penalty of ?2,26,972 was deemed unsustainable, and the Tribunal allowed the appeal against the penalty as well.

In conclusion, the Tribunal allowed both appeals, deleting the addition made by the Assessing Officer and the penalty imposed under section 271(1)(c) of the Act. The Tribunal emphasized the importance of verifying information provided by the assessee and held that the burden of proof was discharged by the appellant through detailed submissions and evidence.