9911796707
TMI Blog2006 (10) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was Rs. 12,57,080. The AO had initiated penalty proceedings for concealment of particulars of income. A penalty of Rs. 4,22,772 being minimum imposable under s. 271(1)(c) was imposed by the AO. The additions with reference to which penalty has been imposed are as under: (i) Loss of Rs. 11.02 lakhs on sale of fabric held as bogus. (ii) Disallowance of loading and unloading expenses of Rs. 1,05,500. 3. It is also pertinent to mention that during the course of assessment proceedings the AO had made enquiry about the existence of A.R. Traders from whom the assessee claimed to have purchased the fabric and it was found that no such at the given address. The assessee was confronted with the results of enquiry. The AO had also further found that the assessee had claimed to have made purchases from AR. Traders from time to time and sold the same goods to M/s Timely Impex Ltd. within a gap of 2 to 3 days at less than purchase rate resulting in aggregate loss of Rs. 11.02 lakhs. 4. The assessee had appealed to the CIT(A) against the addition made by the AO. One of the grounds raised before the CIT(A) was that the AO had not allowed reasonable opportunity of being heard to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons given by him in the impugned order. The said reasons are summarized asunder: (i) That the AO had passed penalty order without affording further opportunity to the assessee as requested vide letter dt. 19th June, 2002 filed on 20th June, 2002. (ii) That the penalty order passed on 12th June, 2002 with the consent of Jt. CIT, Range-VII, Ludhiana, was received on 21st June, 2002. (iii) That the additional material filed by the assessee company has not been considered by the AO while passing the penalty order. (iv) That the finding of the AO that the assessee was not willing to produce A.R. Traders even before the CIT(A) and withdrawn the ground of appeal before the CIT(A) was incorrect insofar as the ground No. 2 before the CIT(A) which was withdrawn pertained to non-consideration of assessee's reply dt. 26th March, 2001 by the then AO passing the assessment order. (v) That the non-production of A.R. Traders at the time of assessment after a span of three years from the date of transaction does not lead to the inference that A.R. Traders is not existing. 8. The CIT(A) has also referred to the additional evidence furnished before him as under: (a) Affidavit of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was contended that A.R. Traders did not have any business premises at the given address. The AO had even gone to Delhi to make enquiry and on the basis of the enquiry held that no concern existed at the given address. It was contended that the assessee had claimed losses in the transactions and it was highly improbable that the assessee would purchase the fabric at higher rate and sell the same at lower rate on various dates. It was contended that the claim made by the assessee that there was commitment with M/s Timely Impex Ltd. to supply the sampled fabric at a particular rate has not been established by any evidence. There was no written agreement with M/s Timely Impex Ltd. to such effect. It was further contended that the evidence furnished before the AO in support of the genuineness of the purchases made from A.R. Traders was considered by the AO as well as by the appellate authority but the same was held not to be sufficient to support the case of the assessee in the light of the enquiry made by the AO and accordingly the addition was confirmed by the first appellate authority. The, assessee had been allowed further opportunity to produce the proprietor of A.R. Traders by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to s. 271(1)(c) are attracted in this case and the burden was upon the assessee to establish that there were bona fide transactions between the assessee and A.R. Traders. For this, reliance was placed on the decision of the Supreme Court in the case of K.P. Madhusudhanan vs. CIT (2001) 169 CTR (SC) 489 : (2001) 251 ITR 99 (SC) and that of the Punjab and Haryana High Court in the case of Vishwakarma Industries vs. CIT (1982) 29 CTR (P H) 243 : (1982) 135 ITR 652 (P H). Reliance was further placed on the decision of the Chandigarh Bench of the Tribunal in the case of Om Prakash Gupta vs. ITO (2002) 75 TTJ (Chd) 984 : (2002) 81 ITD 55 (Chd). It was accordingly pleaded that the penalty imposed by the AO may be restored. 11. The learned counsel for the assessee, on the other hand, sought to support the order of the CIT(A). It was contended that the AO had made substantial additions which were reduced by the CIT(A). It was contended that material purchased from A.R. Traders had been supplied to M/s Timely Impex Ltd. which is a public limited company and the said sale transactions have not been doubted. The assessee had made a commitment to the said company for the supply of the fabri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ips Ltd. only in 2001 and the said fact can nowhere be related to the loss suffered by the assessee in the year 1997-98. It was further contended that the case law cited by the assessee before the CIT(A) has not been shown to be applicable to the facts of this case. Relying upon the decision of the Supreme Court in the case of CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1998) 198 ITR 297 (SC), the learned Departmental Representative contended that the decision of the Court has got to be seep in the context in which it has been rendered. According to the learned Departmental Representative, none of the cases cited by the assessee is applicable to the facts of this case. 13. We have given our careful consideration to the rival contentions. We need not repeat the facts which had been elaborately given earlier. The assessee had claimed loss of Rs. 11.2 lakhs on the transactions of purchases made from A.R. Traders and supplies made to Timely Impex Ltd. The AO had given sufficient opportunity to the assessee to establish the genuineness of the transactions of purchases made from A.R. Traders. Some evidence was furnished before the AO in the course of assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc. filed before the AO in penalty proceedings. There is no mention of this evidence in the penalty order. The CIT(A) ought to have recorded his findings about the evidence claimed to have been filed before the AO and his failure to deal with the said evidence, if any. The CIT(A) has simply recorded the contention advanced on behalf of the assessee and accepted the same without recording his findings with reference to the evidence on record. The CIT(A) has further referred to the penalty order having been passed on 12th June, 2002 ignoring the subsequent rectification order by the AO wherein the date of order has been corrected as 21st June, 2002. The CIT(A) has also referred to the evidence produced by the assessee during the assessment proceedings but has ignored the findings of the AO as well as that of the CIT(A) with reference to the said evidence in quantum appeal. The CIT(A) has ignored the fact that the said evidence was considered in the assessment proceedings and a finding to the contrary was recorded by the AO and addition made sustained by the CIT(A) in quantum appeal. 15. The CIT(A) has further pointed out that whereas the AO has not questioned the sales made to M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst consignment to the assessee in the month of June, 1997, but at that time, it had no bank account. By the time the bank account was opened, total sales of Rs. 16.99 lakhs had ostensibly been effected. This fact itself shows that Shri T. Mandal is most likely a dummy person of the assessee as he has no capacity to carry out the business to such an extent to sell goods worth Rs. 34 lakhs without receiving any amount. The importance of these findings has been ignored by the CIT(A). 16. The CIT(A) has also taken into cognizance the fresh evidence furnished before him for the first time. The said evidence was neither confronted to the AO nor has the CIT(A) demonstrated as to how the said evidence demolished the findings of the AO as well as that of the appellate authority in regard to non-genuineness of the purchase transactions from M/s A.R. Traders. The CIT(A) has further ignored the fact that even if the certificate of letting out of godown to M/s A.R. Traders was to be accepted at its face value than the said letting out was for a limited period from June, 1997 to March, 1998. This also does not inspire confidence that M/s A.R. Traders were having any regular business premises ..... X X X X Extracts X X X X X X X X Extracts X X X X
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