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TMI Blog2005 (10) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... its of Rs. 2,80,000. 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in observing that names, addresses and confirmations in respect of loans were furnished by the assessee." 3. Though the Revenue has raised three grounds of appeal, the main dispute relates to the deletion of the addition of Rs. 2,80,000 made by the AO on account of unexplained loans. 4. The brief facts leading to the dispute are that the Tribunal, Nagpur Bench in its order in ITA No. 25/Nag/2001 dt. 28th Feb., 2003 while considering this issue set aside the order of the learned CIT(A) and remanded the matter back to the file of the AO so as to offer an opportunity to the assessee to explain the credits in question in respect of the following 12 unsecured loans: Rs. 1. Shri Satyanarayan Jhanwar 50,000 2. Mrs. Seema Khan 50,000 3. Mr. Rajeshwar Prasad 40,000 4. Mr. Prashant Ghose 20,000 5. Mr. Prakash Chandra Agrawal 1,00,000 6. Shri Arvind Kumar 40,000 7. Shri Siyaram Lakhan Prasad 40,000 8. Smt. Shilawati Deshmukh 21,000 9. Shri S.G. Deshmukh 47,000 10. Smt. Nobin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with names and addresses before the AO and he submitted that the above cash credits were explained satisfactorily and onus has been discharged by the assessee. Considering the above submissions of the assessee, the learned CIT(A) deleted the impugned addition by holding that the assessee has discharged the primary onus by furnishing the names, addresses and confirmations, copy of repayment of loan etc. He also observed that the assessee not only disclosed the identity of the creditors but also names, addresses, cheque number, bank name and addresses and the amount has been returned by cheque. Aggrieved by the order of the learned CIT(A), the Revenue has filed the present appeal before the Tribunal. 6. Before us, the learned Departmental Representative relied on the order of the AO. 6.1 On the other hand, the learned counsel for the assessee, strongly relied on the order of the learned CIT(A) and reiterated his submissions as were made by him before the learned CIT(A). He has also filed a paper book enclosing all the documents, which were filed by him before the lower authorities. He has also filed the extract of chart mentioning the details of repayment such as name of bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank but they were introduced by a third person to the bank. It could not be said that the creditors were fictitious persons. The Tribunal was, therefore, right in deleting the addition of Rs. 20,000 and also allowing the interest of Rs. 1,318." 6.2 He also relied on the case of CIT vs. Cameo Colour Co. (2002) 173 CTR (Bom) 255 : (2002) 254 ITR 565 (Bom). The counsel further relied on order of the Nagpur Bench of Tribunal and filed copy of the same and submitted that, Nagpur Bench in the assessee's own case in ITA No. 154/Nag/2005 for the asst. yr. 1998-99 on identical issue, the Hon'ble Tribunal has decided the similar issue in favour of the assessee. 7. We have considered the rival submissions and gone through the material available before us. It is seen that out of twelve creditors mentioned above, the AO accepted the loans as genuine in cases of five creditors because these creditors were produced before the AO. In respect of other seven creditors, though all the details were available before the AO, including confirmation letters, names, addresses, details of cheque numbers, date, bank names and addresses, details of repayment of loan amounts by cheques etc. the AO re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled the present appeal before the Tribunal. 10. Before us, the learned Departmental Representative submitted that the AO was justified in levying the penalty on the basis of reduction in loss. He relied on the decision reported in Cadbury Schweppes Beverages India (P) Ltd. vs. Jt. CIT (2005) 96 TTJ (Mumbai) 773 and submitted that this decision supports the case of the Department and the penalty was exigible in the case of the assessee. 11. The learned counsel for the assessee, on the other hand, submitted that as per the provisions applicable to the asst. yr. 1997-98, the penalty can be levied only when the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income. Relying on the decision of the Hon'ble Supreme Court in the case of CIT vs. Prithipal Singh Co. (2001) 166 CTR (SC) 187 : (2001) 249 ITR 670 (SC), he submitted that the penalty for concealment can be levied only in cases where tax was sought to be evaded and unless there was an income which would give the payment of tax, no evasion could be conceived and thus, no penalty could be imposed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of Rs. 4,000 as income from undisclosed sources by his order dt. 25th Jan., 1973. Thereafter, he initiated penalty proceedings under s. 27(1)(c) and by his order dt. 9th Oct., 1973, levied a penalty of Rs. 4,000. This was confirmed by the Commissioner. In the writ petition filed in the High Court, the petitioner contended that, by reason of the provisions of s. 274(2) prior to its amendment, w.e.f. 1st April, 1971, by Act 42 of 1970, the officer did not have any jurisdiction to levy the penalty. The High Court held that, as it was the law in force on 22nd Dec., 1970, when the return was filed, that would be applicable and s. 274(2) as it stood prior to its amendment on 1st April, 1971, was the relevant provision that was to be applied in the instant case and hence the officer had no jurisdiction to levy penalty. (3) CIT vs. Champalal Jain (1978) 112 ITR 809 (Cal) Penalty-Concealment of income-Law applicable-Law as on date offence committed-Return filed on 15th Sept., 1964, after introduction of Explanation to s. 271(1)(c)-Explanation to s. 271(1)(c) applies-IT Act, 1961, s. 271(1)(c), Expln. (4) CIT vs. Shankar Lal Shriniwas (1993) 115 CTR (Raj) 93 : (1994) 205 ITR 140 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty from 1st April, 1969-Law applicable is the law as on date when default occurred and not law as amended-Wealth-tax Act, 1957, s. 18(1)(a) (7) CGT vs. Muthukumaraswamy Mudaliar (1975) 98 ITR 540 (Mad) Penalty under s. 17(1)(a)-Law applicable-Is the law is force as on the last date on which return was due to be filed-Return for asst. yr. 1962-63 due on 30th June, 1962; filed on 22nd Oct., 1962, and penalty levied on 31st March, 1964 on the date of completion of assessment-Law in force as on 30th June, 1962, would apply and the provisions of s. 17(1)(a) as amended by GT (Amendment) Act, 1962, w.e.f. 1st April, 1963, will not be applicable. (8) CIT vs. Hindustan Electrographite Ltd. (1998) 229 ITR 16 (MP) Held, that the assessee had not misled the AO while filing the return under s. 139 of the Act. An intimation was sent to it accepting the return. At the time when the return was filed under s. 139 of the Act on 29th Dec., 1989, s. 28(iiib) was not in existence. It was only when the AO was finalizing the return filed by the assessee, that the law came into force w.e.f. 1st April, 1967, and, therefore, the AO levied additional tax. Where the assessee had voluntarily f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her submitted that so far as case of the assessee is concerned, the same is covered by the judgment of the jurisdictional High Court in case of CIT vs. Oriental Syntax Ltd. Mumbai and also two jurisdictional judgment of this Hon'ble Bench and also on fact the penalty was levied with respect of addition of credit of Rs. 2,80,000 and share application money at Rs. 3,01,000 as the addition of credit of Rs. 2,80,000 were already deleted by CIT(A) as well as order of Tribunal vide ITA No. 252/Nag/2004, therefore on facts also penalty on aforesaid amount itself is not leviable and so far as addition of Rs. 3,01,000 is concerned on account of share application money. The counsel further submitted file copy of the order of the Nagpur Bench ITA No. 12/Nag/2004 in the case of Mehta Cast Iron (P) Ltd., Nagpur dt. 23rd Sept., 2005 and .also 11/Nag/2004 Asstt. CIT vs. Parashwa Engg. (P) Ltd. and it was stated that in the penalty proceedings, the question to be considered is whether the assessee concealed any income or furnished inaccurate particulars of income. The assessee had already furnished confirmation of all the shareholders, there is a finding in the Tribunal order that the confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned Departmental Representative are distinguishable on facts ad hence they are not applicable to the facts of the present case since in the present case no concealment of income or furnishing of inaccurate particulars thereof has been proved or established by the AO to levy the penalty under s. 271(1)(c) of Rs. 2,40,000 and dismiss the appeal filed by the Revenue. He argued that the case of the assessee is also covered by the judgment of the Bombay High Court dt. 25th July, 2005 in the case of CIT vs. Oriental syntax Ltd., Mumbai. 14. We have considered the rival submissions and gone through the various case laws cited by the both the parties. The assessment year involved in this case is 1997-98 and Expln. 4 to s. 271(1)(c) was amended by Finance Act, 2002 and the said amendment is applicable from 1st April, 2003. Therefore, we find force in the contention of the learned counsel for the assessee that as per the provisions applicable to the asst. yr. 1997-98, the penalty can be levied only when the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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