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TMI Blog2013 (9) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... total amount qua them. By the mere reason of such concealment or of furnishing of inaccurate particulars alone, the assessee does not, ipso facto, become liable to a penalty. Imposition of penalty is not at all automatic. Meaning thereby, any addition in quantum would not lead to automatic levy of penalty and this is also true in respect of furnishing of inaccurate particulars of income – Decided in favour of Assessee. - ITA No. 23/Jodh/2009, ITA No. 522/Jodh/2004 - - - Dated:- 12-2-2013 - Shri Hari Om Maratha And Shri R. C. Sharma,JJ. For the Appellant : Sh. Amit Kothari and Sh. G. K. Gargieya, Sh. Dinesh Shrimali and Sh. Sarvesh Baldi For the Respondent : Shri G. R. Kokani ORDER Per Hari Om Maratha, J.M. The above captioned appeals pertaining to quantum addition and penalty pertaining to A.Y. 2001-02, were heard together for the sake of coherence and certainty. Therefore, it would be fruitful being convenient to decide them by a common order. 2. This appeal of the assessee is directed against the order of the ld. CIT(A) dated 29.9.2004. 3. Briefly stated, the facts of the case are that the assessee, as individual, derived his income from Coal India Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed inability to produce them because they were not traceable. He also exhibited his inability to file required documents to prove genuinity of the alleged brokerage payment. After explaining his inability to prove as above, the Accountant of the assessee preferred to surrender the entire amount of Rs. 36,00,166/-, on behalf of the assessee. Later on, this surrender was also confirmed by the assessee through letter dated 11.03.2004, when his books of accounts were impounded u/s 131(3) on 05.03.2004. Accordingly, amount of Rs. 36,00,166/- was added to assessee's total income of the year. For the subsequent year (i.e. A.Y. 2002-03) the assessee had filed Return of Income [ROI] which was also revised in view of the above surrender and as a result similar surrender of the claim of brokerage/commission amounting to Rs. 75,41,080/-, which included brokerage of Rs. 7,45,680/- recorded in the names of both Shri Lokesh Jain and Rajesh Sharma. 4. In the Balance Sheet the assessee has shown unsecured loans of Rs. 7,55,400/- under the head "sundry parties". The details of which, is given at pages 3 and 4 of the A.O's order. The AR of the assessee filed affidavits in respect of the creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of income to be taxed subject to further condition that no panel action of whatsoever nature will be initiated against the same. One of the reason of surrendering of the same as a part of income is that having regard to overall fact of the case in spite of best efforts the Assessee not in a position as to obtain further necessary evidence to prove the same as the A is of the opinion that the parties/persons who provided loans having apprehence in their mind that they will not come forward for the statements as well as they will not provide any further evidence for the petty amounts of loans so provided." 8. From the above submission contained in the letter of the assessee, it is manifest that he had made this surrender only to buy peace and to avoid further litigation. But, no case of deletion of this amount has been made out by the assessee. This amount was consciously surrendered before the A.O. Accordingly, we confirm this addition. As a result, the appeal of the assessee stands dismissed, as the assessee has raised only one issue in this appeal. 9. This appeal of the assessee for A.Y. 2001-02 has been filed against the order of ld. CIT(A) dated 17.12.2008; and emanates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh credits. The AR of the assessee further says that in their confirmation the creditors have disclosed their identity, address and source of income. But due to their inability to furnish further necessary evidences, the surrender was made. But now these confirmations must be considered on merit separately. The assessee is entitled to show that he has not committed any offence-during the penalty proceedings u/s 271(1)(c). The assessee further says that no independent inquiry has been made to provoke the non- genuineness of these creditors. Thereafter he cited various case laws in his favour and finally said that initiation of penalty proceedings are ab initio wrong, void, illegal and deserves to be cancelled." 12. But the A.O. by ignoring the above submission has imposed a penalty qua this addition also. Regarding an amount of Rs. 83,772/- a bonafide mistake was placed. The A.O. has not accepted, the same to has levied a penalty as under :- Total income returned by the assessee Rs. 544491/- Total income as per order u/s 143(3) Rs. 5001829/- 13. Finally, the A.O. has imposed a penalty of Rs. 15,64,526/- on this assessee. 14. In appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law that regular assessment proceedings and penalty proceedings are two entirely different subjects which operate in distinct and separate spheres so much so that entirely different parameters are applicable for making quantum addition and for levying penalty under section 271(1)(c) of the Act. There is no dispute regarding the position of law that under section 271(1)(c) penalty can be levied only if either the act of "concealment of particulars of income" or "furnishing of inaccurate particulars of income" is found to have been committed by the assessee. These are two different omissions or defaults, albeit, they refer to a deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of either suppressio veri or suggestio falsy. By the mere reason of such concealment or of furnishing of inaccurate particulars alone, the assessee does not, ipso facto, become liable to a penalty. Imposition of penalty is not at all automatic. Meaning thereby, any addition in quantum would not lead to automatic levy of penalty and this is also true in respect of furnishing of inaccurate particulars of income. Not only is the levy of penalty discret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the ld. A.R. that the assessee had a dispute with the payees regarding quantum of brokerage / commission. So, it was not possible to produce them before the A.O. It was also found that the assessee had supplied the addresses of both the parties. These are not found to be bogus parties. The assessee has surrendered the amounts to buy peace and to avoid further litigation. In the totality of the circumstances and eth facts of this issue, we are inclined to hold that this is not a fit case for imposing a penalty u/s 271(1)(c). The assessee cannot be said to have either concealed his income or to have furnished inaccurate particulars of his income. The assessee could not substantiate his explanation, but it is not a case where it can be said that the claim of the assessee is not bonafide. Thus, it would not be justified to impose penalty u/s 271(1)(c) in these circumstances. The ld. A.R. has relied on various decisions including the following: 1. CIT Vs. Adam Khan [1997] 223 ITR 264 [Mad] 2. CIT Vs. Suresh Chandra Mittal 241 ITR 124 [MP] 17. The above decisions support our above finding. In CIT(A) Vs. Adam Khan, it has been held as under: "Since the court could not go int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 271(1)(c). The assessee further says that no independent inquiry has been made to provoke the non- genuineness of these creditors. Thereafter he cited various case laws in his favour and finally said that initiation of penalty proceedings are ab initio wrong, void, illegal and deserves to be cancelled." 19. Per contra, the ld. D.R. has relied on the reasoning given by the A.O. for imposing this penalty. 20. With the similar-reasoning we order to delete this penalty also. 21. After considering the rival submissions, we have found that the assessee has claimed to have loans from 45 parties. Out of them the assessee had produced duly attested and properly sworn-in affidavits of 23 parties, wherein, they not only have confirmed the factum of their deposit but have also explained the source(s) thereof. It was only when the A.O. asked the assessee to produce all the 45 parties before him, the assessee not finding it feasible and being unable to comply, made a bonafide surrender of the total amount qua them. This addition has been confirmed even by us. But for imposition of penalty this is not enough. The revenue has to prove that the assessee has either concealed particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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