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TMI Blog2015 (12) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... trade creditor Opening balance as on 01-04-2006 Payment during the year Balance Outstanding as on 31-03-2007 1. M/s. Pushpa Marble Industries, Kishangarh 13,14,404/- 1,55,000/- 11,59,404/- 2. M/s. Mukund Marble Factory 1,03,589/ - 1,03,589/- Total 14,17,993/- Apropos AOs inquiries in this behalf, assessee explained that he had purchased marble from Pushpa Marbles, the outstanding opening trade balance as on 01-04-2006 represented the amount payable by the assessee against earlier year's purchases. An amount of Rs. 1.55 lacs was paid during the year and balance was cleared in subsequent years. The repayment during the year was through bank account. The AO insisted for confirmation from the party i.e. M/s. Pushpa Marble to ascertain the trade liability, which assessee could not produce. 2.2 Apropos M/s. Mukund Marble factory, an amount of Rs. 1,03,589/- was shown as payable for marble purchases whereas according to the AO in the books of account of Mukund Marble, the corresponding receivable was shown as nil. The assessee replied that above parties were not related beside he had no control over unrelated third party's accounts. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred first appeal before the ld. CIT(A) where detailed written submissions were filed, the summary thereof is as under :- a. None of the opening balance of trade creditors pertained to this year, they were opening balances of earlier years and paid subsequently. These transactions of purchases and sale were accepted by the department in earlier years. b. In marble trade many of the parties keep on shifting places depending on the mining lease. The parties were genuine and 2 additions pertained to trade liabilities against the goods purchased and one pertained to goods sold. c. The surrender was voluntary whereas the ld. AO has held it to be unacceptable as there were prolonged inquiries before surrender. It has not been appreciated that assesse also made efforts because he was under bona fide belief that being trade related balances necessary confirmations will be obtained. Rather the inquiries prove the bona fides of the assesse as he cannot know in advance that its trade dealing which were accepted by the department, relevant confirmations would not be fetched by him. d. The parties were not related to the assessee, nothing was cross verified from their end as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.7 The ld counsel for the assesse contends that ld CIT(A) has not disputed the proposition that penalty proceedings are distinct and separate in nature than assessment proceedings. This clearly implies that merely because an income is surrendered it can not be a factor for automatic levy of concealment penalty. The facts and explanation of the assessee's case are to be considered before levying any penalty because imposition of penalty is primarily a question of fact and distinct from assessment proceedings. In this backdrop it is pointed out that ld CIT(A) has erroneously held these liabilities to be bogus, which is a fundamentally wrong finding of fact in as much as ld. AO has held them to be cessation of liability u/s 41(1). All these entries emanate from the books of accounts as opening balances, thus the related purchase/ sale transactions have been accepted by the department in preceding year. These being the undisputed fact the opening balances coming from earlier cannot be held to be bogus. Thus the adverse inferences drawn by lower authorities are self-contradictory and fundamentally flawed consequently any finding or conclusion arrived on that basis is incorrect. Coming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the relevant particulars were filed along with the return and no inaccurate particulars have been furnished with the return of income, penalty is not leviable. Alternatively it is pleaded the AO has erred in not giving any setoff of amounts as payable and receivable both have been added. If set off is given the penalty will be drastically reduced. Reliance is placed on the Supreme Court judgment in the case of Reliance Petro Products Ltd. 322 ITR 158; Price Water House Cooper 348 ITR 306(SC) and other judgments relied on before lower authorities. 2.8 The ld DR on the other hand vehemently argues that once the income is surrendered by assesse, revenue has no burden on it to prove the motive or mens rea. Reliance is placed on following recent judgment of Hon'ble supreme court: MAK DATA v CIT 358 ITR 593 (SC) 2.9 The ld counsel for the assesse on the other hand contends that Mak Data judgment itself postulates that the penalty can be imposed on surrender by the assesse if it is made after detection by the department and assesse doesn't give proper reply. In that case the addition was made after detection by the department, assesse was found to be deflecting those enquiries and n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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