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TMI Blog2016 (1) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... r The Respondent : Shri Narendra Singh, Sr.DR ORDER PER: Manish Borad, Accountant Member This is an appeal filed by the assessee against the order of CIT(A) I, Surat, dated 23.09.2009 in Appeal No.CAS-I/249/08-09. The penalty order u/s.271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for A.Y. 2006-07 was framed on 25.3.2011 by ITO, Ward-1(4), Surat. Assessee has raised following grounds of appeal:- (1) That on the fact and circumstances of the case, learned assessing officer has erred in levying penalty of ₹ 38,94,372/- on account of addition of work-in-progress, Unsecured Loan, Sundry Creditors and Disallowance of various expenses amounting to ₹ 1,38,87,687/- due to non production of evidence of above during assessment proceeding; (2) The appellant craves leave to add, alter, delete or modify any ground appeal. 2. Briefly stated the facts of the case are that the assessee is a Private Limited Company engaged in the business of dyeing and printing of art silk cloth. The return of income was filed on 30.12.2006 at a total income of ₹ 4,87,760/-. Assessee s case was selected for scrutiny and notice u/s 143(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any steps in bringing any evidence on record and even no steps have been taken for admission of the additional evidences. In the absence of any explanation or reasons and evidence, no case is made out for remanding the matter to the file of the A.O. on all the grounds of appeal. The assessee throughout remained non co-operative and did not furnish any evidence or material. For cash credit/sundry creditors even no confirmation of the parties have been filed. The ratio of the order of the Tribunal or the High Court could be applied if the facts are available on record. In the absence of any facts, details and evidences on record, no reliance could be placed on the decision cited by the Ld. Counsel for the assessee. Considering the facts of the case and in the absence of any evidence or material on record, we do not find any justification to interfere with the orders of the authorities below. We confirm the order of the CIT (A) and dismiss the appeal of the assessee. Further as assessee could not succeed before the CIT(A), Assessing Officer proceeded to initiate the penalty proceedings by issuing a show cause u/s.274 r.w.s. 271(1)(c) of the Act. During the course of penalty pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrained them to attend various proceedings before the lower authorities as well as to furnish evidences and records. 3.1 Ld. A.R. urged upon that the assessee has already lost in the quantum proceedings up to the level of Tribunal but now as the necessary information is available along with supporting evidences which are amply clear to prove that there was no concealment of income by the assessee and therefore, the penalty imposed u/s.271(1)(c) of the Act should be deleted. On the other hand, ld. D.R. supported the orders of lower authorities and did not controvert to the merits of documents and evidences submitted by the assessee in the paper book filed on 18.09.2015. 4. We have heard the rival submissions and perused the material on record. The only issue to be examined is that whether the Assessing Officer was justified in imposing the penalty u/s.271(1)(c) of the Act. In a situation, where assessee has fully submitted proper evidences to prove that the additions made by the Assessing Officer at the time of framing the assessment order were not justified. 4.1 Out of total additions made in assessment proceedings completed u/s.144(4) r.w.s. 143(3) of the Act, Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the details furnished before him, then he may not have imposed the penalty to that extent, which has hither to been imposed in the impugned penalty order. 4.3 We have dealt with the same issue in the appeal of assessee s another group company M/s. Ariel Sarees Pvt. Ltd in ITA No.3180/Ahd/2011 for A.Y.2006-07, pronounced on 23.10.2015, wherein we have held as under: 6. We have heard the rival submissions and gone through the facts and circumstances of the case and perused the material available on record. The issue in appeal is imposition of penalty of ₹ 4,03,920/- by the A.O. and confirmed by the CIT(A) in regard to the confirmed addition of quantum of ₹ 12lacs up to the level of ITAT. 6.1 Assessment proceedings u/s.143(3) and penalty proceedings u/s.271(1)(c) are separate proceedings and the A.O. should pass his order on the basis of facts and supporting evidences available at the particular point of time and should not co-relate the two proceedings and nor should have a pre-determined view taken by him in the previous proceedings. In the case under appeal, A.O. made addition of ₹ 12lacs in his order passed u/s.144 on account of unexplained c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be no material to show that the amount in question was the income of the assessee. Alternatively, treating the Explanation as dealing with both the ingredients (i) and (ii) above, where the circumstances do not lead to the reasonable and positive inference that the assessee s explanation is false, the assessee must be held to have proved that there was no mens rea or guilty mind on his part. Even in this view of the matter the Explanation alone cannot justify levy of penalty. Absence of proof acceptable to the Department cannot be equated with fraud or willful default. Held, that in the instant case the cash credits were not satisfactorily explained by evidence and documents. The parties who had advanced the alleged temporary loans were neither disclosed nor were there any supporting documents on record. The accountant, who had arranged the loans was not produced and it was stated that he had left the service as relations with him were strained. In this state of accounts and evidence in the quantum proceedings, the Department was justified in treating the cash credits as income of the assessee but merely on that basis by recourse to Explanation 1, penalty under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee agreeing to have credit entries in its books of account treated as its income by virtue of the provisions of section 68 of the Act, the said sums would be deemed to be income of the year under consideration. However, de hors the said provision, it was not possible to state with certainty that the said sums would be concealed income of the assessee for the year under consideration. The Tribunal had recorded a finding of fact to the effect that there was no past history of the assessee to show that the assessee had been earning business income outside the books, nor was there in the books relating to the year under consideration any instance pointed out indicating any transaction outside the books. The Tribunal was justified in holding that the penalty of ₹ 30,000 imposed by the Inspecting Assistant Commissioner under section 271(1)(c) could not be sustained. From the ratio of above decisions, it emerges that in order to justify the levy of penalty two factors must co-exist; (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee s income. It is not enough for the purpose of penalty that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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