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TMI Blog2018 (12) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... though they may not be sufficient enough to conclusively prove the genuineness of the transactions. Unsecured loans shown to be taken by the assessee cannot be categorically held to be a bogus transaction, though it may be sufficient for making addition u/s 68. The documents therefore are relevant for the purpose of determining whether the assessee had concealed /furnished any inaccurate particulars of income, for the levy of penalty - decided in favour of assessee. - ITA No.141/Chd/2018 - - - Dated:- 13-8-2018 - Shri Sanjay Garg, Judicial Member And Ms. Annapurna Gupta, Accountant Member For the Appellant : Shri Sudhir Sehgal, ADv. For the Respondent : Ms.Deepika Mohan, JCIT ORDER PER ANNAPURNA GUPTA, A.M.: The present appeal has been filed by the assessee against the order of Commissioner of Income Tax(Appeals) 5, Ludhiana [hereinafter referred to as CIT(A)], dated 15.11.2017 relating to assessment year 2004-05 confirming the levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961(in short the Act ) amounting to ₹ 7,72,271/-. The impugned penalty has been levied on account of addition made to the income of the assessee of unsecured loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to substantiate its claim that the loan had been procured through Shri Pawan Bansal and that other partners were unaware of the transaction. The Assessing Officer also stated that the documents now submitted were part of the books of account of the assessee only and, therefore, also there was no reason for not producing the same earlier. The Assessing Officer further pointed out that even the I.T.A.T. had decided not to entertain the additional evidences which were produced before it in quantum proceedings since, it was held, they could not be construed as evidences for proving the loans u/s 68 of the Act. The Assessing Officer thus in above terms objected to the admission of additional evidence. The copy of the report of the Assessing Officer was forwarded to the assessee for his comments who rebutted all the contentions of the Assessing Officer stating that the proof of Shri Pawan Bansal being responsible for procuring loans cannot be demonstrated by way of any documents and that the documents now submitted adequately depicted the genuineness of the transaction showing the same to have been conducted through banking channels only. The CIT(Appeals) refused to admit the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has been dismissed by the Hon'ble ITAT, Chandigarh vide its order dated 25.03.2015. The relevant para of the ITAT order in ITA Nos. 224/Chd/2013 and 232/Chd/2013 is reproduced below:- 9. In the light of the rejection of application for additional evidence the ground raised by the assessee required to be dismissed because assessee has miserably failed to prove the loans to the extent of ₹ 41,59,0007- because no confirmation or any evidence proving such transaction was furnished before AO or even before the CIT(A) or even before us. During the present appellate proceedings, the AR filed three paper books -one containing the documents which were filed before the Hon'ble ITAT also and as already held, these were not found relevant to prove the genuineness of the loan. The second paper book contained the confirmation from four persons, which could not be substantiated as the summons issued u/s 131 were received back and the appellant showed his inability to produce these persons during the appellate proceedings as required by letter dated 03.10.2017. In the absence of independent verification during the appellate proceedings, the confirmations filed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has introduced its own unaccounted income/money as unsecured loans. The argument of the AR regarding Sh. Pawan Bansal is not found convincing as the loans have been shown in the accounts of M/s. Aggarwal Sales, the assessee, and not in the individual capacity of Sh. Pawan Bansal. Had Sh. Pawan Bansal taken these loans in his individual capacity and routed through his capital account, then this argument could have been given. The person paying the loan maintains a contact with the parties to whom the payments have been made because the money is required to be recovered even if no interest is charged. If the person who has paid the loan is not known, this indirectly indicates that the money belong to the assessee itself. It has also been mentioned in the grounds that the submission have not been properly considered by the AO, however the fact is that no submission on merits were filed before the AO. The submissions/ documents filed during the appellate proceedings have been considered but not found acceptable as discussed above. Under these facts and the circumstance of the case, the penalty imposed by the AO is found sustainable as per law and hence confirmed. 4. Aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble ITAT, Chandigarh for proving the loans u/s 68 and it was held that assessee is required to file confirmation as well as show creditworthiness of such parties. Therefore, respectfully following the judgment of the Hon'ble ITAT, these documents are not found worth admission as additional evidence to prove the identity, creditwoj?fniness and genuineness of the loans under section 68 of the I.T. Act, 1961. 6. The Ld. counsel for assessee stated that it is settled law that the assessment proceedings and penalty proceedings are independent and different proceedings and the findings in the quantum proceedings are not conclusive for the purpose penalty proceedings and, therefore, the rejection of additional evidences filed by the assessee following the findings in quantum proceedings was not sustainable. The Ld. counsel for assessee pointed out that even otherwise the assessee besides filing documents which were filed before the I.T.A.T., had filed confirmations of four persons also who had given unsecured loans. Therefore, the parity of reasoning given by the I.T.A.T. in quantum proceedings for rejecting the admission of additional evidences could not have been applied i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also deducted and deposited with the Government. Further confirmations had been filed by four persons also. No adverse remarks having been given against the aforesaid documents filed by the assessee. Ld. counsel for assessee, therefore, contended that though the documents may be insufficient to prove the genuineness of the unsecured loans but it cannot also be said that the assessee had completely failed to prove the genuineness of the transactions. Therefore, in such circumstances ,it was contended, that all the particulars of the loan transactions having been duly reflected in the books of account of the assessee, the assessee could not be held to have concealed or furnished inaccurate particulars of income for levying penalty u/s 271(1)(c) of the Act. 10. The Ld. DR, on the other hand relied upon the order of the CIT(Appeals). The Ld. DR vehemently argued that the assessee had categorically failed to prove the genuineness of the transactions both in quantum proceedings and even in penalty proceedings so much so that the enquiry conducted by the CIT(Appeals) in appellate proceedings by issuing summons to four parties which were received back unserved, indicated that the loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different from the standard of proof /consideration which may lead to the levy of penalty, which requires conclusive findings to the effect that wrong particulars of income had been furnished or particulars of income had been concealed. Thus while additions/disallowances may be made on account of insufficiency of evidences to prove the claim of the assessee, the said factor may not be sufficient for holding that the assessee had concealed or furnished inaccurate particulars of income so as to levy penalty. The findings in quantum proceedings cannot therefore be blindly followed for in penalty proceedings. The reliance placed by the Ld.Counsel for the assessee on the decision of the Hon ble Punjab and Haryana High Court in the case of Bhoj Raj and Co.(supra) and the decision of the Hon be Gujarat High Court in the case of Jalaram Oil Mills(supra) in this regard is apt wherein the aforesaid distinction between quantum proceedings and penal proceedings has been clearly brought out. 16. Viewed in the above backdrop, the additional evidences now filed by the assessee, we hold, cannot be rejected for admission simply following the order of the ITAT in quantum proceedings in this rega ..... 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