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TMI Blog2017 (7) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... enal proceedings u/s. 271(1)(c) read with explanation (B) are being initiated against her.” AO and on composite reading of assessment order, we find that the satisfaction of AO was discernible from the assessment order that the penalty proceedings were proposed to be initiated for furnishing inaccurate particulars of income. This alludes that the assessee was aware of the facets of section 271(1)(c), under which the penalty proceedings were proposed to be initiated, as is discernible from the assessment order. As such now there lies nothing in the mouth of assessee to contend that penalty is bad in law for want of specific charge against her. Therefore, we find that the facts of the case in hand are not existing in the judicial pronouncements relied by the assessee and thus are not relevant to the context of the present appeal before us in the peculiar facts and circumstances. Therefore, the additional ground raised by the assessee deserves to fail. On going through the findings reached by the ld. Authorities below and the examinations of documentary evidence furnished by assessee made by AO, we find that the creditors had made cash deposits in their bank accounts almost equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing been raised for the first time before the Tribunal, which reads as under : That under the facts and circumstances Ist SCN dtd. 14.11.2011 is premature and other 2 SCN s dtd. 23.12.2011 and 03.04.2012 do not precisely specify the charge, therefore illegal and unsustainable in law, hence, penalty order passed in pursuance to such invalid notices is unsustainable in law and without jurisdiction . 3. The brief facts of the case are that assessment of assessee was completed at a total income of ₹ 42,06,490/- as against the returned income of ₹ 4,56,490/-. In the assessment proceedings, the AO noticed that the assessee had made investment of ₹ 1,57,50,000/- in purchase of a property (Rs.1,50,00,000 as sale consideration + ₹ 7,50,000/- as stamp duty), out of which a sum of ₹ 1,02,50,000/- was invested during the period relevant to assessment year under consideration. On being asked for the source of investment, the assessee explained that during the year, she had taken unsecured loans of ₹ 30.00 lacs from following seven persons, who were stated to be friends and relatives : (1). Unsecured loan from Sh. Bis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome and accordingly levied penalty of ₹ 11,63,947/- against the appellant. 5. The appellant challenged the penalty order in appeal before the ld. CIT(A), who after considering detailed submissions of the assessee and various case laws cited, dismissed the appeal observing as under : I have carefully considered the written submissions of the appellant and also the contents of the penalty order and perused the relevant material available on record and after having carefully considered the entire facts and circumstances of the case, my conclusions on the issues raised in the grounds of appeals are as under : The only issue involved in the appeal in hand is imposition of penalty u/s 271(1)(c) which is being discussed and adjudicated in following paras of this order: Part-I:(Penalty with respect to unexplained investment of ₹ 7,50,000/- on account of Stamp Duty) In this regard vide written submission dated 25/3/2014 it has simply been stated that above expenditure has been incurred out of funds available with the assessee. However, no detail or supporting evidence in this regard has been submitted during the appellate proceeding. Moreover, in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Moreover, in some cases when AO asked to explain the source of cash deposits in creditors' bank account it has been stated that the cash has been borrowed by the creditors from several other persons, which means that the creditors for extending loan to the assessee has themselves borrowed cash loan from others which is also not convincing and appears a weak and false explanation for the reasons that the creditors failed to adduce reliable evidence in its support. So far as creditworthiness of the creditor is concerned, on perusal of their pass book and ITR it is quite clear that the earning capacity of the creditors are very low if compared with the amount of loan given to the appellant. In view of above discussion it clearly appears that the creditors did not have sufficient creditworthiness to advance such a big amount of unsecured loans to the appellant. During the appellate proceedings vide submission dated 25/3/2014 the counsel of the appellant has pleaded not to treat the amount of loan as concealed income to the extent the creditors had in their account prior to introduction of impugned cash in their bank account, which amounts to indirect admittance by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts material to the computation of total income of any person, additions are made because such person offers an explanation which he/she is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, the amount so added shall be deemed to be the income in respect of which particulars have been concealed. During the appellate proceedings the appellant, in support of her contention, has cited various case laws and has argued that her case was not covered by the provisions of section 271(1)(c) of the I.T. Act. However, on perusal of above citations, discussed in detail by the appellant in her written submission, as reproduced in forgoing paras of this order, I find that the facts of the case in hand are not covered by above judicial pronouncements and thus are not relevant in context of present appeal. In view of the above discussion and keeping in view all the above facts and circumstances of the case and relevant provisions of the Act I am of the considered view that the assessee has completely failed to substantiate her explanation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time in view of decision of Hon ble Supreme Court in National Thermal Power Company Ltd. 229 ITR 383 (SC) and of Delhi High Court in Gedore Tools Pvt. Ltd., 238 ITR 268 (Del.). 8. On merits, the ld. AR submitted that stamp duty expenses of ₹ 7.50 lacs was from personal sources; that no satisfaction for imposition of penalty on this addition was recorded in assessment order; that additions made in assessment order were not challenged to buy peace of mind and to avoid the exaggerated enquiries and to concentrate on business; that the loans were through banking channel; onus on appellant stood discharged by filing confirmations and bank statements of all the creditors, two creditors personally admitted to have advanced money to appellant in their statements; that doubt on source of source is no ground for treating the amount as concealed income; that non-production of all the creditors is no ground to impose penalty and that the identity and creditworthiness of creditors stood proved. 9. The ld. AR also raised an alternative contention that the source of loan to the extent of ₹ 2,51,492/- which already existed in the accounts of various creditors prior to introduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of this ground are based on the mute question whether the Assessing Officer has recorded its satisfaction specifying a particular facet of section 271(1)(c) , i.e., concealment of particulars of income or furnishing of inaccurate particulars of income before initiating the penalty proceedings. In this context, it has been settled by Hon ble Supreme Court in the case of MAK Data (P) Ltd. vs. CIT, 358 ITR 593 (SC) that the satisfaction of the Assessing Officer should be discernible from the assessment order for imposition of penalty, and he is not required to record his satisfaction in a particular manner or reduce it to writing. The relevant observations of Hon ble Court read as under : 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. A O during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated for furnishing inaccurate particulars of income. This alludes that the assessee was aware of the facets of section 271(1)(c), under which the penalty proceedings were proposed to be initiated, as is discernible from the assessment order. As such now there lies nothing in the mouth of assessee to contend that penalty is bad in law for want of specific charge against her. Therefore, we find that the facts of the case in hand are not existing in the judicial pronouncements relied by the assessee and thus are not relevant to the context of the present appeal before us in the peculiar facts and circumstances. Therefore, the additional ground raised by the assessee deserves to fail. 13. On going through the findings reached by the ld. Authorities below and the examinations of documentary evidence furnished by assessee made by AO, we find that the creditors had made cash deposits in their bank accounts almost equal to the amounts of unsecured loans advanced to the assessee immediately prior to issuance of cheques/DDs in favour of the assessee. The ld. CIT(A) has rightly observed that in such a scenario, cash deposits of huge amounts prior to issue of cheques cannot be a co-in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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