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TMI Blog2015 (8) TMI 1554X X X X Extracts X X X X X X X X Extracts X X X X ..... ash sales have been accepted by the sales tax authorities. The authorities below dis-believed the explanation of the assessee with regard to cash sales made to different parties because their complete details are not noted in the bills. It was also noted that since no complete particulars of the purchasers are mentioned in the sale bills, therefore, cash sales are not subjected to verification. This was the sole reason for making the addition as well as levying the penalty under section 271(1)(c) of the Act against the assessee - As in the case of R.B. Jessa Ram Fateh Chand [ 1969 (7) TMI 10 - BOMBAY HIGH COURT] and similarly M. Durai Raj [ 1971 (3) TMI 11 - KERALA HIGH COURT] held that the books of account cannot be rejected if in cash sales, names and address of the purchasers are not mentioned. There is no need to mention name and address in the cash sales. These judgements support the version of the assessee that mere dis-believing the explanation of the assessee would not be enough to levy the penalty under section 271(1)(c) The facts and circumstances of the case shall have to be considered because levy of the penalty is discretionary in nature. The Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of Rs. 3.12 Cr by crediting the income from undisclosed sources to its books of account in the garb of cash sales. 3. The penalty order was challenged before ld. CIT(Appeals) and it was submitted that cash sales amounting to Rs.3.12 Cr only out of the total sales of Rs. 94.54 Cr and that the said cash sales were duly disclosed and accounted for in the books of account. It was argued that all the sales were backed by the sales bills, sales tax paid challans and Sales Tax Return filed by the assessee with the Commercial Tax Department of Una. It was argued that books of account alongwith inventory record were duly audited by the tax auditor and the cash sales should not have been treated as unexplained cash credits merely because the address of all the customers were not found to be complete on the cash sales bills. It was further argued that the Assessing Officer has failed to discharge the onus of proving the source of generation of such undisclosed income and had proceeded only on suspicion and assumptions while levying the penalty. It was submitted that appeal of the assessee had been admitted by the Hon'ble High Court of Himachal Pradesh which proves that addition ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty was debatable and arguable issue, the Tribunal referred to the order on the assessee's appeal in quantum proceedings and the substantial questions of law which had been framed therein. Thus, there was no case made out for imposition of penalty and the penalty was rightly set aside. 6. He has submitted that penalty proceedings are distinct from assessment proceedings. The additions confirmed in the quantum proceedings cannot be the basis for imposition of penalty as is held in the case of Durga Kamal Rice Mills V CIT 265 ITR 25 and also relied upon decision of the Allahabad High Court in the case of Ratan Lal Aggarwal 317 ITR 336 wherein the issue was also in respect of additions of cash credits confirmed in quantum proceedings. The ld. counsel for the assessee further submitted that the assessee is admittedly maintaining accounts which are duly audited. It had declared the entire sale proceeds including cash sales in the return of income which was forming part of the gross receipts on which assessee also deposited sales tax and sale tax assessment had been completed by the authorities. Copy of the sale tax order dated 25.03.2010 is filed at page 56 of the Paper Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 271(1)(c) of the Act is therefore, clearly attracted in the case of the assessee. The ld. DR relied upon decision of the Hon'ble Supreme Court in the case of Union of India Others V Dharmendra Textiles Processors others 306 ITR 277 in which it was held as under : Explanations appended to section 271(l)(c) of the Incometax Act, 1961, indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The object behind the enactment of section 271(l)(c) read with the Explanations indicates that the Section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under section 276C. 8. We have considered the rival submissions and material available on record. In this case, the penalty has been imposed because the Assessing Officer found that assessee has booked cash sales of Rs. 3 Crores in the month of September,2006 to different parties. This was the sole basis for levy of penalty against assessee because t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of M. Durai Raj V CIT 83 ITR 484, held that the books of account cannot be rejected if in cash sales, names and address of the purchasers are not mentioned. There is no need to mention name and address in the cash sales. These judgements support the version of the assessee that mere dis-believing the explanation of the assessee would not be enough to levy the penalty under section 271(1)(c) of the Act against the assessee for merely not mentioning the complete details of the purchaser in the cash sale bills. No evidence has been brought on record of concealment of income or filing inaccurate particulars of income in respect of cash sales except the explanation of assessee had been found to be unacceptable. Therefore, it would not follow the amount of cash sales represents income of the assessee so as to levy the penalty under section 271(1)(c) of the Act. Merely dis-believing explanation of the assessee was no ground to levy the penalty. The explanation of assessee was not found to be false. No material is brought on record to hold assessee had made any false claim of cash sales. In our opinion, in the cash sales bills, there was no need to mention the complete names ..... X X X X Extracts X X X X X X X X Extracts X X X X
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