Blessing Construction, Surat vs Assessee

अपीलाथ / अपीलाथ / (Appellant) ू यथ यथ / थ / (Respondent)

Assessee(s) by : Shri Pritesh L. Shah, AR Revenue by : Shri Nimesh Yadav, Sr. DR.

सुनवाई क# तार%ख/ / Dateof Hearing : 29/05/2015 घोषणा क# तार%ख / Date of Pronouncement: 05/06/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

This is an appeal filed by the assessee and is directed against the order of the Ld. Commissioner of Income-tax(Appeals)-II, Surat dated 05.08.2011, pertaining to Assessment Year 2005-06.

2. The only ground raised by the assessee in the appeal is against the confirmation of penalty of Rs.3,65,925/- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act.

3. The facts of the case are that during the course of assessment proceedings, the Assessing Officer made the addition of Rs.13,00,000/- for unexplained cash credit which was reduced to Rs.10,00,000/- by the CIT(A) and the ITAT vide order dated 29.12.2011 in ITA No.1487/Ahd/2009 upheld the order of the CIT(A) thereby sustained the addition of ITA No. 2460/Ahd/2011 Blessing Construction vs. ITO For AY 2005-06 2

Rs.10,00,000/- for unexplained cash credit. The Assessing Officer levied penalty u/s 271(1)(c) amounting to Rs.3,65,925/-, treating the sum of Rs.10,00,000/- as concealed income of the assessee. On appeal, the CIT(A) sustained the same; hence, this appeal by the assessee.

4. We have heard both the parties and perused the material placed before us. It is a settled law that assessment proceedings and penalty proceedings are separate and independent. The ITAT has sustained the addition of Rs.10,00,000/- on the ground that the assessee could not prove the creditworthiness of the creditors. The ITAT also noticed that there was a cash deposit in the account of all the creditors immediately before the issue of cheque to the assessee. Therefore, considering the preponderance of the probability and also considering the decisions of Hon'ble Apex Court in the cases of Durga Prasad More vs. CIT, (1971) 82 ITR 540 (SC) and Sumati Dayal vs. CIT, (1995) 214 ITR 801(SC), sustained the addition. However, we find that the assessee had produced the confirmation of all the creditors. All the creditors are assessed to Income-tax and they were produced before the Assessing Officer. They also accepted before the Assessing Officer having advanced the money to the assessee. The facts in the case of all the creditors are more or less same; therefore, we discuss herein below the evidences furnished by the assessee in the case of one creditor viz. Taraben A. Mehta from whom the assessee borrowed Rs.2,00,000/-. At page No.13, Taraben has given the source of the deposit of Rs.2,00,000/- in her bank account. The sources included opening balance and also the refund of loan and advance which was given in the preceding year. At page No.14, there is an acknowledgement of the filing of return for Assessment Year 2005-06 in which she disclosed the income of Rs.81,120/-. At page No.15, there is computation of income in which the creditor disclosed the income from business as well as income from other sources (interest income). At page ITA No. 2460/Ahd/2011 Blessing Construction vs. ITO For AY 2005-06 3

No.16, there is balance-sheet of Taraben in which loan given to assessee i.e. Blessing Construction - Rs.2,00,000/-has been disclosed. At page Nos. 17 & 18, there is confirmation from Taraben. At page No.19, there is copy of her bank account and at page No.20, there is her copy of account from assessee's books for Financial Year 01.04.2006 to 31.03.2007 in which the loan is refunded by cheque. Similar evidences were produced by the assessee in the case of other creditors. After considering all these evidences, we are of the opinion that merely because the Assessing Officer or the ITAT did not consider these evidences to be sufficient for the purpose of explaining the cash credit u/s 68, it will not automatically lead to levy of penalty u/s 271(1)(c). The consideration in the assessment proceedings and the penalty proceedings are different. The addition can be sustained on preponderance of probabilities but where the assessee has given sufficient evidences with regard to credit in his books of accounts and such evidences or explanations have not been found to be false, merely because the same is not accepted in assessment proceedings, the levy of penalty may not be justified. After considering the facts of the case as well as the explanation of the assessee and the evidences produced by the assessee, we are of the opinion that it is not a fit case for levy of penalty u/s 271(1)(c). Accordingly, the penalty levied u/s 271(1)(c) is cancelled.

5. In the result, the assessee's appeal is allowed.

Order pronounced in the Court on 5th June, 2015 at Ahmedabad.

Sd/- Sd/-

(KUL BHARAT) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 05/06/2015 Biju T., PS ITA No. 2460/Ahd/2011 Blessing Construction vs. ITO For AY 2005-06 4 षत Copy आदे श क# ूितिल+प अमे+षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू यथ / The Respondent. 3. संबंिधत आयकर आयु- / Concerned CIT 4. आयकर आयु-(अपील) / The CIT(A)

5. +वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

/ BY ORDER, आदे शानु सार

TRUE COPY

Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad