M/S Goel Enclave, Lucknow vs Assessee

This is assessee's appeal directed against the order of Learned CIT (A)

- I Lucknow Dated 07.03.2013 for A.Y. 2008 - 2009.

2. The only grievance of the assessee is regarding confirming the penalty of Rs. 450,000 imposed by the A.O. u/s 271 (1) (c) of I. T. Act.

3. Learned AR of the assessee submitted copy of confirmations of all 7 creditors on direction of the tribunal. He also submitted that the assessee these confirmations could not obtain these confirmations earlier and because the accountant was not available, could not reconcile these accounts and for these reasons, surrender was made. He also submitted that since, now the confirmations are available, penalty is not justified. He also placed reliance on a judgment of Hon'ble Bombay High Court rendered in the case of CIT vs. Upendra V. Mithani, in ITA No. 1860 of 2009 dated 05.08.2009. He submitted that copy of this judgment is available on page 1 of Case Laws Paper Book. Learned D.R. of the Revenue supported the orders of the authorities below.

4. We have considered the rival submissions. We find that in the present case, the addition was made by the A.O. by observing in the assessment 2

order that regarding 8 creditors having balance of Rs. 12,42,004, it was submitted by the assessee before him that these accounts need to be reconciled but the accountant, who had written the books had left the assessee company and therefore, it is taking time to reconcile. He also observed that the assessee surrendered this amount by stating that this amount is being surrendered to buy peace with the department. Hence, it is seen that in the present case, addition was made for the reason that the assessee could not prove the creditors and not for this reason that the claim of the assessee was disproved. In the light of these facts, we examine the applicability of the judgment cited by the learned AR of the assessee. In that case, it was held by Hon'ble Bombay High Court that if the assessee has given an explanation, which is unproved but not disproved, this cannot be inferred that the assessee's case is false and therefore, penalty is not justified. In the present case, now the assessee has brought on record confirmations of 7 parties out of total 8 parties and hence, it is seen that at least, in penalty proceedings, the assessee has made out a case that even surrender or addition was not called for. We have nothing to say about surrender and consequent addition but in the facts of the present case, penalty is not justified. Therefore, we delete the penalty.

5. In the result, the appeal of the assessee is allowed.

(Order was pronounced in the open court on the date mentioned on the caption page)

Sd/. Sd/.

(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member

Dated:31/03/2015 *C.L.Singh

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar