M/S. Aggarwal Financers, Ladwathrough Its v. Commissioner Of Income Tax, Karnal And Another

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 65 of 2010Date of decision: 19.4.2011 M/s. Aggarwal Financers, Ladwathrough its partner, Rajinder Pal Gupta Versus --- Appellant Commissioner of Income Tax, Karnal and another --- Respondents CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. Sandeep Goyal, Advocatefor the appellant. Mr. Yogesh Putney, Senior Standing Counselfor the respondent. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (in short “the Act”) has been filed by the assessee against theorder dated 3.12.2008 passed by the Income Tax Appellate TribunalChandigarh Bench (SMC Bench), Chandigarh (in short “theTribunal”), in ITA No. 933/Chandi/2005, relating to the assessmentyear 1998-99. 2.The following substantial questions of law have beenclaimed for determination of this Court: “(i)Whether in the facts and circumstances of the presentcase the action of the authorities below, in passing thepenalty order under Section 271(1)(c) of the Act therebyholding the concealment of income, when all the cashcredits were duly explained by the appellant assessee, islegally sustainable in the eyes of law?case the action of the authorities below, in passing thepenalty order under Section 271(1)(c) of the Act therebyholding the concealment of income, when all the cashcredits were duly explained by the appellant assessee, islegally sustainable in the eyes of law? (ii)Whether under the facts and circumstances of thepresent case the action of the authorities below inimposing penalty even when the onus was discharged bythe appellant assessee in toto is legally sustainable in theeyes of law?present case the action of the authorities below inimposing penalty even when the onus was discharged bythe appellant assessee in toto is legally sustainable in theeyes of law? (iii) Whether under the facts and circumstances of thepresent case the action of the authorities below inimposing penalty for concealment of income, merely onthe basis of presumptions, is legally sustainable in theeyes of law?present case the action of the authorities below inimposing penalty for concealment of income, merely onthe basis of presumptions, is legally sustainable in theeyes of law? (iv)Whether under the facts and circumstances of thepresent case the action of the authorities below inpassing orders (Annexure A-1 to A-3) even when thegenuineness of the transactions were fully explained bythe appellant assessee, therefore, discharging its onus, islegally sustainable in the eyes of law?present case the action of the authorities below inpassing orders (Annexure A-1 to A-3) even when thegenuineness of the transactions were fully explained bythe appellant assessee, therefore, discharging its onus, islegally sustainable in the eyes of law? (v)Whether under the facts and circumstances of thepresent case the action of the authorities below inpassing the impugned orders (Annexure A-1 to A-3) arelegally sustainable in the eyes of law?present case the action of the authorities below inpassing the impugned orders (Annexure A-1 to A-3) arelegally sustainable in the eyes of law? (v)Whether under the facts and circumstances of thepresent case the action of the authorities below inpassing the impugned orders (Annexure A-1 to A-3) arelegally sustainable in the eyes of law?present case the action of the authorities below inpassing the impugned orders (Annexure A-1 to A-3) arelegally sustainable in the eyes of law? 3.The facts, in brief, necessary for adjudication as narratedin the appeal, are that the assessee filed its return of income for theassessment year 1998-99, on 31.10.1998, declaring income of Rs.6,889/-. The assessing officer, however, made assessment underSection 148 of the Act. Certain short-comings and deficiencies weredetected by the assessing officer in the return filed. Accordingly, theassessing officer noticed that the deposits made by the creditors ofthe assessee as shown in the books of account were not genuine,inasmuch as no confirmation and verification had been furnished bythe assessee and, thus, made an addition of Rs. 1,97,000/-. Theassessing officer also disallowed 1/4[th] of the actual expenses of Rs.67,767/- and further added a sum of Rs. 16,942/-. Pursuant to thesame, notice under Section 274 read with Section 271(1)(c) of theAct was issued. The assessing officer, vide order dated 24.12.2004,held that there was concealment of income by the assessee andaccordingly imposed a penalty of Rs. 68,949/-. 4.Appeals against the imposition of penalty carried by theassessee before the Commissioner of Income-tax (Appeals) {in short“the CIT(A)”} and the Tribunal were dismissed.assessee before the Commissioner of Income-tax (Appeals) {in short“the CIT(A)”} and the Tribunal were dismissed. 5.We have heard learned counsel for the parties and haveperused the record. 6.The Tribunal while upholding the findings of CIT(A) andthe assessing officer, imposing penalty had recorded as under:the assessing officer, imposing penalty had recorded as under: “We are aware that the penalty is not imposable if there isno conscious breach of law as was held by the Hon’bleApex Court in the case of Hindustan Steel Ltd. Vs. Stateof Orissa (83 ITR 26) (SC) and at the same time, for imposition of penalty, the conduct of the assessee mustbe conscious. Hon’ble Gujarat High Court in the case ofAM Shah & Co. vs. CIT (108 Taxman 137) (Guj.) evenwent to the extent that the concealment/ inaccurationoccurring up to final stage must be considered. Evenotherwise, a harmonious construction of Section 106 ofthe Evidence Act and Section 68 of the Act will be thatthough apart from establishing the identity of the creditor,the assessee must establish the genuineness of thetransaction as well as the credit worthiness of his credit.The burden is on the assessee to prove the genuinenessof the transaction. In the present appeal, since in spite ofvarious opportunities provided to the assessee, thecreditors could not be produced, therefore, it can be saidthat the assessee attempted to conceal the particulars byfurnishing inaccurate particulars. We are aware that theaddition made on this account would not automaticallyjustify the imposition of penalty, under Section 271(1)(c)of the Act, no penalty can be imposed if the facts andcircumstances are equally consistent with the hypothesisthat it does. In the present appeal, since the assesseehas not explained cash credits, therefore, we are of theview that the penalty has been rightly levied. Theimpugned order is upheld. Consequently, this appeal isalso dismissed.” 7.The Tribunal on appreciation of material had affirmed theorders of the authorities below and arrived at the conclusion that there was concealment of income on the part of the assessee. Thepenalty under Section 271(1)(c) of the Act had, thus, been rightlylevied. Nothing could be shown that the findings recorded by theauthorities below were perverse or erroneous in any manner. 8. In view of the above, no substantial question of law arisesand the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE April 19, 2011*rkmalik* 7.The Tribunal on appreciation of material had affirmed theorders of the authorities below and arrived at the conclusion that there was concealment of income on the part of the assessee. Thepenalty under Section 271(1)(c) of the Act had, thus, been rightlylevied. Nothing could be shown that the findings recorded by theauthorities below were perverse or erroneous in any manner. 8. In view of the above, no substantial question of law arisesand the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE April 19, 2011*rkmalik* (ADARSH KUMAR GOEL) JUDGE