PALKHI INVESTMENTS & TRADING COMPANY P. LTD, MUMBAI v. ITO CIR 9(2)(4), MUMBAI

ITA 2623/MUM/2011 | 2005-2006
Pronouncement Date: 24-07-2013 | Result: Dismissed

Appeal Details

RSA Number 262319914 RSA 2011
Assessee PAN AAACP6303C
Bench Mumbai
Appeal Number ITA 2623/MUM/2011
Duration Of Justice 2 year(s) 3 month(s) 18 day(s)
Appellant PALKHI INVESTMENTS & TRADING COMPANY P. LTD, MUMBAI
Respondent ITO CIR 9(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-07-2013
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 24-07-2013
Date Of Final Hearing 11-07-2013
Next Hearing Date 11-07-2013
Assessment Year 2005-2006
Appeal Filed On 06-04-2011
Judgment Text
INCOME TAX APPELLATE TRIBUNAL MUMBAI - C BENCH. . .. . . .. . / !'# !'# !'# !'# ' ' ' ' BEFORE S/SH. B.R. MITTAL JUDICIAL MEMBER & RA JENDRA ACCOUNTANT MEMBER ./ ITA NO.2623/MUM/2011 $ $ $ $ % % % % / ASSESSMENT YEAR-2005-06 PALKHI INVESTMENTS & TRADING COMPANY PVT. LTD. SWATI BUILDING NORTH AVENUE ROAD SANTACRUZ (W) MUMBAI-400054 VS. ITO CIR 9(2)(4) AAYKAR BHAVAN M.K.MARG MUMBAI- 400020 PAN: AAACP6303C ( &' / APPELLANT ) ( ()&' / RESPONDENT ) &' &' &' &' * * * * ' ' ' ' / APPELLANT BY : SHRI VIPUL JOSHI & NISHIT GANDHI ()&' + * ' / RESPONDENT BY : MS. C. TRIPURA SUNDARI (DR) $ $ $ $ + ++ + - - - - / DATE OF HEARING : 11-07-2013 ./% + - / DATE OF PRONOUNCEMENT : 24-07-2013 $ $ $ $ 1961 + ++ + 254(1) ' '' ' 0 0 0 0 '1 '1 '1 '1 ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) PER RAJENDRA A.M. CHALLENGING THE ORDER DT.03-02-2011 OF THE CIT(A)-2 0 MUMBAI ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.A.THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-20 MUMBAI (THE CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT 196 I(THE ACT) LEVIED BY THE ASSESS ING OFFICER. 1.B. WHILE DOING SO THE CIT (A) ERRED IN: (I)BASING HIS JUDGMENT ON: INCORRECT INSUFFICIENT AND UNCORROBORATED FACTS AN D (B)ERRONEOUSLY RELYING ON CASE LAWS WHICH ARE TOTAL LY DISTINGUISHABLE ON FACTS. (C)ERRONEOUSLY NOT ACCEPTING THE CASE LAW CITED BY THE ASSESSEE. (D)ERRONEOUSLY HOLDING THAT THE ASSESSEE HAD INTENT IONALLY CONCEALED THE INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. (E)ERRONEOUSLY HOLDING THAT THE ASSESSEE HAD NOT BE EN IN A POSITION TO DISCHARGE THE BURDEN THAT THAT LAY ON IT UNDER EXPLANATION TO SECTION 271 (1) (C) OF THE ACT. (II)NOT APPRECIATING/TAKING INTO CONSIDERATION THE DETAILED ORAL AS WELL AS WRITTEN SUBMISSION MADE BEFORE HIM. 1C.IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUM STANCES OF THE CASE AND IN LAW THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY AS WELL AS THE OR DER OF THE CIT (A) ARE BAD ILLEGAL AND VOID. WITHOUT PREJUDICE TO THE ABOVE 2.THE CIT (A) ERRED IN COMING TO THE CONCLUSION THA T THE CLAIM MADE IN THE RETURN OF INCOME WAS FOUND TO BE INCORRECT OR FALSE RESULTING IN CONCEALMENT O F INCOME ON ITS PART AND THEREBY CONFIRMING PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271 ( 1) (C) OF THE ACT. 3.IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW NO CONCEALMENT PENALTY WAS LEVIABLE. 4.THE ASSESSEE CRAVES LEAVE TO ADD DELETE AND/OR M ODIFY ANY OF THE GROUNDS OF APPEAL AT THE TIME OF 2 ITA NO.2623/MUM/2011 (AY-2005-06) PALKHI INV ESTMENTS & TRADING COMPANY PVT. LTD HEARING. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE COMPANY IS ABOUT PENALTY LEVIED BY THE AO U/S. 271 (1)(C)OF THE ACT THAT WAS LATER ON CONFIRMED BY THE FIRST APPELLATE AUTHORITY(FAA). FACTS OF THE CASE : 2. DURING THE ASSESSMENT PROCEEDINGS AO MADE AN ADDITI ON OF RS 1 05 79 672/-TO THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF THE LIABILITIES SHOWN IN VARIOUS NAMES ON THE GROUND THAT THEY HAD CEASED TO EXIST AND REPRESENTED INCOME IN TERMS SEC TION 41(1) OF THE ACT.THOUGH THE AO HAD ASKED THE ASSESSEE TO FURNISH CONFIRMATION FROM THE CREDITORS SO AS TO PROVE EXISTENCE OF THE LIABILITIES YET IT DID NOT FILE ANY CONFIRMATION IN THIS REGARD.AO ISSUED ENQUIRY LETTERS TO THE CREDITORS AT ADDRESSES GIVEN. ALL RETURNED UN-SERVE D.AO BROUGHT THIS TO THE NOTICE OF THE ASSESSEE VIDE HIS LETTER DT.06-12-07AND GAVE ONE MORE OPPORT UNITY TO PROVE EXISTENCE OF THESE LIABILITIES. THE ASSESSEE EXPLAINED THAT THE LIABILITIES HAD BEE N OUTSTANDING FOR SEVERAL YEARS AND HAD BEEN ACCEPTED GENUINE IN THE EARLIER YEARS. IT FURTHER S UBMITTED THAT ALL THE CREDITORS WERE GENUINE AND NO ADDITION WAS REQUIRED TO BE MADE IN THE CURRENT YEAR EVEN IF THE LIABILITIES COULD NOT BE PROVED THIS YEAR. THE AO DID NOT AGREE.HE OBSERVED THAT IF THE LIABILITIES SUBSISTED THE ASSESSEE SHOULD HAVE BEEN AWARE OF THE PRESENT WHEREABOUTS OF THE C REDITORS.OBSERVING FURTHER THAT THE ASSESSEE FAILED TO SHOW THAT THE LIABILITIES CONTINUED TO EX IST AT THE YEAR END HE TREATED THEM AS INCOME UNDER SECTION 41(1) OF THE ACT.THE ADDITION WAS CON FIRMED BY THE CIT(A). 2.1. ON FURTHER APPEAL TRIBUNAL NOTED THAT THE AO HAD MA DE ENQUIRIES REGARDING THE CREDITORS AT THE ADDRESSES GIVEN BY THE ASSESSEE AND RESULTS WERE CO MMUNICATED TO THE ASSESSEE. THEREAFTER THE ASSESSEEN EITHER FILED CONFIRMATIONS NOR DID IT GIV E THE CURRENT ADDRESSES OF THE CREDITORS.IT OBSERVED THAT WHETHER A PARTICULAR LIABILITY WAS A GENUINE EXISTING LIABILITY OR HAD CEASED TO EXIST WOULD DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EA CH CASE. THE ASSESSEE TRIED TO EXPLAIN THAT THE LIABILITIES WERE OUTSTANDING BECAUSE OF DISPUTES WI TH THE CUSTODIAN BUT NO EVIDENCE WAS PRODUCED TO SUBSTANTIATE SUCH CLAIM. TRIBUNAL OBSERVED THAT HAD THERE BEEN GENUINE LIABILITIES THE CREDITORS WOULD HAVE DEFINITELY MADE THE CLAIM AND RAISED DIS PUTES BUT NO SUCH MATERIAL OR ANY CORRESPONDENCES HAD BEEN PRODUCED THAT IT DID NOT C ONFORM TO NORMAL HUMAN CONDUCT THAT A CREDITOR WOULD NOT MAKE EFFORTS TO RECOVER MONEY RE CEIVABLE FROM A PERSON THAT THE PERSON WOULD NOT BE AWARE OF THE PRESENT WHEREABOUTS OF THE CRED ITOR IF GENUINE LIABILITIES WERE PENDING. FINALLY TRIBUNAL HELD THAT THE LIABILITIES IN QUEST ION SHOWN AS OUTSTANDING AT THE END OF THE YEAR WERE REALLY NOT EXISTING AND UPHELD THE ADDITION TO THE EXTENT OF RS.1 05 79 672. IT REJECTED THE ALTERNATE PLEA OF THE ASSESSEE THAT ADDITION IF AN Y COULD BE MADE IN THE EARLIER YEAR AS LIABILITIES WERE COMING FROM THE EARLIER YEAR ON THE GROUND THA T AS PER ITS OWN ADMISSION THE LIABILITIES EXISTED IN EARLIER YEARS AND THEY CAN BE TREATED AS INCOME ONLY IN THE YEAR THEY CEASED TO EXIST. 2.1.1. MEANWHILE AO HAD ISSUED A NOTICE FOR LEVYING PENALT Y U/S.271(1)(C) OF THE ACT FOR FURNISH - ING INACCURATE PARTICULARS OF THE INCOME AND THUS C ONCEALING INCOME FOR THE AY UNDER CONSIDERA - TION.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE HELD THAT TWO APPELLATE AUTHORITIES HAD CONFIRMED THAT THE LIABILITIES HAD CEASED TO EXIST THAT THE ASSESSEE HAD SHOWN NON-EXISTING LIABILITIES WHICH COULD BE FOUND OUT ONLY AFTER ENQ UIRY IN COURSE OF THE ASSESSMENT THAT THE ASSESSEE HAD MADE WRONG CLAIM THEREBY FURNISHING IN ACCURATE PARTICULARS LEADING TO CONCEALMENT OF INCOME.HE THEREFORE LEVIED THE MINIMUM PENALTY OF RS.38 71 366/-.ASSESEE PREFERRED AN APPEAL BEFORE THE FAA.AFTER TAKING IN TO CONSIDERAT ION THE ASSESSMENT ORDER PENALTY ORDER AND REPLY FILED BY THE ASSESSEE HE HELD THAT TRADING L IABILITY WERE NON-EXISTING DURING THE YEAR IN QUESTION THAT THE TRIBUNAL HAD ALSO FOUND AS A MATT ER OF FACT THAT THE LIABILITY HAD CEASED TO EXIST DURING THE CURRENT YEAR THAT NOTHING PREVENTED THE ASSESSEE TO SUBSTANTIATE THIS CLAIM BEFORE THE AO AND BOTH THE APPELLATE AUTHORITIES WHEN IT WAS A SKED TO PROVE THE EXISTENCE OF OUTSTANDING CREDITS THAT NO CREDENCE COULD BE ATTACHED TO THE SAID CLAIM DURING PENALTY PROCEEDINGS THAT IT WAS NOT A CASE OF PROVING THE NATURE AND SOURCE OF CASH CREDIT IT WAS A CASE OF PROVING EXISTENCE OF LIABILITY WHICH WAS ALLOWED AS DEDUCTION IN EARLIER YEARS AND WAS NEVER ACTUALLY PAID FOR THAT 3 ITA NO.2623/MUM/2011 (AY-2005-06) PALKHI INV ESTMENTS & TRADING COMPANY PVT. LTD GENUINENESS OF THE CLAIM OF DEDUCTION WAS NOT AN IS SUE BEFORE HIM THAT IT WAS A CASE WHETHER THE ASSESSEE CONTINUED TO OWE THESE DUES DURING THE CUR RENT YEAR THAT IT FAILED TO BRING ANY COGENT MATERIAL ON RECORD TO SHOW THAT THESE LABILITIES DI D CONTINUE TO EXIST THAT THE APPELLANT HAD NOT BEEN ABLE TO ESTABLISH THAT THE LIABILITIES TO THE EXTEN T OF RS.1 05 79 672/- HAD NOT CEASED TO EXIST THA T IT WAS NOT THE CASE WHERE ASSESSEE MADE A CLAIM WHICH WAS MERELY NOT ACCEPTABLE TO THE AO THAT IT WAS IS A CASE WHERE THE CLAIM MADE IN ITS RETURN OF INCOME WAS INACCURATE INCORRECT OR FALSE RESULTING IN CONCEALMENT OF INCOME ON ITS PART.FINA LLY HE HELD THAT THE CONDITIONS PRESCRIBED IN SECTION 271(1)(C) EXISTED IN RESPECT OF PENALTY LEV IED. 2.2. BEFORE US AUTHORISED REPRESENTATIVE(AR) SUBMITTED T HAT CREDIT ENTRIES IN THE BOOKS OF ACCOUNT WERE GENUINE THAT IN A LETTER TO THE AO ASSESSEE HAD EXPLAINED THE TRANSACTIONS IN QUESTION THAT CONDUCT OF THE ASSESSEE WAS BONAFIDE THAT THERE WA S NO CONCEALMENT OF FACTS OR INCOME.HE RELIED UPON THE JUDGMENTS DELIVERED BY THE HONBLE BOMBAY HIGH COURT AND THE HONBLE SUPREME COURT IN THE CASES OF NALIN P SHAH(IT APPEAL(LOD)NO .49-51OF 2013)AND RELIANCE PETRO PRODUCTS PVT.LTD.(322 ITR 158)RESPECTIVELY.HE ALSO REFERRED TO THE CASE OF NIRMALA DYE CHEM DELIVERED BY THE AHMEDABAD TRIBUNAL(ITA/941/AHD/2010-DTD.26.10.2 012.)HE REFERRED TO PAGE NO.78 32 33 37 AND 40 OF THE PAPER BOOK.DEPARTMENTAL REPRESENTATIV E(DR) SUBMITTED THAT AO HAD ESTABLISHED THE FACT ABOUT CONCEALMENT OF INCOME BY THE ASSESSEE T HAT OUT OF 9 ITEMS PENALTY WAS IMPOSED FOR 6 ITEMS ONLY THAT ACTION OF THE AO PROVED THAT PENAL PROVISIONS WERE INVOKED AFTER CONSIDERING THE FACTS OF THE CASE IN QUANTUM APPELLATE PROCEEDINGS THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE THAT IT WAS A.OS EFFORTS THAT PROVE THE NON-GENUINE NESS OF THE TRANSACTIONS. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.AS FAR AS FACTS OF THE CASE ARE CONCERNED IT IS CLEAR FROM THE QUANTUM ORD ER OF THE TRIBUNAL THAT ASSESSEE HAD NOT FILED ANY SUPPORTING EVIDENCE WITH REGARD TO THE LIABILIT IES.OUT OF THE TOTAL LIABILITIES OF 1.26 CRORES AO FOUND THAT IN THE FOLLOWING CASES ASSESSEE HAD FAIL ED TO PRODUCE ANY PROOF TO PROVE THE GENUINENESS OF THE TRANSACTIONS: KARAMCHAND CHUNILAL- RS.85 41 829/- SSV DEVELOPERS RS. 5 75 000/- OUTSTANDING EXPENSES- RS.12 49 499/- BAD DELIVERY SUSPENSE- RS. 1 32 093/- TRAVEL CONSULTANT- RS. 50 000/- M/S CREDITORS- RS. 29 051/- WE ARE AWARE THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM THE ASSESSMENT PROCEEDINGS AND AN ADDITION IN QUANTUM ASSESSMENT DOES NOT AUTOMATICAL LY BRINGS PENAL PROVISIONS IN TO PLAY.BUT PENALTY FOR FURNISHING INACCURATE PARTICULARS AND F ILING FALSE DETAILS RESULT IN IMPOSING PENALTY U/S. 271(1)(C)OF THE ACT.DURING THE PENALTY PROCEEDINGS ASSESSEE HAD NOT PRODUCED ANY POSITIVE EVIDENCE THAT PARTICULARS FILED BY IT IN THE RETURN WERE TRUE.AO MADE INVESTIGATION ABOUT THE LIABILITIES APPEARING IN THE BOOKS OF ACCOUNTS OF T HE ASSESSEE.HE FOUND THAT EXCEPT FOR TWO TRANSACTION REST WERE BOGUS.HE ISSUED A SHOW CAUSE NOTICE IT AND ASKED TO FILE ANY DOCUMENTARY EVIDENCE THAT COULD PROVE THAT CLAIM MADE BY IT WER E BASED TRUE OR ACCURATE.AS PER THE ESTABLISHED PRINCIPLES OF CONCEALMENT PROCEEDINGS ASSESSEE HAS TO SUPPORT ALL THE CLAIMS MADE BY IT IN THE RETURN OF INCOME-IT IS PRIME DUTY.IT IS NOT THE DUT Y OF AO TO PROVE THE NEGATIVE.ONCE A CLAIM WAS FILED BY THE ASSESSEE ABOUT LIABILITIES IT SHOULD H AVE LED SOME EVIDENCE THAT A REASONABLE PRUDENT PERSON WOULD CONSIDER THE SAME AS SUFFICIENT.HERE T HE ISSUE IS NOT ABOUT SUFFICIENCY OF EVIDENCES BUT NON EXISTENCE OF THE CLAIM THAT HAS B EEN SHOWN IN BOOKS OF ACCOUNTS AND THAT WAS VERIFIED TO BE TRUE IN THE RETURN FILED.A RETURN OF INCOME IS NOT A JUST PIECE OF PAPER IT GIVES DETAI LS OF INCOME POSITIVE OR NEGATIVE OF AN ASSESSEE.IT IS CONSIDERED THE ACCEPTED AN ADMISSIBLE EVIDENCE IN THE COURTS.THEREFORE IT IS EXPECTED FROM THE ASS ESSEES THAT THEY WOULD FILED TRUE AND ACCURATE PARTICULARS OF THEIR INCOME.IN THE MATTER UNDER CON SIDERATION DETAILS FILED BY THE ASSESSEE WERE NOT 4 ITA NO.2623/MUM/2011 (AY-2005-06) PALKHI INV ESTMENTS & TRADING COMPANY PVT. LTD TRUE AND SAME AMOUNTED TO FURNISHING OF INACCURATE PARTICULARS.ONCE BASIC FACTS WERE CONSIDERED BY THE TWO APPELLATE AUTHORITIES AND BOTH HAVE REAC HED TO A LOGICAL CONCLUSION THERE REMAINS NO DOUBT THAT IT IS A FIT CASE FOR LEVYING PENALTY.WE WOULD LIKE TO REFER TO RELEVANT PORTION OF THE QUANTUM ORDER OF THE TRIBUNAL: WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVA L CONTENTIONS DISPUTE RAISED IN THIS APPEAL IS WHET HER THE LIABILITIES SHOWN BY ASSESSEE AS OUTSTANDING IN THE BALANCE SHEET AT THE END OF THE RELEVANT YEAR GENUINE EXISTING LIABILITIES OR WHETHER THEY HAD CE ASED TO EXIST AND THUS COULD BE TREATED AS INCOME U /S. 41(1) OF THE I.T. ACT. THE CASE OF THE ASSESSEE IS THAT THESE LIABILITIES WERE COMING FROM THE EARLIER YEARS IN WHICH THEY HAD BEEN FOUND TO BE GENUINE AND THESE H AD NOT BEEN WRITTEN RETURNED BACK BY THE ASSESSEE A ND THEREFORE COULD NOT BE TREATED AS INCOME U/S. 41(1) .IT HAS BEEN EXPLAINED THAT LIABILITIES WERE PENDIN G DUE TO DISPUTES OF CLIENTS WITH THE CUSTODIAN. THE ASSE SSEE HAS ALSO RAISED DISPUTE AS TO ADEQUATE OPPORTU NITY OF HEARING OR CROSS EXAMINATION OF THE PARTIES. 4.1.WE FIRST DEAL WITH THE ISSUE REGARDING OPPORTUN ITY/CROSS EXAMINATION. WE FIND FROM THE RECORDS THA T THE AO MADE INQUIRIES REGARDING THE CREDITORS AT THE AD DRESSES GIVEN BY THE ASSESSEE AND THE RESULTS OF ENQUIRY WERE DULY COMMUNICATED TO THE ASSESSEE ON 0 2.11.2007 ON WHICH DATE THE ASSESSEE HAD BEEN ASKED TO PROVE THE EXISTENCE AND GENUINENESS OF THE CREDI T LIABILITIES. TIME HAD BEEN ALLOWED TILL 16.11. 20 07 BUT THERE WAS NO RESPONSE. THE AO THEREAFTER VIDE LETT ER DATED 16.12.2007 HAD GIVEN FINAL OPPORTUNITY TO PROVE THE EXISTENCE OF THE CREDITORS IN RESPONSE TO WHICH THE ASSESSEE HAD MADE CERTAIN SUBMISSIONS AS MENTIONED IN PARA 2.1 EARLIER WITHOUT ANY SUPPORTIN G EVIDENCE TO SHOW THAT THE LIABILITIES WERE ACTUAL LY EXISTING.THE ASSESSEE NEITHER FILED CONFIRMATIONS N OR GAVE THE CURRENT ADDRESSES OF THE CREDITORS.IT C ANNOT THUS SAID THAT THE ASSESSEE HAD NOT BEEN GIVEN ADEQ UATE OPPORTUNITY OF HEARING. THE ASSESSEE HAS ALSO RAISED THE ISSUE OF CROSS EXAMINATION OF PARTIES. I T HAS BEEN SUBMITTED THAT THE ASSESSEE HAD NOT BEEN ALLOWED CROSS EXAMINATION OF THE PARTIES.WE FIND TH AT THE AO HAD DULY CONFRONTED THE ASSESSEE WITH THE RESULT OF INQUIRTY IN RELATION TO ALL THE CREDITORS AND THERE IS NO MATERIAL ON RECORD TO SHOW THE ASS ESSEE HAD MADE REQUEST FOR CROSS EXAMINATION OF ANY PARTY WHICH WAS DENIED. MOREOVER OPPORTUNITY OF CROSS EXAMINATION COULD BE RELEVANT ONLY IN CASE OF IIT I NVEST TRUST IN WHICH THE AMOUNT OUTSTANDING WAS ONL Y RS.1 03 117/-.IN OTHER CASES THE ASSESSEE HAD NOT PROVIDED EVEN THE CURRENT ADDRESSES OF THE PARTIES AND THEREFORE QUESTION OF CROSS EXAMINATION DOES NOT AR ISE IN THOSE CASES.IN THE ABOVE CIRCUMSTANCES WE D O NOT SEE ANY MERIT IN THE PLEA OT THE ASSESSEE THAT IT HAD NOT BEEN GIVEN ADEQUATE OPPORTUNITY OF HEARI NG OR OPPORTUNITY OF CROSS EXAMINATION AND THE SAME IS TH EREFORE REJECTED 4.2.AS REGARDS MERITS OF THE CASE IN OUR VIEW WHE THER A PARLICULAR LIABILITY IS A GENUINE EXISTING L IABILITY OR FT HAS CEASED TO EXIST WILL BE DEPEND UPON THE F ACTS AND CIRCUMSTANCES OF EACH CASE.NO DOUBT FOR TA XING THE LIABIIITIES AS INCOME U/S. 41(1) THE BURDEN IS ON THE REVENUE TO PROVE THAT THE LIABILITY HAD CEA SED TO EXIST. BUT THE REVENUE CAN DISCHARGE THE BURDEN ONL Y WHEN THE ASSESSEE FILES THE NAMES AND THE CORRECT ADDRESSES OF THE CREDITORS. IN THIS CASE THE ASSESS EE COULD NOT FILE ANY EVIDENCE SUCH AS CONFIRMATION S FROM THE CREDITORS TO SHOW THAT THE LIABILITIES WERE OUT STANDING. THE ASSESSEE HAD GIVEN NAMES AND ADDRESSE S OF THE CREDITORS BASED ON WHICH THE AO HAD MADE ENQUIR IES AND IT WAS FOUND ON ENQUIRY THAT OUT OF THE FIV E PARTIES ONE PARTY DENIED THAT ANY AMOUNT WAS DUE T O IT AND OUT OF THE REMAINING FOUR LETTERS WERE RETURNED UN-SERVED IN TWO CASES AND REMAINING TWO P ARTIES DID NOT RESPOND AT ALL.THE RESULTS OF ENQUIR Y HAD BEEN COMMUNICATED TO THE ASSESSEE WHO PRODUCED NO EVIDENCES TO SUBSTANTIATE THAT THE LIABILITIES W ERE REALLY OUTSTANDING X X X X X X X X X X X X X X X X X X X IN CASE OF KARAMCHAND CHUNILAL AND SSV DEVELOPERS THE POSITION IS DIFFERENT. THE ASSESSEE NEITHER FILED CONFIRMATIONS FROM THESE PARTIES NOR THE PART IES WERE FOUND AVAILABLE AT THE ADDRESSES GIVEN AND THE ASSESSEE COULD NOT GIVE THE CORRECT ADDRESSES EVEN AFTER BEING CONFRONTED AND AFTER SUFFICIENT OPPORTU NITY. THEREFORE THERE IS NO WAY THE REVENUE COULD MAKE I NQUIRIES IN THESE CASES. CONCLUSION HAS THEREFORE T O BE DRAWN IN SUCH CASES AFTER CONSIDERING THE FACTS AND THE CIRCUMSTANCES OF THE CASE.IT IS A SETTLED LEGA L POSITION AS HELD BY THE HONBLE SUPREME COURT IN TH E CASE OF DURGA PRASAD MORE(82ITR550) THAT REVENUE AUTHORITIES ARE ENTITLED TO LOOK INTO SURROUNDING C IRCUMSTANCES TO ARRIVE AT ANY FINDING OF FACTUAL OR REAL SITUATION AND THE COURTS HAVE TO JUDGE THE MATERIAL PLACED BEFORE THEM BY APPLYING THE TEST OF PROBABILITIES. THE SURROUNDING CIRCUMSTANCES AND MA TERIAL ON RECORD DO NOT SUPPORT THE CASE OF THE ASSESSEE THAT THE LIABILITIES WERE EXISTING IN THES E CASES AT THE END OF THE RELEVANT YEAR. HAD THERE BEEN GENUINE LIABILITIES THE CREDITORS WOULD HAVE DEFINI TELY MADE THE CLAIM AND RAISED DISPUTES BUT NO SUC H - MATERIAL OR ANY CORRESPONDENCES HAVE BEEN PRODUCED. IT DOES NOT CONFORM TO NORMAL HUMAN CONDUCT THAT A CREDITOR WILL NOT MAKE EFFORTS TO RECOVER MONEY REC EIVABLE FROM A PERSON AND THAT THE PERSON WILL NOT BE 5 ITA NO.2623/MUM/2011 (AY-2005-06) PALKHI INV ESTMENTS & TRADING COMPANY PVT. LTD AWARE OF THE PRESENT WHEREABOUTS OF THE CREDITOR IF GENUINE LIABILITIES WERE PENDING.NEITHER BEFORE T HE LOWER AUTHORITIES NOR EVEN AT THIS STAGE ANY MATERI AL HAS BEEN PRODUCED TO SHOW THAT ANY BONAFIDE DISP UTE WAS PENDING NOR THE CORRECT ADDRESSES OF THE PARTI ES HAVE BEEN GIVEN. THEREFORE CONSIDERING THE SURROUNDING CIRCUMSTANCES AND THE MATERIAL ON RECOR D WE AGREE WITH THE CONCLUSION DRAWN BY THE REVENUE AUTHORITIES THAT THE LIABILITIES SHOWN AS OUTSTANDI NG AT THE END OF THE YEAR IN THESE CASES WERE NOT E XISTING AND ADDITIONS U/S.4 1(1) ON THE FACTS OF THE CASE W OULD THEREFORE BE JUSTIFIED. 3.1. WE HAVE CONSIDERED THE CASES/DOCUMENTS REFERRED BY THE AR.PAGES 32 33 37 40 AND 78 OF PAPER BOOK DO NOT SHOW THAT CLAIM OF THE ASSESSEE W AS GENUINE OR THAT GENUINENESS OF THE CLAIM WAS PROVED BY THE ASSESSEE BEFORE ANY OF THE AUTHOR ITIES.WE FIND THAT FACTS OF THE CASES RELIED UPON BY THE ASSESSEE ARE TOTALLY DIFFERENT FROM THE MATTER UNDER CONSIDERATION.IN THE MATTER OF NALIN P SHAH (SUPRA)THE ASSESSEE HAD DECLARED LONG TERM CAPITAL LOSS OF RS.4.39 CRORES WHICH WERE INCLUSIVE OF LOSS INCURRED ON THE SALE OF US 64 UNI TS. THE AO DISALLOWED THE LOSS ON SALE US 64 UNITS ON THE GROUND THAT WHERE INCOME FROM PARTICUL AR SOURCE WAS EXEMPT FROM TAX THEN THE LOSS FROM SUCH SOURCE COULD NOT BE SET OFF FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. IN VIEW OF THE ABOVE HE ALSO INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY UNDER SECTON 271(1)(C) OF THE ACT AND SAME WAS CONFIRMED BY THE FAA.ON FURTHE R APPEAL THE TRIBUNAL HELD THAT THE ASSESSEE HAD IN ITS RETURN OF INCOME FILED A NOTE W ITH ITS COMPUTATION OF INCOME DISCLOSING ALL DETAILS ABOUT THE SALE OF US 64 UNITS THE LOSS AND RESULTANT CARRY FORWARD. FURTHER ALL DETAILS WERE DISCLOSED IN ITS RETURN OF INCOME AS IS EVIDENT FRO M THE FACT THAT THE AO GATHERED INFORMATION ABOUT THE CARRY FORWARD LOSS AND SALE OF UNITS FROM RETURN FILED BY THE ASSESSEE. THE TRIBUNAL HELD THAT THE FROM THE AFORESAID FACTS AT THE HIGHEST IT CAN BE SAID THAT THE CLAIM OF THE ASSESSEE WAS NOT SUSTAINABLE IN LAW BUT THERE WAS NO FURNISHING OF I NACCURATE PARTICULARS OR CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. CONSIDERING THESE FACT S HONBLE HIGH COURT HELD THAT SAME VIEW WAS TAKEN BY THE APEX COURT IN THE MATTER OF RELIANCE P ETROPRODUCTS PVT LTD.(SUPRA.) AND UPHELD THE ORDER OF THE TRIBUNAL . IN THE PRESENT CASE NO DETAILS WERE FILED BY THE AS SESSEE AND IT WAS THE INVESTIGATION MADE BY THE AO THAT REALITY OF THE AL LEGED LIABILITIES CAME TO LIGHT.IN THE CASE OF NIRMALA DYE CHEM(SUPRA) TRIBUNAL HAD TO DEAL WITH A DISPUTED LIABILITY WHICH WAS NOT DENIED BY THE OTHER PARTY.IN OUR OPINION THE CASE OF NIRMALA DYE CHEM IS OF NO HELP TO THE ASSESSEE.IN THE JUDGMENT OF RELIANCE(SUPRA)HONBLE SUPREME COURT IT WAS HELD THAT IF THERE WAS DIFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE ABOUT A CLA IM THEN ONLY ON THAT BASIS PENALTY COULD NOT BE LEVIED.IN THE CASE UNDER CONSIDERATION QUESTION IS NOT ABOUT ALLOWABILTIY OF CERTAIN EXPENDITURE.IN THE MATTER OF RELIANCE (SUPRA)ASSESS EE HAD PRODUCED ALL NECESSARY EVIDENCE WITH REGARD TO THE CLAIM.BUT IN THE PRESENT MATTER AS DI SCUSSED EARLIER A CLAIM FOR LIABILITY WAS MADE FOR WHICH NO EVIDENCE WAS PRODUCED.WE FIND THAT DURING PENAL PROCEEDINGS ASSESSEE WAS ISSUED A NOTICE ASKING HIM WHY PENALTY SHOULD NOT BE LEVIED. AFTER CONSIDERING EXPLANATION FILED BY THE ASSESSEE AO REACHED AT THE CONCLUSION THAT ASSESSE E HAD MADE NON-BONAFIDE CLAIM AND THUS HE HAD MADE HIMSELF LIABLE FOR LEVY OF PENALTY. DURING THE COURSE OF HEARING TWO QUERIES WERE RAIS ED BY THE BENCH-ONE OF THEM WAS ABOUT THE ASSESSMENT YEAR FROM WHICH THE DISPUTED AMOUNTS WER E PENDING.AR WAS DIRECTED TO THROW LIGHT ON THE SEQUENCE OF EVENTS THAT PROVED THAT THE TAX AUTHORITIES WERE INFORMED ABOUT THE YEAR WHEN THE LIABILITY AROSE FOR THE FIRST TIME.THE OTHER QU ERY WAS ABOUT HDFC SECURITIES LTD. (HDFC). IT WAS CLAIMED ON BEHALF OF THE ASSESSEE THAT BUSINESS OF KARAMCHAND WAS TAKEN OVER BY THE HDFC.AR WAS ASKED AS WHETHER ANY LETTER WAS RECEIVE D BY THE ASSESSEE FROM THE HDFC STATING THAT AMOUNT DUE FROM KARAMCHAND HAS TO BE PAID TO H DFC AS IT HAD TAKEN OVER THE BUSINESS OF KARAMCHAND? AR WAS NOT IN A POSITION TO CLARIFY BOT H THE ISSUE. AS PER SECTION 142 AO IS EMPOWERED TO REQUIRE A PER SON TO PRODUCE OR CAUSE TO BE PRODUCED SUCH DOCUMENTS OR ACCOUNTS THAT AO REQUIRE FOR MAKING AN ASSESSMENT.HE CAN CONDUCT NECESSARY INQUIRYFOR OBTAINING FULL INFORMATION IN RESPECT OF THE INCOME OR LOSS OF A PERSON. UNDER SECTION 143(3) THEAO IS EMPOWERED TO PASS AN ORDER ALLOWING OR REJECTING THE CLAIM MADE BY THE ASSESSEE.NOT ONLY THIS BUT ASSESSEE IS ALSO ENTITLE D TO PRODUCE PARTICULARS SUPPORTING HIS CLAIMS DURING THE ASSESSMENT PROCEEDINGS.IT IS FOUND THAT BEFORE FINALISING THE ASSESSMENT ORDER AO HAD 6 ITA NO.2623/MUM/2011 (AY-2005-06) PALKHI INV ESTMENTS & TRADING COMPANY PVT. LTD DIRECTED THE ASSESSEE TO FURNISH FULL DETAILS OF LI ABILITIES WITH SUPPORTING DOCUMENTS.IT IS FURTHER FOUND THAT AT VARIOUS STAGES OF ASSESSMENT AO KEPT THE ASSESSEE INFORMED ABOUT THE DEVELOPMENTS THAT WERE TAKING PLACE ABOUT THE LIABILITIES CLAIME D BY IT.ASSESSEE-COMPANY DID NOT PRODUCE DOCUMENT REQUIRED BY THE AO TILL THE FINALISATION O F ASSESSMENT.NOT ONLY THIS NEITHER BEFORE CIT NOR BEFORE THE ITAT ASSESSEE FURNISHED ANY EVIDENC E ABOUT EXISTENCE OF LIABILITY.ON INQUIRY BY BENCH AR ADMITTED THAT APPEAL FILED BY THE ASSESSEE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL WAS DISMISSED BY THE COURT AND THAT SLP FILED BY THE ASSESSEE BEFORE THE HONBLE APEX COURT WAS ALSO REJECTED. 2.3.2. DELIBERATING UPON THE FACTS AND CIRCUMSTANCES OF TH E CASE UNDER CONSIDERATION WE ARE OF THE OPINION THAT THE ASSESSEE HAD FAILED TO PROVE THE C LAIM MADE BY HIM IN THE RETURN OF INCOME SO THE AO AND THE FAA WERE ALSO JUSTIFIED IN LEVYING/UPHOL DING THE PENALTY AS PER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT.WE ARE ALSO OF THE OPI NION THAT AMOUNT IN QUESTION WAS PART OF THE INCOME OF THE ASSESSEE AND THAT THE PARTICULARS FIL ED BY THE ASSESSEE ABOUT THE SO CALLED LIABILITIES WERE INACCURATE.WE CANNOT IGNORE THE FACT THAT THE OBJECT BEHIND THE ENACTMENT OF SEC.271(1)(C) READ WITH THE EXPLANATIONS IS TO PROVIDE FOR A REME DY FOR LOSS OF REVENUE DUE TO THE SOVEREIGN.AS THE PENALTY U/S.271(1)(C) IS A CIVIL LIABILITY SO WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING IT AS IS THE CASE IN THE MATTER OF P ROSECUTION UNDER SECTION 276C OF THE ACT.WE FIND THAT TWIN CONDITIONS FOR LEVYING PENALTY U/S.271(1) (C) OF THE ACT;I)AMOUNT IN QUESTION TO BE PART AND PARCEL OF THE INCOME OF THE ASSESSEE II)FILING OF INACCURATE PARTICULARS/ CONCEALING OF PARTICULARS OF SUCH INCOME;EXIST IN THE CASE UNDER CONSIDERATION.IT IS SAID THAT PROVISIONS OF SECTION 271(1)(C) HAVE TO BE STRICTLY APPLIED IN THE LARGER INTEREST OF DISCIPLINE IN FILING CORRECT RETURNS B Y THE ASSESSEES. ASSESSEES ARE ENTITLED TO CLAIM VARI OUS CLAIMS BUT WITH A RIDER THAT SAME SHOULD BE BONA FIDE.MAKING A CLAIM FOR A NON EXISTING LIABILI TY IN OUR OPINION IS AN ADMISSIBLE EVIDENCE OF FURNISHING OF INACCURATE PARTICULARS. A NON GENUINE CLAIM AND DEBATABLE CLAIM ARE TWO DIF FERENT CONCEPTS.WHEN AN UNREAL THING OR UNTRUE FACT IS PROJECTED OR PRESENTED AS TRUE OR GE NUINE SAME IS TERMED TO BOGUS. COURTS ARE UNANIMOUS THAT FOR A DEBATABLE CLAIM ASSESSEE CANNO T BE PENALISED BUT WHEN HE MAKE A BOGUS CLAIM LEVY OF PENALTY IS JUSTIFIED.IT IS RIGHTLY SA ID THAT A CLAIM WITHOUT SUPPORTING EVIDENCES IS LIK E A BODY WITHOUT LIFE.ASSESSEE IS EXPECTED RATHER RE QUIRED NOT ONLY PRODUCES EVIDENCE BUT TO PRODUCE POSITIVE EVIDENCE IN RESPECT OF A CLAIM MAD E. ONUS OF PROVING A CLAIM IS ALWAYS ON THE ASSESSEE AND HE HAS TO BE DISCHARGE IT FULLY.MERE M AKING OF A CLAIM IS NOT SUFFICIENT.IF ASSESSEE FAILS TO PRODUCE THE CORROBORATIVE EVIDENCES HIS CL AIM ALSO FAILS. IN THE CASE UNDER CONSIDERATION THE ASSESSEE HAS FAILED MISERABLY TO SUBSTANTIATE A ND SUPPORT CLAIM PERTAINING TO LIABILITIES MADE BY IT IN THE RETURN OF INCOME.IN OTHER WORDS IN PRE SENT CASE UN-SUBSTANTIATED CLAIM OF LIABILITIES WAS PROJECTED AS GENUINE.WE ARE OF THE OPINION THAT IF A CLAIM IS MADE WITHOUT ANY BASIS AND THAT RESULTS IN DEPRIVING THE STATE OF ITS DUE SHARE OF TAX IT DESERVES TO BE TREATED DIFFERENTLY FROM A CLAIM WHERE CITIZENS AND STATE HAVE DIVERGENT VIEW ABOUT THE ALLOWABILITY OF THE SAID CLAIM.IN FIRST CATEGORY THERE IS ONLY A CLAIM WITHOUT ANY SUBSTANC E WHEREAS IN SECOND CATEGORY A CLAIM SUPPORTED BY DOCUMENTARY EVIDENCE IS ALWAYS THERE B UT AO AND ASSESSEE HAVE DIFFERENCE OF OPINION AS WHAT TREATMENT SHOULD BE GIVEN TO IT.THE CASE BEFORE US FALLS IN FIRST CATEGORY.AS THE FACTS AND THE CONDUCT OF THE ASSESSEE CLEARLY ESTAB LISH THAT IT HAD FILED INACCURATE PARTICULARS OF INCOME AND HAD THUS CONCEALED PARTICULARS OF INCOME SO WE DO NOT WANT DISTURB THE ORDER OF THE FAA.THEREFORE UPHOLDING HIS ORDER WE DECIDE EFFEC TIVE GROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESULT APPEAL FILED B Y THE ASSESSEE STANDS DISMISSED. 2 3 $2 4 5 + 0 2! + ! 67 . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY 2013 . '1 + ./% ' 8 9$ 24 ! 2013 / + 0 > 7 ITA NO.2623/MUM/2011 (AY-2005-06) PALKHI INV ESTMENTS & TRADING COMPANY PVT. LTD SD/ SD/- ( . ? ? ? ? . . B.R.MITTAL ) ( !'# !'# !'# !'# / RAJENDRA ) / JUDICIAL MEMBER ' ' ' ' /ACCOUNTANT MEMBER / MUMBAI 9$ /DATE:24 TH JULY 2013 SK '1 '1 '1 '1 + ++ + ( @ ( @ ( @ ( @ A'@% A'@% A'@% A'@% / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT (A) / B C 4. THE CONCERNED CIT / B C 5. DR C BENCH ITAT MUMBAI / @D 0 ( $ . . . 6. GUARD FILE/ 0 E )@ ( //TRUE COPY// '1$ / BY ORDER F / 6 ! DY./ASST. REGISTRAR /ITAT MUMBAI