M/s. J.K. Enterprises, Baroda v. The ACIT., Circle-2,, Baroda

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HON'BLE SH RI A.N. PAHUJA A.M.) I.T.A. NO. 3847/AHD./2007 ASSESSMENT YEAR : 1992-1993 M/S. J.K. ENTERPRISES BARODA -VS.- ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2 BARODA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.K. PATEL RESPONDENT BY : SHRI NEETA SHAH SR. D .R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 13.08.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II BARODA CONF IRMING THE PENALTY OF RS.1 51 000/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 1992-93. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A FIRM ENGAGED IN THE BUSINESS OF DISTRIBUTION OF PLASTIC GRANULES OF IPCL. FOR THE A SSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.12 94 650/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 2 50 ON 22.03.2002 WHEREIN HE MADE THE ADDITION OF RS.2 69 500/- UNDER SECTION 68 OF THE A CT ON ACCOUNT OF UNEXPLAINED DEPOSITS IN RESPECT OF THREE PERSONS WHICH ARE AS UNDER :- (I) SHRI SURYAKANT VYAS DEPOSIT ACCOUNT DATE MODE OF PAYMENT AMOUNT (RS.) 27.05.91 BY CASH 10 000 29.05.91 10 000 30.05.91 10 000 31.05.91 10 000 TOTAL 50 000 2 ITA NO. 3847/AHD/2007 (II) SHRI SURESHBHAI PATEL DEPOSIT A/C. DATE MODE OF PAYMENT AMOUNT (RS.) 03.02.92 BY CASH 10 000 27.02.92 12 250 31.03.92 12 250 31.03.92 15 000 31.03.92 50 000 TOTAL 99 500 (III) SMT. HANSABEN PATEL DEPOSIT A/C. DATE MODE OF PAYMENT AMOUNT (RS.) 15.02.92 BY CASH 17 500 31.03.92 15 000 31.03.92 17 500 31.03.92 10 000 31.03.92 60 000 TOTAL 120 000 3. WHILE MAKING THE AFORESAID ADDITION THE ASSESSI NG OFFICER OBSERVED THAT EARLIER THE ADDITION MADE UNDER SECTION 68 WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR THE PURPOSE OF MAKING INDEPENDENT ENQUIRY TO ASCERTAIN THE GENU INENESS OF DEPOSITS CLAIMED TO HAVE BEEN ACCEPTED FROM THE AFORESAID THREE PERSONS. IN THE A SSESSMENT ORDER THE ASSESSING OFFICER OBSERVED THAT CASH DEPOSITS FROM SHRI SURYAKANT VYA S ARE CONCERNED NO INDEPENDENT ENQUIRIES COULD BE CONDUCTED AS SHRI SURYAKANT VYAS WAS NOT F OUND TO BE RESIDING AT THE ADDRESS GIVEN BY THE ASSESSEE. THE INSPECTOR OF INCOME TAX WHO WAS DEPUTED TO MAKE ENQUIRIES REGARDING THE WHEREABOUTS OF SHRI VYAS INFORMED THAT INSPITE OF EFFORTS MADE BY HIM THE WHEREABOUTS OF THE SAID PERSON COULD NOT BE GATHERED. THE ASSESSING OF FICER ACCORDINGLY OBSERVED THAT INDEPDENT ENQUIRY AS DIRECTED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN CASE OF SHRI VYAS COULD NOT BE CONDUCTED BECAUSE OF HIS INCORRECT ADD RESS PROVIDED BY THE ASSESSEE. HE ACCORDINGLY MADE THE ADDITION OF RS.50 000/- UNDER SECTION 68 IN RESPECT OR CASH CREDIT OF SHRI VYAS. 3 ITA NO. 3847/AHD/2007 4. WITH REGARD TO REMAINING TWO PERSONS NAMELY SHR I SURESH D. PATEL AND SMT. HANSABEN S. PATEL WHO HAVE GIVEN CASH DEPOSITS OF RS.99 500 /- AND RS.1 20 000/- RESPECTIVELY THEY FILED AFFIDAVITS WHEREIN THEY HAVE STATED TO HAVE AFFIRME D THAT THEY HAVE NOT GIVEN ANY ADVANCE WHATSOEVER TO M/S. J. K. ENTERPRISE (PD) AT ANY TIM E AND MORE PARTICULARLY DURING THE ASSESSMENT YEAR 1990-91 AND 1991-92. RELYING ON THE AFFIDAVITS OF THESE TWO CREDITORS THE ASSESSING OFFICER MADE THE ADDITION IN RESPECT OF BOTH THE CASH CREDI TS UNDER SECTION 68. IN RESPECT OF AFORESAID CASH CREDITS PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) WERE INITIATED. 5. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)- V BARODA VIDE ORDER DATED 11.10.2004 CONFIRMED THE AFORESAID ADDITION OF RS. 2 69 500/- FOR THE DETAILED REASONS GIVEN IN PARA 4.9 ON PAGE 7 WHICH READS AS UNDER :- 4.9. IN VIEW OF THESE FACTS AND CIRCUMSTANCES IT IS HELD THAT AMOUNT OF RS.50 000/- RS.99 500/- AND RS.1 20 000/- IS UNEXP LAINED CASH DEPOSITS/ CREDIT SHOWN IN THE NAME OF SHRIKANT VYAS SURESHBH AI PATEL AND SMT. SURESHBHAI PATEL (HANABEN) AND ATLEAST THE DEPOSITS IN THE NAME OF SURESHBHAI PATEL AND SMT. SURESHBHAI PATEL IS THE A PPELLANTS OWN UNACCOUNTED INCOME SHOWN TO BE DEPOSITED IN THEIR N AME AS THESE TWO PERSONS HAVE FURNISHED AFFIDAVIT TO THE EFFECT THAT THEY HAVE NOT ADVANCED ANY AMOUNT TO M/S. J.K. ENTERPRISE (PD). IN VIEW OF THE ABOVE THE GROUND SO TAKEN BY THE APPELLANT IS REJECTED AND AS SESSING OFFICERS ACTION OF ADDING AMOUNT OF RS.2 69 500/- AS UNEXPLA INED CASH CREDIT IS CONFIRMED. 6. ON RECEIPT OF AFORESAID ORDER OF LEARNED COMMISS IONER OF INCOME TAX(APPEALS) IN QUANTUM APPEAL THE ASSESSING OFFICER ASKED THE ASS ESSEE TO SHOW-CAUSE WHY PENALTY UNDER SECTION 271(1)(C) BE NOT LEVIED IN RESPECT OF ADDIT ION OF CASH CREDIT OF THE AFORESAID THREE PERSONS WHICH IS CONFIRMED BY THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) IN QUANTUM APPEAL. IN REPLY THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT CONFIRMATION FROM THESE DEPOSITORS ARE AVAILABLE ON RECORD. THESE WERE PRODUCED BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 07.01.2002. IT WAS ALSO SUBMITTED THAT THE ADDITION S WERE MADE UNDER DEEMING PROVISIONS OF THE ACT AND THERE WAS NO CONSCIOUS CONCEALMENT OF ANY I NCOME. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT ONUS IMPOSED UPON BY EXPLANATION 1 BELOW SECTION 271(1)(C) HAS NOT BEEN DISCHARGED. HE ACCOR DINGLY LEVIED THE PENALTY OF RS.1 51 000/- BEING 100% OF TAX SOUGHT TO BE EVADED ON ADDITION O F RS.2 69 500/- MADE UNDER SECTION 68 OF THE 4 ITA NO. 3847/AHD/2007 INCOME TAX ACT 1961. ON APPEAL AGAINST THE PENALTY ORDER BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE RELIED ON THE FOL LOWING DECISIONS :- (I) ANANTHARAMA VEERSINGHABHAI & CO. VS.- CIT [1 23 ITR 457 (SC); (II) CIT VS.- KHODAY ESWARSA & SONS [83 ITR 369] ; (III) NATIONAL TEXTILES VS.- CIT [249 ITR 125 (G UJ.)]; (IV) DILIP N. SHROFF VS.- JT. CIT SPECIAL RANGE MUMBAI [161 TAXMAN 218]. IT WAS CONTENDED THAT THERE IS NO CONSCIOUS CONCEAL MENT OF ANY INCOME THEREFORE PENALTY BE CANCELLED. 7. AFTER CONSIDERING THE AFORESAID SUBMISSION IN T HE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE P ENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) FOR THE DETAILED REASONS GI VEN IN PARA 2.3 ON PAGES 4 TO 8 WHICH READS AS UNDER :- 2.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. COUNSEL AND FACTS OF THE CASE. AS MENTIONED EARLIER THE MATTER OF UNEXPLAINED CAS H CREDIT FROM THREE PARTIES NAMELY SHRI SURYAKANT VYAS SHRI SURESHBHAI PATEL A ND SMT. HANSABEN PATEL WERE SET-ASIDE TWICE AND FINALLY ASSESSING OFFICER PASSED ASSESSMENT ORDER DATED 22.03.2002 MAKING THE ADDITION OF RS.2 69 500/- U/S .68. AS MENTIONED IN PAGE-2 OF THIS ASSESSMENT ORDER THE CASH DEPOSITS WERE CLA IMED TO HAVE BEEN ACCEPTED BY THE APPELLANT ON VARIOUS DATES DURING F.Y 1991-92 SINCE THE DEPOSITS WERE MADE IN CASH AND THESE DEPOSITORS WERE NOT ASSESSED TO T AX ASSESSING OFFICER ASKED APPELLANT TO ESTABLISH THE GENUINENESS AND CREDITWO RTHINESS OF THE DEPOSITORS. IN THE ABSENCE OF ANY ATTEMPT TO PROVE CREDITWORTHINES S OR GENUINENESS BY THE APPELLANT ASSESSING OFFICER CONDUCTED INDEPENDENT INQUIRIES. HE DEPUTED AN INSPECTOR OF INCOME-TAX TO FIND THE WHEREABOUTS OF SHRI SURYAKANT VYAS HOWEVER HE COULD NOT FIND OR LOCATE THE SAID PERSON EVEN T HE ADDRESS FURNISHED BY THE APPELLANT WAS FOUND TO BE INCORRECT. IN THE ABSENCE OF ANY LEAD FROM THE INFORMATION AVAILABLE THE ASSESSING OFFICER COULD NOT EXAMINE SUCH CREDIT. OTHER TWO DEPOSITORS NAMELY SHRL SURESH D PATEL AND SMT. HANAABEN PATEL WHO CLAIMED TO HAVE GIVEN CASH DEPOSIT OF RS.99 500/- A ND RS.1 20 000/- RESPECTIVELY HAVE FILED AFFIDAVITS WHEREIN THEY HAVE STATED THAT THEY HAVE NOT GIVEN ANY ADVANCE WHATSOEVER TO THE APPELLANT AT ANY TIME AND MORE PARTICULARLY DURING A.YS 1990- 91 AND 1991-92. CONSIDERING THESE AFFIDAVITS ASSESS ING OFFICER HELD THESE DEPOSITS AS UNEXPLAINED. IN APPEAL BY ORDER DATED 11.10 2004 ALL THE ARGUM ENTS OF THE APPELLANT INCLUDING THE CLAIM OF DIFFERENCE IN FIGURES IN THE CASE OF TWO DEPOSITORS HAVE BEEN ADDRESSED AND DEALT WITH. IT IS HELD THAT DATE WISE DETAILS OF DEPOSITS IN THE NAME OF ALL THREE PERSONS HAVE BEEN GIVEN WHICH HAVE BEE N SHOWN IN CASH. THE CLAIM OF 5 ITA NO. 3847/AHD/2007 DIFFERENCE IN AMOUNT OF DEPOSITS WERE TAKEN IN THE SET-ASIDE ASSESSMENT PROCEEDINGS WHICH WERE ALSO FOUND TO BE INCORRECT I N VIEW OF THE AFFIDAVITS OF THE DEPOSITORS FILED. FURTHER THERE IS A DEFINITE FIND ING IN THE ASSESSMENT ORDER DATED 29 03.1995 WHEREIN IT HAS BEEN SPECIFICALLY MENTION ED THAT THE LEDGER ACCOUNTS WERE CHECKED BY THE ASSESSING OFFICER AND ACCOUNTS OF THESE PARTIES APPEAR ON PAGE-50 56 57 AND 94 OF THE LEDGER AND THE EXTRAC T OF LEDGER ACCOUNT OF THESE PARTIES HAVE BEEN REPRODUCED IN THE ORDER WHICH CLE ARLY SHOWS THAT CASH DEPOSITS IN THE BOOKS OF ACCOUNTS WERE RS.50 000/- IN THE CA SE OF SHRI SURYAKANT VYAS RS.99 500/- IN THE CASE OF SHRI SURESHBHAL PATEL AN D RS 1 20 000/- IN THE CASE OF SMT. HANSABEN PATEL. IT HAS ALSO BEEN OBSERVED BY C IT(A) THAT THERE WAS SEARCH AND SEIZURE OPERATION IN THE GROUP CASES IN THE APP ELLANT AND ITS PARTNERS. THE LEDGER ACCOUNT REFERRED IS THE ORIGINAL LEDGER ACCO UNT. THE BALANCE-SHEET IS AT VARIANCE WITH THE ENTRIES SHOWN IN THE LEDGER ACCOU NT IN RESPECT OF SMT HANSABEN PATEL AND SHRI SURESHBHAI PATEL WHATEVER HAS BEEN MENTIONED IN THE LEDGER ACCOUNT WHICH ARE PRIMARY RECORD HAVE BEEN CONSIDER ED. CONSIDERING THE FACTS THE AMOUNT ADDED U/S.68 BY THE ASSESSING OFFICER IN THE NAME OF THREE DEPOSITORS WAS CONFIRMED. CONSIDERING THE ABOVE FACTS IT IS CLEAR THAT APPEL LANT HAS SHOWN CASH DEPOSITS TO THE EXTENT OF RS.2 69 500/- IN THE BOOK S OF ACCOUNTS DESPITE SEVERAL OPPORTUNITIES IN ORIGINAL AND TWO SET-ASIDE ASSESSM ENT PROCEEDINGS APPELLANT COULD NOT DISCHARGE ITS ONUS TO EXPLAIN THESE CASH CREDITS. IN THE ABSENCE OF APPELLANT ESTABLISHING THE GENUINENESS OF DEPOSITS ASSESSING. OFFICER MADE INDEPENDENT INQUIRIES AND FOUND THAT THE CREDITS AP PEARING IN APPELLANT'S BOOKS ARE NOT GENUINE. THEREFORE ADDITION WAS MADE AFTER CONSCIOUSLY FINDING THE APPELLANT'S CLAIM FALSE. SINCE ASSESSING OFFICER HA D POSITIVELY ESTABLISHED IN HIS LAST ASSESSMENT ORDER THESE CREDITS AS UNEXPLAINED IT IS CLEAR THAT APPELLANT CONCEALED THE PARTICULARS OF INCOME BY CLAIMING BOG US CASH CREDITS IN ITS BOOKS OF ACCOUNTS. ONUS WAS ON THE APPELLANT TO PROVE THE GE NUINENESS OF THE CREDIT ALONG WITH THEIR CREDIT WORTHINESS HOWEVER APPELLANT IS C LAIMING THAT IT WAS NOT PROVIDED WITH AN OPPORTUNITY TO REBUT THE CONTENTION OF THE DEPOSITORS. AS REGARDS SHRIKANT VYAS NOT BEING TRACEABLE AT THE AVAILABLE ADDRESS APPELLANT DID NOT SUBMIT ANYTHING EVEN AT THIS STAGE. AS REGARDS OTHER TWO D EPOSITORS APPELLANT STATED THAT THE BALANCE-SHEET FIGURES ARE DIFFERENT AND THAT TH ERE IS NO MENTION FOR A.Y.1992- 93 IN THEIR AFFIDAVITS. THE DIFFERENT FIGURES FROM THE LEDGER ACCOUNTS HAVE BEEN DEALT WITH IN THE ORDER OF CIT(A) IN QUANTUM APPEAL THEREFORE THE SAME IS NOT REPEATED HERE. AS REGARDS NO SPECIFIC MENTION OF A. Y.1992-93 THESE DEPOSITORS IN THEIR AFFIDAVITS MENTIONED THAT THEY HAVE NOT MADE ANY ADVANCES WHATSOEVER TO THE APPELLANT WHICH CLEARLY GOES AGAINST THE APPELLANT. IN THE LIGHT OF SUCH FACTS IT CAN BE SAID THAT THE CREDITS APPEARING IN APPELLANT'S B OOK ARE UNEXPLAINED AND TO THAT EXTENT APPELLANT HAD CONCEALED THE PARTICULARS OF I NCOME. THE PENALTY HAS NOT BEEN IMPOSED BY THE ASSESSING OFFICER ON THE BASIS OF FINDING OF APPEAL BUT THE SAME IS IMPOSED ON THE FINDING OF FACTS AND THEREFO RE THE DECISION RELIED UPON BY THE APPELLANT IN THE CASE OF CIT VS SADIRAM BALMUKU ND 84 ITR 183 IS NOT RELEVANT. APPELLANT ALSO RELIED UPON SC DECISION IN THE CASE OF ANANT RAM VEERSINGHBHAI & CO. VS CIT 123 ITR 457 AND OTHER DE CISIONS WHICH ARE ON THE ISSUE OF ESTABLISHING MENS REA BY THE DEPARTMENT. I T MAY BE MENTIONED HERE THAT 6 ITA NO. 3847/AHD/2007 AFTER THE AMENDMENT IN 1964 BY REMOVING THE WORD 'D ELIBERATELY 1 FROM SECTION 271(L)(C) F THE DEPARTMENT NEED NOT HAVE TO ESTABLISH MENS REA OR ATTEMPT TO CONCEAL THE INCOME. NOW EXPLANATION L IS AUTOMATIC . ONUS IS ON APPELLANT TO REBUT. THE PENALTY IS LEVIABLE UNDER EXPLANATION 1 IF EXPLANATION SUBMITTED BY THE APPELLANT IS NOT SUBSTANTIATED. THIS VIEW IS CLEARL Y EXPRESSED BY THE FOLLOWING DECISIONS : 246 ITR 218 (KER) - K P MADHUSUDAN 250 ITR 157 (DEL) - GURUBACHAN SINGH APPELLANT'S RELIANCE IN THE CASE OF NATIONAL TEXTIL E VS CIT 249 ITR 125 (GUJ) ALSO DOES NOT HELP SINCE THERE IS MATERIAL AN D CIRCUMSTANCES LEADING TO THE REASONABLE CONCLUSION THAT UNEXPLAINED CREDIT DOES REPRESENT THE APPELLANT'S INCOME. BY SHOWING UNEXPLAINED DEPOSITS IN BOOKS OF ACCOUNTS APPELLANT CONCEALED THE PARTICULARS AND FURNISHED INACCURATE PARTICULARS OF INCOME THEREFORE PENALTY IS LEVIABLE. IN THE CASE OF DURG A TIMBER WORKS VS CIT REPORTED IN 79 ITR 63 HON DELHI HIGH COURT HELD THAT WHEN THE ASSESSEE IS UNABLE TO PRODUCE ANY EXPLANATION REGARDING THE CASH CREDIT T HE AMOUNT CAN BE TREATED AS ITS CONCEALED INCOME. IN VIEW OF THE FACTS DISCUSSED EARLIER AND ALSO THE LEGAL POSITION AS HELD BY VARIOUS COURTS I FIND THIS A FIT CASE FOR LEVY OF PENALTY U/S.271(L)(C) AND ACCORDINGLY THE PENALTY LEVIED BY THE ASSESSING OFF ICER RS.1 51 000/- IS HEREBY CONFIRMED. 8. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI M.K. PATEL APPEARED AND CONTENDED THAT SHRI SURYAKANT VYAS FROM WHOM THE A SSESSEE ACCEPTED THE DEPOSIT OF RS.50 000/- WAS NOT FOUND AT THE RELEVANT TIME AT THE ADDRESS GIVEN BY HIM TO THE ASSESSEE. HE SUBMITTED THAT CASH LOAN TO HIM WAS REFUNDED THEREFORE THER E IS NO JUSTIFICATION WHATSOEVER IN LEVYING THE PENALTY IN RESPECT OF THIS CASH DEPOSIT OF RS.50 00 0/-. WITH REGARD TO THE REMAINING TWO CREDITORS NAMELY SHRI SURESHBHAI PATEL AND SMT. HANSABEN PATE L HE SUBMITTED THAT BOTH THE CREDITORS WERE GIVEN AFFIDAVITS TO THE ASSESSING OFFICER. THE ASSE SSING OFFICER HAS NOT PROVIDED ANY OPPORTUNITY TO CROSS EXAMINE THOSE TWO CREDITORS T HEREFORE PENALTY IN RESPECT OF OTHER TWO CREDITORS BE ALSO CANCELLED. 9. ON THE OTHER HAND SMT. NEETA SHAH SR. D.R. APP EARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW . SHE POINTED OUT THAT ONUS WAS ON THE ASSESSEE AND THE ASSESSEE DID NOT FURNISH CORRECT A DDRESS OF SHRI SURYAKANT VYAS. ON GIVEN ADDRESS HE WAS NOT AVAILABLE THEREFORE IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO CONDUCT INDEPENDENT ENQUIRY. SINCE INDEPENDENT ENQUIRY COUL D NOT BE CONDUCTED ON ACCOUNT OF NOT FURNISHING OF CORRECT ADDRESS THE PENALTY IN RESPE CT OF SHRI VYAS IS RIGHTLY LEVIED AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). WITH REGARD TO THE OTHER TWO CREDITORS 7 ITA NO. 3847/AHD/2007 THE LD. D.R. EXPLAINED THAT ONUS WAS ON THE ASSESSE E UNDER EXPLANATION 1 BELOW SECTION 271(1)(C). THIS ONUS IS NOT DISCHARGED. SHE FURTHER POINTED OUT THAT THE ASSESSEE WAS FULLY AWARE THAT BOTH THESE CREDITORS HAVE GIVEN AFFIDAVITS TO THE ASSESSING OFFICER. THEREFORE IT WAS FOR THE ASSESSEE TO PRODUCE THEM OR FURNISH NECESSARY EVIDE NCE IN THAT REGARD. SINCE THIS WAS NOT DONE THE PENALTY WAS RIGHTLY LEVIED AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF BOTH THE CREDITORS ALSO. 10. IN HIS REJOINDER SHRI M.K. PATEL LD. COUNSEL OF THE ASSESSEE DREW OUR ATTENTION THAT THE CORRECT ADDRESS OF SHRI VYAS WAS NOT AVAILABLE WITH THE ASSESSEE BECAUSE THE ASSESSEE HAS REPAID THE LOAN OF RS.50 000/- TO SHRI VYAS. THE ADDRESS G IVEN WAS CORRECT WHEN THE ASSESSEE TOOK THE LOAN. THE MERE FACT THAT AFTER TEN YEARS SHRI VYAS HAS LEFT THAT PREMISES IS NOT THE GROUND TO LEVY THE PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF T HE SAID ADDITION OF RS.50 000/-. IN SUPPORT OF THIS RELIANCE WAS PLACED ON THE DECISION OF THE HO N'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS.- CIT REPORTED IN 249 ITR 125 (GUJ.). 11. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN RESPECT OF S HRI SURYAKANT VYAS FROM WHOM THE ASSESSEE ACCEPTED DEPOSIT OF RS.50 000/- NO INDEPENDENT ENQ UIRY COULD BE MADE. SHRI VYAS MIGHT HAVE LEFT THE ADDRESS GIVEN TO THE ASSESSEE. THE LOAN GI VEN TO HIM HAS ALREADY BEEN RETURNED. IN THESE CIRCUMSTANCES IN OUR OPINION THIS IS NOT A FIT CA SE TO LEVY THE PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF THIS CASH CREDITOR. HENCE PENALTY IN RE SPECT OF CASH CREDIT OF RS.50 000/- IS CANCELLED. 11.1. WITH REGARD TO THE REMAINING CREDITORS NAMEL Y SHRI SURESH D. PATEL AND SMT. HANSABEN PATEL IT IS PERTINENT TO NOTE THAT THE ASSESSING O FFICER MADE INDEPENDENT ENQUIRY COLLECTED THE EVIDENCES IN THE FORM OF AFFIDAVITS FROM BOTH THE C REDITORS WHICH CLEARLY INDICATE THAT THE CASH CREDITS WHICH ARE CLAIMED TO BE RECEIVED FROM THOS E TWO CREDITORS WERE NOT GENUINE. IN THESE CIRCUMSTANCES ONUS IMPOSED UPON THE ASSESSEE BY EX PLANATION 1 BELOW SECTION 271(1)(C) HAS NOT BEEN DISCHARGED. IN THESE CIRCUMSTANCES IN OUR OPI NION WE ARE OF THE VIEW THAT PENALTY IN RESPECT OF THESE TWO CASH CREDITS OF RS.99 500/- AN D RS.1 20 000/- RESPECTIVELY IS RIGHTLY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER. WE THEREFORE INCLINE TO UP HOLD THE LEVY OF PENALTY IN RESPECT OF BOTH THESE CREDITORS. 8 ITA NO. 3847/AHD/2007 11.2. RESULTANTLY THE ASSESSING OFFICER IS DIRECTE D TO RE-WORK OUT THE PENALTY UNDER SECTION 271(1)(C) IN RESPECT OF CASH CREDITS OF RS.2 19 500 /- [RS.99 500/- + RS.1 20 000/-]. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 14.05.201 0 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14 / 05 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.