IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA No. 143/CHD/2016 Assessment Year: 2008-09 Shri Sanjeev Bajaj, Vs ITO, Prop.M/s Neelkanth Commodities Ward III(3), Services, 140-B, Ludhiana. Kitchlu Nagar, Ludhiana. PAN: ABFPB1331F (Appellant) (Respondent) Appellant by : Shri Ashok Goyal,CA Respondent by : Shri S.K.Mittal,DR Date of Hearing : 30.08.2016 Date of Pronouncement : 14.09.2016 ORDER This appeal by assessee has been directed against order of ld. CIT(Appeals)-1, Ludhiana dated 28.12.2015 for assessment year 2008-09 challenging levy of penalty under section 271(1)(c) of Income Tax Act on addition of Rs. 30,40,620/- on account of unexplained cash deposits. assessee in grounds of appeal also challenged order of ld. CIT(Appeals) in not admitting additional evidences as submitted before ld. CIT(Appeals) at first appellate proceedings. 2 2. Briefly facts of case are that during course of assessment proceedings, Assessing Officer made addition of Rs. 30,40,620/- on account of unexplained cash deposit in bank account. During course of assessment proceedings, assessee was asked to provide details of Rs. 30,40,620/- on account of cash deposits in bank account of assessee. assessee had provided details of 10 persons out of 27 from whom he allegedly claimed to have received cash. assessee could not prove basic conditions, therefore, Assessing Officer made addition accordingly. Penalty proceedings were also initiated. assessee provided details of 10 persons which were also incomplete which were filed at assessment stage. Assessing Officer, therefore, noted that assessee failed to prove identity, credit worthiness and genuineness of transaction and held that assessee has willfully concealed particulars of income and levied penalty under section 271(1)(c) of Act. 3. penalty order was challenged before ld. CIT(Appeals) and written submissions of assessee reproduced in appellate order in which assessee briefly explained that assessee provided details of 10 persons out of 27 number of clients at time of assessment proceedings. Out of total, Assessing Officer issued notice under section 133(6) of Act to only 4 and out of 4, two back-tracked and address of 3 other two could not be verified. addition is made without verifying details of all persons. As per details provided by assessee at time of proceedings, necessary details had been provided as to names, address alongwith PAN number of depositors. Therefore, assessee proved genuine transaction in matter. 4. assessee also furnished details of 27 persons and submitted that assessee has discharged onus to prove genuineness of transaction in matter. It was, therefore, submitted that penalty may not be levied against assessee. It was also submitted that assessee produced additional evidences before ITAT Chandigarh in quantum matter but ITAT Chandigarh Bench did not admit additional evidences and dismissed appeal of assessee. It was submitted that in quantum proceedings, assessee could not file additional evidences due to family circumstances and case was decided by ld. CIT(Appeals) against assessee. Therefore, additional evidences were filed before ITAT Chandigarh Bench. additional evidences filed in shape of confirmations from most of persons with their address, copies of bills raised by assessee, therefore, assessee made prayer that same may be admitted as additional evidence under Rule 46A of IT Rules. It was submitted that assessment proceedings and penalty proceedings are independent 4 therefore, additional evidences which are vital in nature, may be admitted in penalty appellate proceedings. It was also submitted that additional evidences depicting confirmed copies of accounts, bills of transactions with clients showing their full name and address alongwith PAN cards which have been filed with prayer for admitting additional evidence, same may be admitted because same would prove identity of investors and genuineness of transaction in matter and in such circumstances, penalty would not be leviable. assessee relied upon several decisions in support of contention. Remand report from Assessing Officer was called for. ld. CIT(Appeals), however, noted that assessee made request for admission of additional evidences before ITAT in quantum proceedings but same have not been admitted. ld. CIT(Appeals), therefore, noted that no reasonable cause is made out for admission of additional evidences and accordingly, additional evidences filed under Rule 46A were rejected. Penalty was also confirmed by dismissing appeal of assessee on this issue. 5. ld. counsel for assessee submitted that additional evidences filed before ld. CIT(Appeals) were relevant and vital in nature and would explain that penalty is not leviable in matter. Therefore, same should have been admitted by ld. CIT(Appeals) for 5 deciding issue on merits. He has submitted that merely because in quantum proceedings, same additional evidences were not admitted by Tribunal, is no ground to reject admission of additional evidences in penalty proceedings which are independent and all together different proceedings. He has submitted that in same circumstances, ITAT SMC Bench Chandigarh in case of Jorawar Singh Vs ITO ITA No. 629/2016 dated 22.07.2016 admitted additional evidences being relevant in penalty proceedings and restored matter to file of Assessing Officer for re- consideration. Copy of order is placed on record. He has, therefore, submitted that additional evidences may be admitted and matter may be remanded to Assessing Officer for re-consideration. 5(i) On other hand, ld. DR relied upon orders of authorities below and submitted that once Tribunal on quantum have not admitted additional evidences, therefore, same may not be admitted in penalty proceedings as well and appeal of assessee may be dismissed. 6. I have considered rival submissions. penalty is levied on account of unexplained cash deposit in bank account of assessee. assessee provided details of 10 persons out of 27 persons from whom assessee has received cash. ld. counsel for 6 assessee filed details of remaining 17 persons in respect of whom additional evidences have been filed before ld. CIT(Appeals) for admission. ld. CIT(Appeals), however, did not accept additional evidences which are in shape of confirmations with their addresses, copies of bills and PAN etc. Merely because additional evidences were not admitted in quantum proceedings, is no ground to reject request of assessee for admission of additional evidence in penalty proceedings which are independent and different proceedings. Since additional evidences are relevant and required to be looked into in penalty proceedings, therefore, ld. CIT(Appeals) should have admitted additional evidences for purpose of hearing. Similar issue was considered by ITAT SMC Bench Chandigarh in case of Jorawar Singh (supra) in which additional evidences have been admitted being relevant. order is reproduced as under : IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHR I BHAVNESH SA IN I, JUD IC IAL MEMBER ITA No. 629/Chd/2016 (Assessment Year : 2008-09) Jorawar Singh, Vs. Income Tax Officer, S/o Sh.Joginder Singh, Ward-1, Village Galedva, Kurukshetra. Tehsil Pehowa, District Kurukshetra. PAN: ACBPS3332E 7 (Appellant) (Respondent) Appellant by : Shri Sudhir Sehgal Respondent by : Shri S.K. Mittal, DR Date of hearing : 20.07.2016 D t e o f P r o n o u n c e me n t : 22.07.2016 O R D E R This appeal by assessee has been directed against order of learned Commissioner of Income Tax (Appeals), Karnal dated 5.4.2016 for assessment year 2008-09, challenging levy of penalty under section 271(1)(c) of Income Tax Act, 1961 (in short Act ). 2. During assessment proceedings, disallowance of Rs.6,42,870/- was made out of claim of commission paid by assessee. CIT (Appeals) as well I.T.A.T. confirmed addition. On these facts, penalty was levied, which was also confirmed by CIT (Appeals). 3. I have heard learned representatives of both parties. It is stated that assessee is LIC agent and claimed deduction on account of commission paid to several persons, who have procured new LIC policies from different persons. addition was made because assessee could not adduce complete details and list of persons to whom commission was paid. assessee has now filed application for admission of additional evidence, in which it is stated that list of sub-agents and their affidavits alongwith names of parties who had been introduced by each sub-agents alongwith list was filed as additional evidence. assessee prayed that same may be admitted for hearing, since assessee was under bonafide belief that since evidences have been filed before CIT (Appeals), therefore, there is no need to file same in penalty proceedings. learned D.R., however, submitted that same point was raised before Tribunal, in which assessee challenged order of CIT (Appeals) in not considering affidavits of nine persons filed at appellate stage. CIT (Appeals) 8 did not consider these nine affidavits of persons in support of claim of payment of commission because no request under Rule 46A of Income Tax Rules was made. learned D.R., therefore, submitted that since same affidavits were not considered by CIT (Appeals), therefore, same may not be admitted for hearing. 4. On consideration of rival contentions and material available on record, I am of view that though findings given in quantum proceedings are relevant and have probative value but these are not conclusive for levy of penalty against assessee under section 271(1)(c) of Act. It is well settled that quantum and penalty proceedings are distinct and independent proceedings. assessee in penalty proceedings still could have explained that it is not case of levy of penalty based on evidence on record. Hon'ble Supreme Court in case of Tek Ram Vs. CIT, 262 CTR 118 (SC) and Hon'ble Punjab & Haryana High Court in case of CIT Vs. Mukta Metal Works, 336 ITR 555 (P &H ) admitted additional evidence being relevant and required to be looked into. addition was made by authorities below because assessee could not produce complete list of persons to whom commission was paid and no evidence was adduced in this regard. assessee has now filed affidavits of nine persons to whom assessee had paid commission alongwith list of parties in respect of whom LIC policies were obtained through commission agents. These additional evidences are, therefore, relevant and shall have to be looked into in order to decide whether assessee is able to explain issue for purpose of levy of penalty. In this view of matter, I admit these additional evidences for purpose of hearing. contention of learned D.R. that same additional evidences were not admitted by CIT (Appeals), has no merit because assessee did not make any request under Rule 46A of Income Tax Rules for admission of additional evidence. These additional evidences so admitted would have bearing on issue and could explain matter 9 in issue with reference to penalty matter. Further these additional evidences were not filed before authorities below and Assessing Officer has not looked into matter. Therefore, matter shall have to be restored to file of Assessing Officer for reconsideration. 5. In this view of matter, I set aside orders of authorities below and restore issue of levy of penalty to file of Assessing Officer with direction to redecide issue in light of additional evidence so admitted above. assessee is directed to produce these evidences before Assessing Officer for consideration. Assessing Officer shall give sufficient opportunity for hearing to assessee. 6. In view of above, appeal of assessee is allowed for statistical purposes. Order pronounced in open court. 7. Considering facts of case in light of order in case of Jorawar Singh (supra), I set aside order of ld. CIT(Appeals) in refusing to admit additional evidences. These additional evidences being relevant, shall have to be looked into in order to decide whether assessee is liable for penalty, I admit these additional evidences for purpose of hearing. Since these additional evidences, so admitted, were not considered by authorities below, therefore, matter shall have to be restored to file of Assessing Officer for re-consideration. 8. In this view of matter, I set aside orders of authorities below and restore issue of levy of penalty to file of Assessing Officer with direction to re-decide 10 issue of penalty in light of additional evidences so admitted above. assessee is directed to produce these additional evidences before Assessing Officer for his consideration. Assessing Officer shall give reasonable sufficient opportunity of being heard to assessee. 9. In result, appeal of assessee is allowed for statistical purposes. Order pronounced in Open Court. Sd/- (BHAVNESH SAINI) JUDICIAL MEMBER Dated 14 t h Sept.,2016. Poonam Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT,DR Assistant Registrar, I TAT Chandigarh Sanjeev Bajaj v. ITO, Ward III(3), Ludhiana