IN INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH JAIPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM ITA No. 935/JP/2019 Assessment Year :2011-12 Smt. Suman Katta cuke DCIT, 18, Siyaram Street, Durgapura, Vs. Central Circle-03, Jaipur Jaipur PAN/GIR No.: ACBPK4356L Appellant Respondent Assessee by : Shri Rohan Sogani (CA) Revenue by : Shri Bhanwar Singh (JCIT) Date of Hearing : 23/09/2019 Date of Pronouncement: 25/09/2019 ORDER PER: VIKRAM SINGH YADAV, A.M. This is appeal filed by assessee against order of ld. CIT(A)-4, Jaipur dated 26.04.2019 wherein assessee has taken following grounds of appeal:- 1. In facts and circumstances of case and in law ld. CIT(A) has erred in, confirming action of ld. AO in levying penalty of Rs. 86,520/- u/s 271(1)(c) of Income Tax Act, 1961. action of ld. CIT (A) is illegal, unjustified, arbitrary and against facts of case. Relief may please be granted by deleting said penalty of Rs. 86,520/-. 2. In facts and circumstances of case and in law, ld. AO has erred in imposing penalty u/s 271(1)(c) without specifically pointing out whether penalty was proposed on concealment of particulars of ITA No. 935/JP/2019 Smt. Suman Katta, Jaipur Vs. DCIT, Jaipur income or for furnishing inaccurate particulars of income. action of ld. AO is illegal, unjustified, arbitrary and against facts of case. Relief may please be granted by quashing penalty imposed u/s 271(1)(c). 2. At outset, Ground No. 2 was not pressed by ld. AR during course of hearing, hence, same is dismissed as not pressed. 3. Regarding Ground No. 1, briefly stated, facts of case are that in assessment order passed u/s 144 read with section 153A, addition of Rs. 2,80,000/- was made in respect of loan transaction with Ms Shweta Jain in absence of any confirmation and identity and credit worthiness of this party and genuineness of transactions remaining unproved. Before ld. CIT(A), assessee filed, by way of additional evidences, copy of PAN, complete address as well as confirmation of party qua loan given to assessee. However, addition was confirmed by ld. CIT(A) holding that assessee has not provided copy of bank statement showing relevant credit in bank account and therefore, genuineness of transactions and creditworthiness of Ms Shweta Jain could not be established. said finding of ld. CIT(A) have since attained finality in absence of any further appeal before Tribunal. 4. In penalty proceedings, Assessing Officer, relying on findings of ld. CIT(A) in quantum proceedings, stated that claim of liability in form of unsecured loan was made by assessee in her books of accounts. Since claim of liability has been made by assessee, onus lies on her to prove creditworthiness of creditor during course of assessment proceedings. However, assessee clearly failed to do so and for same reason, addition has been sustained by ld. CIT(A). It was further 2 ITA No. 935/JP/2019 Smt. Suman Katta, Jaipur Vs. DCIT, Jaipur stated that assessee has failed to prove source and creditworthiness in terms of section 68 of Act and accordingly, same has been considered unexplained credit and therefore, assessee concealed her income of Rs. 2,80,000/- which was detected during course of assessment proceedings. Had there been no assessment proceedings u/s 144/153A, income so disclosed would have remained untaxed. Therefore, it is clear that inaccurate particulars have been detected because of assessment proceedings in this case and assessee chose not to declare such income in her return filed u/s 139(1). provision of explanation 1 to section 271(1)(c) of Act are held applicable in instant case. Accordingly, penalty of Rs. 86,520/- was levied on assessee. 5. On appeal, ld. CIT(A) has confirmed said levy of penalty holding that AO was correct in imposing penalty of unsecured loan taken from Ms. Shweta Jain and referring to order of ld. CIT(A) in quantum proceedings, it was further stated by ld CIT(A) that it is clearly inferred from ld. CIT(A) s order that such unsecured loan is appellant s own money and this finding is not contested even now . Accordingly, he confirmed penalty of Rs. 86,520/- against which assessee is in appeal before us. 6. During course of hearing, ld. AR submitted that assessee has discharged initial onus cast on her in terms of furnishing of PAN, complete address of Ms Shweta Jain as well as confirmation by her of giving loan to assessee. It was further submitted that merely because addition has been made in quantum proceedings, same should not be basis for levy of penalty u/s 271(1)(c) of Act. Further, he relied on decision of Co-ordinate Bench in case of Smt. Sonu Khandelwal, Jaipur vs. ITO, Jaipur (ITA No. 01/JP/2015 dated 27.09.2016) wherein Co-ordinate Bench has relied 3 ITA No. 935/JP/2019 Smt. Suman Katta, Jaipur Vs. DCIT, Jaipur on findings of Hon ble Gujarat High Court in case of Baroda Tin Works [1996] 221 ITR 661 (Gujarat) wherein it was held as under:- .It is to be noticed that falsity of explanation was expressly put differently from mere unsatisfactory nature of explanation offered. So also clear distinction was drawn between explanation which is not satisfactory and which is not bona fide. former was sufficient to include disputed sum in computation of income of assessee as falsity of explanation, inheres willful nondisclosure. In latter case, though explanation offered by assessee in respect of such additions or disallowance may be not satisfactory in opinion of income tax Officer, it may be sufficient to include it in income, but still if assessee establishes his bona fides about explanation submitted by him, penalty could not be imposed by invoking Explanation . 7. Per contra, ld. DR relied on findings of lower authorities. Further, ld. DR submitted that decision of Co-ordinate Bench in case of Smt. Sonu Khandelwal, Jaipur vs. ITO, Jaipur is distinguishable on facts as in that case, findings recorded by Tribunal was that in respect of most of creditors, transaction has been effected through banking channel and in that context, findings have been recorded by Tribunal for non-levy of penalty unlike instant case where assessee has failed to furnish bank statement. He accordingly supported order of lower authorities and submitted that same may kindly be confirmed. 8. We have heard rival contentions and perused material available on record. limited issue under consideration relates to levy of penalty in respect of addition confirmed in quantum proceedings u/s 68 of Act. In support of its explanation and bonafide for non- levy of penalty, assessee has relied on evidence filed before lower authorities in terms of 4 ITA No. 935/JP/2019 Smt. Suman Katta, Jaipur Vs. DCIT, Jaipur satisfying initial onus facts on her by way of copy of PAN, complete address of Ms. Shweta Jain as well as confirmation given by her in support of loan transaction with assessee. We find that these evidences and bonafide of assessee have not been disputed by Revenue. only reason, addition has been confirmed in quantum proceedings is non- furnishing of bank statement of Ms Shweta Jain. In our view, absence of bank statement may be sufficient to hold that assessee has not discharged fully initial onus cast on her in terms of proving creditworthiness of Ms. Shweta Jain, however same doesn t necessarily lead to levy of penalty in all cases. explanation and evidence filed in support of her explanation have to be tested on touchstone of bonafide and In instant case, there is no further investigation/examination which has been carried out by Revenue or any positive evidence which has been brought on record by Revenue. Assessing Officer has merely relied on findings in quantum proceedings and has levied penalty in instant case. It is settled legal proposition that assessment and penalty proceedings are independent proceedings and if AO had any iota of doubt regarding confirmation so filed by assessee in support of loan transaction, it was incumbent on him to carry out independent investigation and bring evidence rebutting explanation so furnished by assessee. Therefore, in absence of same, even though addition have been made in quantum proceedings, bona fide of assessee in support of transaction cannot be disputed and therefore it is not fit case for levy of penalty and same is directed to be deleted. In result, appeal of assessee is allowed. 5 ITA No. 935/JP/2019 Smt. Suman Katta, Jaipur Vs. DCIT, Jaipur Order pronounced in Open Court on 25/09/2019. Sd/- Sd/- lanhi (Sandeep Gosain) (Vikram Singh Yadav) Judicial Member Accountant Member Jaipur Dated:- 25/09/2019 Ganesh Kr. Copy of order forwarded to: 1. Appellant- Smt. Suman Katta, Jaipur 2. Respondent- DCIT, Central Circle-03, Jaipur 3. CIT 4. CIT(A) 5. DR, ITAT, Jaipur. 6. Guard File {ITA No. 935/JP/2019} By order, Asst. Registrar 6 Suman Katta v. DCIT, Central Circle-03, Jaipur