Goyal Industries Ltd.,, Surat v. The ACIT, Circle-1,, Surat

ITA 702/AHD/2008 | 2004-2005
Pronouncement Date: 28-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 70220514 RSA 2008
Assessee PAN AAACG8627L
Bench Ahmedabad
Appeal Number ITA 702/AHD/2008
Duration Of Justice 2 year(s) 3 month(s) 3 day(s)
Appellant Goyal Industries Ltd.,, Surat
Respondent The ACIT, Circle-1,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 28-05-2010
Date Of Final Hearing 20-05-2010
Next Hearing Date 20-05-2010
Assessment Year 2004-2005
Appeal Filed On 25-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.702/AHD/2008 ASSESSMENT YEAR: 2004-05 DATE OF HEARING:20.5.10 DRAFTED:24.5.10 GOYAL INDUSTRIES LTD. 701 TRIVIDH CHAMBERS RING ROAD SURAT PAN NO.AAACG8627L V/S . DY. COMMISSIONER OF INCOME TAX CIRCLE-1 SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI DEEPAK BHATIA AR RESPONDENT BY:- SMT. JYOTI LAXIMI SR-DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY ASSESSEE RAISING FOLLOWING GROUNDS:- 1. THAT HONBLE C.I.T.(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.2 83 412/- U/S.271(1)(C) OF THE INCOME TAX ACT 1961. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL THAT LD. CIT(APPEALS) HAS CONFIRMED THE PENALTY OF RS.2 83 412/- LEVIED BY TH E ASSESSING OFFICER. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TEXTURISED YARN AND ART SILK CL OTH. FOR THE YEAR UNDER CONSIDERATION RETURN OF INCOME WAS FILED ON 27-10-2 004 ON A TOTAL INCOME OF RS. NIL. IN THE ASSESSMENT ORDER ASSESSING OFFICER PR OPOSED FOLLOWING ADDITIONS:- ADDITION ON ACCOUNT OF UNEXPLAINED CREDITORS R S.7 00 000/- - DISALLOWANCE OF HOTEL EXPENSES INCURRED FOR BUSINESS PURPOSE RS. 90 000/- ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 2 AFTER MAKING THESE ADDITIONS ASSESSING OFFICER ALS O INITIATED PENALTY PROCEEDINGS U/S.271(1) OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON V ERIFICATION OF SCHEDULE ATTACHED TO THE BALANCE-SHEET CREDIT BALANCE OF RS. 7 LAKH WAS NOTICED. IT WAS THE SUM CLAIMED TO HAVE BEEN RECEIVED FROM M/S. SHREE C ORPORATION AGAINST ORDER FOR SUPPLY OF POLYESTER TEXTURED YARN TO BE IMPORTE D FROM SINGAPORE. IT WAS SUBMITTED THAT MARKET SUBSEQUENTLY DECLINED. THEREF ORE THAT PARTY REFUSED TO TAKE THE GOODS AT THE PRE-DETERMINED PRICE. THE ASS ESSEE DID NOT FURNISH DETAILS LIKE CONFIRMATION FROM THAT OTHER PARTY AND PERIOD CORRESPONDING TO PURCHASE OF YARN OR PLACING OF ORDER OR DISPUTE FOR RECOVERY. ACCORDINGLY HE PROPOSED AN ADDITION OF RS.7 LAKH U/S.68 OF THE ACT WHICH WAS F INALLY NOT DISPUTED AND ACCEPTED BY THE ASSESSEE. SIMILARLY ADDITION OF RS. 90 000/- MADE AFTER DISALLOWING TOTAL EXPENSES CLAIMED TO BE INCURRED O N BUSINESS PROMOTION WAS CONFIRMED BECAUSE ASSESSEE FAILED TO PRODUCES NECES SARY EVIDENCE. IN THE PENALTY PROCEEDINGS ASSESSEE FURNISHED FOLLOWING E XPLANATION:- 1.11.1 BOTH ADDITIONS HAVE BEEN MADE PURELY ON THE BASIS OF PROBABILITY. 1.11.2 THE EXPLANATION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE. 1.11.3 PENALTY CAN BE LEVIED ON WHEN THEE IS AN UND OUBTED FINDING THAT AN ACTUAL INCOME WAS EARNED THE PARTICULARS OF WHICH WERE CONCEALED OR INACCURATE PARTICULARS OF WHICH WERE FURNISHED. 1.11.4 IN RESPECT OF BOTH ADDITIONS SUFFICIENT EXP LANATION ON THE BASIS OF FACT AND DOCUMENTS AVAILABLE WITH US WAS FURNISHED. 1.11.5 THE EXPLANATIONS ARE BONAFIDE AND THE SAME W EE NOT FOUND TO BE INCORRECT. 1.11.6 IN RESPECT OF ADDITION OF RS.7 00 000/- THE AMOUNT REPRESENTS AN ADVANCE RECEIVED FROM A CUSTOMER BY NAME SHREE CORP ORATION THROUGH BROKER. THE BROKER HAS DISAPPEARED AND THE PARTY IS NOT IN OUR DIRECT CONTRACT. HENCE MATTER COULD NOT BE SETTLED. ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 3 1.11.7 REGARDING THE ADDITION OF RS.90 000/- ON DIS ALLOWANCE OF HOTEL PROMOTING BUSINESS AND THAT IT CAN NOT BE PROVED DO CUMENTARILY. 1.11.8 THE BONAFIDE OF THE ASSESSEE COMPANYS CASE IS EVIDENT FROM THE HUGE UNABSORBED LOSS/DEPRECIATION AND THAT THERE IS NO INCOME DESPITE THE ADDITION. 1.11.9 NO SATISFACTION OF CONCEALMENT WAS REACHED B Y THE ASSESSING OFFICER AT THE TIME OF INITIATING THE PENALTY PROCE EDINGS AND HENCE NO PENALTY CAN BE IMPOSED. ASSESSING OFFICER REJECTED THE EXPLANATION AND OBSE RVED THAT:- I) NO EVIDENCE REGARDING IDENTITY OF THE CREDITOR WHO PAID THE SUM WAS FURNISHED II) THE DETAILS OF THE BROKER THROUGH WHOM MONEY WAS R IGHTLY RECEIVED WERE NOT GIVEN III) NOT GIVING ON THE GROUND THAT BROKER IS NOT RECEIVA BLE IV) THERE IS NO EVIDENCE THAT CREDIT WAS IN THE NATURE OF ADVANCE V) CREDITWORTHINESS OF THE ALLEGED CREDITOR WAS NOT ES TABLISHED VI) EVEN TODAY SAID SUM HAS REMAINED UNCLAIMED FROM THE SAID CREDITOR AND NEITHER THE GOODS HAS BEEN SUPPLIED TO THEM NOR MONEY HAS RETURNED TO THEM. HE ACCORDINGLY LEVIED THE PENALTY OF RS.2 83 412/- BY TREATING THE SUM OF RS.7.90 LAKHS AS CONCEALED INCOME. 5. THE LD. CIT(APPEALS) CONFIRMED THE PENALTY ON BO TH THE AMOUNT ON THE GROUND THAT NEITHER DURING THE ASSESSMENT PROCEEDIN GS NOR DURING APPELLATE PROCEEDINGS THE ASSESSEE GAVE ANY EVIDENCE OF IDEN TITY OF THE CREDITOR. THE GENUINENESS OF THE TRANSACTION WAS ALSO NOT SHOWN. IT IS NOT SHOWN WHY THE CREDITOR DID NOT BOTHER ABOUT THE REFUND OF THE MON EY OR FOR SUPPLY OF THE GOODS. IN RESPECT OF THE SUM OF RS.90 000/- LD. CIT(APPEA LS) MENTIONED THAT ASSESSEE DID NOT SHOW AS TO WHO STAYED IN THE HOTEL WHAT WA S THE NATURE OF EXPENDITURE WHETHER ANY MEETING WERE CONDUCTED IN THE HOTEL AND WHO ATTENDED SUCH MEETING. THUS BUSINESS PURPOSE OF THE EXPENDITURE WAS NOT ESTABLISHED. ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 4 6. BEFORE US LD. AR SUBMITTED THAT ASSESSEE-FIRM IS IN LIQUIDATION AS TOTAL LOSS IS OVER RS.85 LAKH DURING THIS YEAR. IN VIEW OF THIS THE CREDITOR AND THE BROKER HAVE NOT BOTHERED TO FILE ANY CLAIM AGAINST THE ASSESSEE. IN FACT NON- FURNISHING OF DOCUMENTARY EVIDENCE WOULD BE SUFFICI ENT FOR MAKING ADDITION BUT FOR LEVY OF PENALTY THE ASSESSING OFFICER HAS TO S HOW THAT IMPUGNED ADDITION WAS IN FACT INCOME OF THE ASSESSEE. LD. AR FURTHER SUBMITTED THAT THE EXPLANATION FURNISHED BY THE ASSESSEE WAS BONA FIDE FOR BOTH THE ITEMS OF ADDITIONS. THE ASSESSING OFFICER DID NOT FIND ANY E VIDENCE OF CONCEALMENT AND BOTH THE ADDITIONS WERE MADE PURELY ON PRESUMPTIVE BASIS. THE ASSESSEE HAD FURNISHED COPY OF LEDGER ACCOUNT OF THE CREDIT OR I N THE BOOKS OF THE ASSESSEE SHOWING THE DETAILS. THE ORDER WAS ORALLY RECEIVED THROUGH BROKER. THAT PARTY WAS NOT IN DIRECT CONTACT WITH ASSESSEE THUS THE A SSESSEE WAS PREVENTED BY REASONABLE CAUSE FROM FURNISHING THE CONFIRMATION F ROM THAT PARTY. IT IS NOT A CASE OF NON-FURNISHING OF EXPLANATION. ALL MATERIAL FACTS LIKE CHEQUE NO. NAME OF THE BANK AND DATE HAS BEEN FURNISHED TO THE ASSE SSING OFFICER. THE EXPLANATION IS BONA FIDE AND THERE IS NO FINDING TH AT INCOME IN FACT HAS BEEN ACTUALLY EARNED BY THE ASSESSEE. THE ISSUE IS DIREC TLY COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES V. CIT (2000) 249 ITR 125 (GUJ) IT IS HELD IN THAT CASE THAT MERELY BECAUSE AN ADDITION U/S.68 HAS BEEN MADE PENALTY CANNOT BE LEVIED. REGARDING ADDI TION OF RS.90 000/- LD. AR SUBMITTED THAT SUM WAS PAID IN RESPECT OF BUSINESS PURPOSE. THE EXPENDITURE WAS ACTUALLY INCURRED AND AMOUNT WAS ACTUALLY PAID. THE ADDITION WAS MADE ONLY ON THE GROUND THAT DETAILS OF THE PERSON WHO A TTENDED THE MEETING WERE NOT FURNISHED. THE INCURRING OF EXPENDITURE WAS NOT DIS PUTED. WHAT WAS DISPUTED WAS BUSINESS PURPOSES OF THE EXPENDITURE. PENALTY C ANNOT BE LEVIED IN VIEW OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF SAYAJI IRON & ENGG. CO. V. CIT (2002) 253 ITR 749 (GUJ) AND ALSO AS PER THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF T.ASHOK PAI V. CIT (2007) 292 ITR 11 (SC) AND IN THE CASE OF DILIP N. SHROFF V. JCIT (2007) 291 ITR 51 (SC). FURTHER DECISION ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 5 OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT V. P.K. NARAYANAN 238 ITR 905 (KER) AND IN THE CASE OF SHIVLAL TAK V. CIT (2001) 251 ITR 272 (RAJ) SUPPORT THE VIEW OF ASSESSEE. 7. ON THE OTHER HAND LD. SR-DR SUBMITTED THAT PENA LTY IS LEVIABLE UNDER EXPLANATION 1B TO SEC. 271(1) AS EXPLANATION FURNI SHED BY THE ASSESSEE IS NOT BONA FIDE. HE HAS NOT BEEN ABLE TO SUBSTANTIATE TH E EXPLANATION FURNISHED BY IT AND THE MATERIAL FACTS NECESSARY FOR ASSESSMENT AND IN SUPPORT OF EXPLANATION HAVE NOT BEEN FURNISHED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS FACTS ON RECORD. IN OUR CONSIDERED VIEW PENALTY U/S.271(1 ) IN CASE OF ADDITION OF RS.90 000/- CANNOT BE SUSTAINED. IT IS ONLY A CLAI M OF EXPENDITURE ON HOTEL. THE CASE OF THE ASSESSEE IS THAT BUSINESS CLIENTS HAD C OME ON WHICH HE HAD TO INCUR EXPENDITURE FOR ARRANGING MEETING IN THE HOTEL. THE CLAIM OF THE ASSESSEE WAS NOT SUPPORTED WITH EVIDENCE INASMUCH AS HE WAS UNAB LE TO PRODUCE EVIDENCE ABOUT THE NATURE OF MEETINGS AND THE PERSONS WHO AT TENDED THE MEETING. THE FACT OF INCURRING OF EXPENDITURE WAS NOT DOUBTED BUT WHA T WAS DOUBTED WAS THE BUSINESS PURPOSE OF THE EXPENDITURE. WE DERIVE SUPP ORT FROM THE DECISION OF HONBLE HIGH COURT IN THE CASE OF CIT V. RELIANCE PETROLIUM PRODUCTS (2010) 322 ITR 158 (SC). IN VIEW OF THIS WE CANCEL THE P ENALTY IN RESPECT OF ADDITION OF RS.90 000/-. 9. HOWEVER SAME CANNOT BE SAID ABOUT THE ADDITION OF RS.7 LAKH. EVEN THOUGH ONUS OF THE ASSESSEE DURING THE ASSESSMENT P ROCEEDINGS IS CONFINED TO SUBMITTING EVIDENCE REGARDING IDENTITY OF THE CREDI TOR CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. HOWEVE R IN PENALTY PROCEEDINGS IT IS NOT THE CASE THAT ENTIRE BURDEN IS ON THE DEPART MENT TO SHOW THAT WHAT WAS ADDED WAS IN FACT CONCEALED INCOME OF THE ASSESSEE. EXPLANATION TO ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 6 SEC.271(1) PROVIDES FOR DEEMING ADDITION AS CONCEA LED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN F URNISHED PROVIDED CONDITIONS LAID DOWN IN EITHER OF THE CLAUSES ARE SATISFIED. IF ASSESSEE DOES NOT FURNISH ANY EXPLANATION IN RESPECT OF ADDITION MADE OR EXPLAN ATION FURNISHED IS FOUND FALSE THEN CLAUSE (A) OF EXPLANATION-I CAN BE INVOKED. WH ERE ASSESSEE FURNISHES AN EXPLANATION IN RESPECT OF ADDITION MADE THEN AS PE R CLAUSE (B) OF EXPLANATION- I. THE ADDITION WOULD BE DEEMED AS CONCEALED INCO ME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED P ROVIDED FOLLOWING THREE CONDITIONS ARE SATISFIED.:- (I) ASSESSEE IS NOT ABLE TO SUBSTANTIATE HIS EXPLA NATION. (II) EXPLANATION FURNISHED BY HIM IS NOT BONA FIDE . (III) ALL THE MATERIAL FACTS NECESSARY FOR ASSESSM ENT OR IN RESPECT OF EXPLANATION ARE NOT FURNISHED BY HIM. IF ASSESSEE IS ABLE TO SHOW PRIMA FACIE THAT HE IS NEITHER HIT BY CLAUSE (A) OR BY CL AUSE (B) OF THE EXPLANATION-I THEN ONUS WILL SHIFT TO THE A.O. THA T CONDITION LAID DOWN THEREIN ARE SATISFIED. FOR THE SAKE OF CONVENIENCE WE PRODUCE SEC.271(1) AS UNDER:- '271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIO NER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY (I)****** (II) ****** (III) IN THE EASES REFERRED TO IN CLAUSE (C) IN AD DITION TO ANY TAX PAYABLE BY HIM A SUM WHICH SHALL NOT BE LESS THAN BUT WHI CH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR THE FUR NISHING OF INACCURATE PARTICULARS OF SUCH INCOME. ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 7 EXPLANATION 1 - WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FALLS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FI DE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESU LT THEREOF SHALL FOR THE PURPOSE OF CLAUSE (C) OF THIS SUB-SECTION BE D EEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED.' IN RESPECT OF EXPIN.(1) THE DEEMING FICTION IS RAIS ED AND ADDED/DISALLOWED AMOUNT IS TREATED AS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. EXPLANATION- I (B) WILL NOT APPLY IF THE EXPLANATION GIVEN BY THE ASSESSEE IN THE QUANTUM PROCEEDINGS WHICH HE COULD NOT SUBSTANTIATE IN THOSE PROCEEDINGS WAS (I) BONA FIDE AND (II) HE HAD DISCL OSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME. IN CASES WHERE EXPLANATION WAS OFFERED BUT WAS REJECTED AS IT COU LD NOT BE SUBSTANTIATED BY THE ASSESSEE THERE WOULD ARISE NO PRESUMPTION OF CONCE ALMENT OF THE PARTICULARS OF INCOME THAT WAS ADDED OR DISALLOWED IF SUCH ASSESSE E CAN SHOW THAT THE SAID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD DISCLOSED ALL FACTS RELATING TO SUCH EXPLANATION AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME DURING THE QUANTUM PROCEEDINGS. FOR BRINGING THE CASE UNDER THE MAIN PROVISION THE ONUS IS PUT ON THE DEPARTMENT TO PROV E THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS THEREOF. TO BRING THE CASE OF THE ASSESSEE WITHIN ITS MISCHIEF MERE REJECTION OF ASSESSEES CLAIM WOULD NOT BE SUFFICIENT AND THE AS SESSEE CANNOT BE HELD GUILTY OF CONCEALMENT. IT IS BY VIRTUE OF EXPLANATION THAT ASSESSING OFFICER CAN RAISE THE PRESUMPTION ABOUT ADDITIONS MADE TO THE TOTAL I NCOME OR DEDUCTION DISALLOWED THAT IT REPRESENTS ASSESSEES CONCEALED INCOME OR THE INCOME IN ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 8 RESPECT OF WHICH ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. WHEN WE EXAMINE PART-B OF THE EXPLANATION-I CAREFULLY THEN WE ARE OF THE VIEW THAT THE WORDS NOT SUBSTANTIATE USED IN THAT CLAUSE DOES N OT MEAN THAT IT IS NOT ACCEPTED BY THE CONCERNED AUTHORITY BUT IT MEANS THAT THERE IS NO SUBSTANCE IN THE CLAIM MADE BY THE ASSESSEE. THE WORD SUBSTANTIATE IS O PPOSITE TO THE WORD VAGUE OR FANCIFUL OR WITHOUT ANY FOUNDATION OR BASIS. THE PHRASE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE MEANS THAT THE ASSES SEE HAS TO SHOW THAT CIRCUMSTANCES EXISTED WHEREBY IT HAS MADE THE CLAIM OR THAT AS IN THE PRESENT CASE IT HAD IN FACT RECEIVED THE MONEY FROM THE CR EDITORS BUT THEIR CREDENTIALS CANNOT BE ESTABLISHED. IT HAS TO BE PROVED THAT FAI LURE OF THE ASSESSEE TO FURNISH EVIDENCE IN SUPPORT THE CLAIM WAS BEYOND HIS CONTRO L. ASSESSEE HAS TO PROVE OR FURNISH EVIDENCE THAT CIRCUMSTANCES EXISTED WHICH D ISABLED HIM TO FURNISH THE EVIDENCE IN SUPPORT OF HIS CLAIM. THE THIRD CONDITI ON IS THAT ALL THE FACTS RELATING TO THE CLAIM AND MATERIAL TO THE COMPUTATION OF ITS TOTAL INCOME HAS BEEN DISCLOSED BY HIM. IT MEANS THAT ALL THE MATERIAL FA CTS WHICH ARE RELEVANT FOR COMPUTATION OF INCOME OF THE ASSESSEE HAVE BEEN DIS CLOSED TO THE DEPARTMENT NOT MERELY DURING THE ASSESSMENT PROCEEDINGS BUT IN THE RETURN OF INCOME. 10. WHEN WE EXAMINE THE FACTS OF THE PRESENT CASE WE NOTICE THAT ASSESSEE DID NOT FURNISH ANY EVIDENCE ABOUT IDENTITY OF THE CREDITOR OR OF THE BROKER THROUGH WHOM IT WAS CLAIMED THAT CHEQUES WERE RECEI VED AS ADVANCE AGAINST ALLEGED PURCHASE OF THE GOODS TO BE IMPORTED BY THE ASSESSEE. IF SAME BROKER IS PROVIDING CHEQUES TO THE ASSESSEE AS ADVANCE AGAINS T PURCHASE TO BE MADE BY HIS CLIENT HE SHOULD NECESSARILY SUBMIT A COVERING LET TER AND PLACE ORDER FOR PURCHASE. THERE SHOULD BE DETAILS ABOUT PH. NO. OF THE ALLEGED PURCHASER OR OF THE BROKER. IN THE PRESENT CASE THERE IS NO IDENTI FICATION DETAIL EITHER OF THE ALLEGED PURCHASER OR OF THE BROKER. FURTHER THERE ARE NO DETAILS ABOUT ALLEGED PURCHASE ORDER. FURTHER WE NOTICE THAT IN SPITE OF EXPIRY OF SO MANY YEARS SINCE THIS MONEY WAS ALLEGEDLY RECEIVED BY THE ASSESSEE THERE IS NEITHER SALE OF GOODS ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 9 TO THE PARTY NOR REFUND OF MONEY. THERE IS ALSO NO EVIDENCE THAT ASSESSEE HAD IMPORTED THE GOODS FOR BEING SUPPLIED TO THE ALLEGE D PURCHASER AS CLAIMED IN THE EXPLANATION. THUS EXPLANATION FURNISHED BY THE ASS ESSEE CANNOT BE SAID TO BE SUBSTANTIATED. IT IS APPARENTLY VAGUE FANCIFUL AND WITHOUT ANY FOUNDATION OR BASIS. IN RESPECT OF SECOND CONDITION IN EXPLANAT ION-1(B) WE ARE OF THE VIEW THAT EXPLANATION FURNISHED BY THE ASSESSEE IS NOT B ONA FIDE. ASSESSEE EXPLAINED THAT MONEY WAS RECEIVED FROM A PURCHASER. IT WAS FU RTHER CLAIMED THAT IT WAS RECEIVED THROUGH A BROKER AND FOR IMPORT OF MATERIA L. IN ADDITION TO THIS IT WAS FURTHER CLAIMED THAT DUE TO CHANGE IN MARKET RATE O F THE GOODS THE PURCHASER REFUSED TO ACCEPT STOCK FOR WHICH THE ORDER WAS PLA CED BY HIM. THIS EXPLANATION IS BUNDLE OF CONTRADICTIONS LEADING TO THE BELIEF T HAT IT IS FALSE. THERE IS NO EVIDENCE THAT THE ASSESSEE REALLY MADE ANY ATTENTIO N TO IMPORT ANY GOODS FROM SINGAPORE. THE DETAILS OF THE GOODS FOR WHICH ORDER WAS PLACED WERE NOT FURNISHED THE RATES AT WHICH GOODS WERE SOUGHT TO BE PURCHASED ARE NOT PROVIDED. THE DETAILS THAT MARKET HAS CHANGED TO TH E DETRIMENT OF THE PURCHASER ARE ALSO NOT PROVIDED. ANY CORRESPONDENCE FROM PURC HASER REGARDING REFUSAL TO PURCHASE THE GOODS AS PER PURCHASERS ORDER WAS ALS O NOT PROVIDED. THE DETAIL AS TO AMOUNT OF LOSS EITHER TO THE PURCHASER OF GOO DS OR TO THE ASSESSEE WAS ALSO NOT PROVIDED. THE VARIATION IN PRICES WHICH WOULD H AVE CAUSED THE LOSS ARE ALSO NOT PROVIDED. THE DETAIL OF ANY ATTEMPT TO SETTLE DOWN THE DISPUTE FOR THE RETURN OF MONEY WAS ALSO NOT PROVIDED. IN FACT THERE IS NO CLAIM THAT THERE WAS ANY ATTEMPT TO THE CLAIM. NO PARTY HAVING PAID MONEY TO THE ASSESSEE FOR PURCHASE OF THE GOODS WOULD FORGO ITS MONEY IF IT CANCELS TH E ORDER. IT WOULD PREFER TO SETTLE DOWN ON AN AMOUNT BY BEARING A BURDEN OF MON EY AS LOSS AND NOT FORGOING ENTIRE SUM AND TOTALLY DISAPPEARING FROM T HE SCENE. THE INGREDIENT ABOUT A BONA FIDE CLAIM IS THAT THE ASSESSEE SHOULD BE ABLE TO SHOW OR PROVE SOME INTERMEDIATE STEPS IN THE WHOLE PROCESS OF TRA NSACTION. IF IT IS NOT ABLE TO GIVE EVIDENCE IN RESPECT OF ANY STEP IN THE WHOLE P ROCESS OF TRANSACTION THEN IT CAN BE SAID THAT EXPLANATION FURNISHED BY THE ASSES SEE IS NOT BONA FIDE. IT IS ITA NO.702/AHD/2008 A.Y. 2004-05 GOYAL INDS. LTD. V. DCIT CIR-1 SRT PAGE 10 NOTHING BUT A BALD CLAIM. THERE IS NOTHING TO SHOW THAT THE DETAILS OF THE FUNDS AS CLAIMED BY THE ASSESSEE HAVE ACTUALLY COME FROM THE ALLEGED PURCHASER OR OF ALLEGED TRANSACTION OR OF ALLEGE FAILURE OF THE TRA NSACTION. THUS THE EXPLANATION FURNISHED BY THE ASSESSEE CANNOT BE TREATED AS BONA FIDE. 11. REGARDING THE THIRD CONDITION THAT ALL THE FACT S RELATING TO THE EXPLANATION AND COMPUTATION OF INCOME HAS BEEN DISCLOSED BY THE ASSESSEE WE ARE OF THE VIEW THAT IN THE PRESENT CASE DETAILS OF THE IDENTI TY OF THE CREDITOR OR OF THE BROKER OR OF THE TERMS AND CONDITIONS OF THE PURCHA SE OR OF ATTEMPTS TO IMPORT THE GOODS FROM SINGAPORE OR OF ATTEMPT TO RETURN T HE MONEY AND OR OF ATTEMPT TO SETTLE THE DISPUTE HAVE NOT BEEN PROVIDED. IN V IEW OF THESE ALL THE THREE INGREDIENTS LAID DOWN IN EXPLANATION 1(B) ARE FULLY SATISFIED AND THEREFORE ASSESSING OFFICER CAN DEEM THE ADDITION AS INCOME I N RESPECT WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INA CCURATE PARTICULARS OF INCOME. AS A RESULT WE HOLD THAT PENALTY IS LEVIAB LE UNDER EXPLANATION 1(B) TO SEC. 271(1)(C) IN RESPECT OF ADDITION OF RS.7 LAKH. ACCORDINGLY WE CONFIRM PENALTY IN RESPECT OF THIS ADDITION. 12. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/05 /2010 SD/- SD/- (T.K.SHARMA) (D.C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD DATED : 28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 4. T HE CIT CONCERNS. 2. THE RESPONDENT. 5. THE DR ITAT AHMEDABAD 3. THE CIT(APPEALS)-I SURAT 6. GUARD FI LE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD