By TIOL News Service

JAIPUR, FEB 08, 2016: THE issue is - Whether where as a finding of fact it was established on record that the assessee has shown a bogus liability in its books and had issued bearer cheques as "self cheques" so that the amount could be withdrawn by self, then no perversity in such findings can be alleged. YES is the answer.

Facts of the case

The assessee had filed its return declaring income of Rs.2,15,330/-. After examination of its books, the AO noted that the assessee had shown sundry creditors of Rs.4,76,537/- in the name of Dee Jay Steels, New Delhi, and on a further enquiry from the said creditor u/s 133(6) it transpired that notice which was sent by the AO to the address given by the assessee of the said creditor, returned undelivered by the postal authorities. The AO again desired the assessee to file complete address of the party as also the confirmation and other material to substantiate the entry shown in the name of said creditor. On further enquiry it was noticed by the AO that the account was squared up in the A.Y 2007-08 and payment of Rs.1,50,000/- was shown through three cheques of Rs.50,000/- each and balance amount was shown to be paid in cash below Rs.20,000/- on various dates. On further enquiry by the AO from the concerned bank where the cheques were drawn, the bank conveyed that all the three cheques were presented over counter by bearer of the cheques and favouring self. Faced with the said material brought on record by the AO, the assessee filed a reply mentioning therein that it could not get the confirmation from the said creditor and surrendered the amount for taxation in order to avoid further litigation and to have mental peace, and thus entire amount of Rs.4,76,537/- was offered for taxation. The AO accordingly made an addition u/s 41(1)(a).

Having heard the parties, the High Court held that,

++ in the view of this court, merely mentioning to avoid further litigation and to have mental peace does not make out that the assessee had offered the same amount subject to non initiation of penalty proceedings, and leaving that apart, the AO in our view could not have assured the assessee of non initiation of proceedings u/s 271(1)(c) or non imposition of penalty u/s 271(1)(c) for concealment and furnishing of inaccurate particulars of income as they are independent and separate proceedings. The AO had also found as a finding of fact that it was established on record that the assessee has shown a bogus liability in the books of account and even the AO was able to go into further detail that even bearer cheques were issued which were "self cheques" and the amount was withdrawn by the assessee himself and even subsequent amounts were debited to the account of the creditor on several different dates showing payment to have been made by cash to the said creditor - Dee Jay Steels, New Delhi, all amounts below Rs.20,000/-. All such findings of fact noticed by all the three authorities being essentially finding of fact, in our view the impugned order of the Tribunal is well reasoned and is not required to be interfered with as no perversity is noticed.

(See 2016-TIOL-220-HC-RAJ-IT)