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2012 (7) TMI 40 - AT - Income TaxDeletion of penalty levied u/s 271(1)(C) - assessment was completed u/s 143(3) r.w.s 147 determining the income of the assessee with making addition - AO levied the penalty on addition of Rs.14 lakhs to cash credit as assessee failed to file PAN or confirmation in respect of the depositors - Held that:- As assessee could not substantiate the source of deposits to the satisfaction of the A.O. therefore, an addition was made by him. However, the law is now well settled that assessment proceedings and penal proceedings are separate and addition does not automatically leads to imposition of penalty for concealment. Before imposing penalty the A.O. is required to bring on record certain facts which lead to reasonable conclusion that the amount does represent the assessee’s income which was shown as deposit from other persons. In this case the deposits of Rs.14 lakhs were accepted by the assessee by account payee cheques from the depositors and copies of accounts of these depositors were also furnished to the A.O. during assessment proceedings, thus A.O. neither established that the money in fact belonged to assessee nor proved that the explanation/evidence adduced by assessee was false - penalty imposed is thus deleted - in favour of assessee.
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