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2014 (7) TMI 374 - AT - Income TaxPenalty u/s 271(1)(c) of the Act – Addition u/s 68 of the Act - Unexplained credit entries in bank account - Held that:- The only ground for levying the penalty is that the CIT(A) has also upheld the addition made by the AO - This reason alone cannot be held to be the basis for levy of penalty - the findings given in the assessment proceedings alone, may not justify imposition of penalty, as the consideration that arise in the penalty proceedings are different from those in the assessment proceeding - The findings in the quantum proceedings, though have a probative value, but in the penalty proceedings the explanation and the materials have to be reappraise afresh to examine, whether the assessee is guilty of concealment of income or furnishing of inaccurate particulars. CIT(A) has also not tried to deal with the assessee’s explanation in proper perspective and without considering the assessee’s explanation in the objective manner - both the authorities have failed to consider the assessee’s explanation - as regards the amount of income surrendered during the course of search, the assessee’s explanation has been that, he has been carrying on the business of catering which he wanted to discontinue and was in the process of handing over his business to his brother, Mr. Vinod Sangoi - the assessee was under bonafide presumption that the said account has also been handed over to his brother, therefore, he did not examine the cash deposits made in the various assessment years - assessee has further submitted that the provisions of Explanation 5 to section 271(1)(c) is not applicable qua this addition on account of surrender, as he has satisfied the necessary conditions for getting the benefit under Explanation 5 - similar explanation given by the assessee in the subsequent years, wherein similar kind of deposits were found and were surrendered at the time of search, the Tribunal has dealt the assessee’s explanation in detail and has confirmed the penalty - Since similar facts are permeating in this year also, the said finding will apply mutatis mutandis in this year also qua the amount of surrender – thus, the levy of penalty on the addition of ₹ 3,04,500, which was declared during the course of search u/s 132(4) is upheld. Once the assessee has given the explanation, which on the facts of the case is probable explanation and also substantiates prima-facie from material on record and other attendant facts, then the onus shifts upon the AO to show that such an explanation is false or not bonafide and then only the AO can proceed to levy the penalty - after the assessee’s explanation, neither the AO nor the CIT(A) has been able to rebut the assessee’s explanation as false - the penalty levied is unwarranted - levy of penalty on addition made on account of credit appearing in the bank account, penalty u/s 271(1)(c) cannot be confirmed – thus, the order of the CIT(A) is set aside - Thus, the penalty u/s 271(1)(c) is confirmed on the addition of ₹ 3,04,500 and penalty is deleted on the addition of ₹ 7,58,234 – Decided partly in favour of Assessee.
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