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2015 (8) TMI 1090 - AT - Income TaxPenalty under section 271(1)(c) - Held that:- What is really required to be seen by the authorities below was there was an explanation offered by the assessee which could be acceptable to a fact finding body and whether such an explanation could be said to be a bonafide explanation. We find that the explanation of the assessee is supported by the decisions of the Tribunal in Thermoflic's case (1996 (9) TMI 182 - ITAT JABALPUR) and Moped and Machine's case (2005 (8) TMI 49 - MADHYA PRADESH High Court). The fact that the assessee did not pursue the matter against this quantum addition, on merits, cannot be put against the assessee in the penalty proceedings, but then that is precisely what the authorities below have ended up doing. Quite to the contrary, the fact that the assessee has not prolonged this issue reaching finality by not challenging, before the appellate forums, the additions made by the Assessing Officer. Such a conduct should not deincentivized. We disapprove this approach in the penalty proceedings. In any case, so far as the penalty proceedings are concerned, all that is to be seen is whether explanation of the assessee is a reasonable explanation or not. In our considered view, for the detailed reasons set out the explanation of the assessee so far as non taxability of capital gains, even if that be so, on dissolution of partnership firm was a reasonable explanation which ought to have been accepted. As regards the disallowance of vehicle repairs, miscellaneous, printing and stationery expenses.for want of complete supporting evidence, such a disallowance cannot be reason enough to impose concealment penalty under section 271(1)(c). Not only that the assessee has an explanation for this claim but the explanation has been substantially accepted inasmuch as the disallowance is only for a small portion of the expenses. In view of this fact, as also bearing in mind entirety of the case, it was not a fit case for imposition of penalty on this count either. Thus it is a fit case for deletion for the impugned penalty - Decided in favour of assessee.
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