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2016 (3) TMI 862 - AT - Income TaxPenalty u/s. 271(1)(c) - outstanding excise duty - Excise Department has carried out an inspection on the premises of the assessee - Held that:- The stand of the assessee is that invoice value shown by it was of ₹ 9,33,500/-. This invoice value has been revised by the Excise Authorities to the figure of ₹ 15,69,724/-. It puts a tax liability of ₹ 1,03,832/-. Keeping in view the smallness of the amount involved the assessee did not litigate with the Excise Authorities. According to the assessee, it does not mean that he has accepted the calculation made by the Excise Authorities, even for the purpose of visiting the assessee with penalty. We have perused the assessment orders, i.e., dated 04.02.2007 as well as 29.12.2010 passed u/s 143(3) and 143(3) r.w.s. 263 of the Income-tax Act. We find that the Assessing Officer nowhere independently analyzed the material or the evidences collected by Excise Authorities. He simply proceeded against the assessee on the basis of information collected from Excise Authorities. The nature of that information has never been analyzed for the purpose of making addition to the income of the assessee. That type of evidence cannot be relied upon for the purpose of visiting the assessee with penalty. The degree of evidence ought to be of a little higher standard, because the penalty proceedings could expose the assessee with prosecution also. Merely the assessee did not dispute with Excise Authorities does not mean that, in case of penalty proceedings if it challenges the very basis of addition, it will be denuded from his rights to challenge the nature of evidence. In our opinion, the evidence relied upon by the Assessing Officer does not falsify the explanation of the assessee as discernable from the note no.2 of the Auditors’ Report prepared u/s 44AB of the Act. In view of the above discussion, we allow the appeal of the assessee and delete the penalty. - Decided in favour of assessee
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