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2016 (5) TMI 367 - AT - Income TaxPenalty levied U/s 271(1)(c) - unexplained investment U/s 69A - Held that:- It is a fact that the assessee’s father was 90 years old suffering from cancer, have not been denied. The fact that the earlier gift of ₹ 13.75 lacs from the father has not been disputed by the department. The ld CIT(A) while confirming the penalty has relied only on the observation of the ITAT in quantum proceedings. It is a settled law that the penalty proceedings are neither mechanical nor automatic and merely because there is a finding in the quantum order making the addition by itself cannot justify for imposition of penalty more so when the assessee had disputed the addition. The assessee’s reliance on the decision in the case of Eilly Litty & Compnay and National Textiles (2009 (3) TMI 33 - SUPREME COURT ) is well founded. Thus the ld CIT(A) except relying on the observations of the ITAT has done nothing to hold the assessee’s explanation was false and any other material to draw an inference qua the imposition of penalty. The assessee has given a reasonable explanation on merits about the gift and while considering the penalty issue, nothing adverse has been commented thereon except the finding of the ITAT. It is a settled law that penalty proceedings are distinguished and separate and assessee can raise fresh plea in the penalty proceedings, which has been done in this case. Having raised proper explanation and please in the penalty proceedings, it was incumbent on the CIT(A) to have considered the reply as an appellate authority and given proper findings. The mere reference to ITAT in quantum proceedings, which are separate and distinguish, cannot partake a character of exercise of appeal discretion by the ld CIT(A). In view thereof, the case before us is not fit for imposition of penalty, the same is deleted. - Decided in favour of assessee
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