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2017 (4) TMI 236 - AT - Income TaxPenalty levied u/s 271(1)(c) - addition u/s 68 - cash credits found in the hands of the partnership firm in the name of partner and others - Held that:- As noticed that the assessee’s only source of income is rental income and there is no charge that the assessee has suppressed its rental income. Further the year under consideration, being the first year of operation, the assessee could not have generated income to the extent of cash credits/capital credits offered by it and introduced the same in that form. Hence, in the facts and circumstances of the case discussed above, the assessment of cash credits in the first year of operation was due to legal fiction created in sec. 68 of the Act. Hence acceptance of the said assessment, in our view, would not lead to a case of concealing particulars of income or furnishing of inaccurate particulars of income. The impugned addition has been made due to legal fiction prescribed u/s 68 of the Act and there is no scope that the assessee could have earned income to the extent assessed by the partnership firm. We have also noticed that the question of assessing such cash credits in the hands of partnership firm during the first year of operation has got divergent views. Hence the entire addition itself becomes debatable one. It is well settled proposition of law that the penalty u/s 271(1)(c) cannot be levied on debatable issues. - Decided in favour of assessee
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