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2022 (4) TMI 673 - AT - Income TaxPenalty u/s. 271(1)(c) - unexplained cash credit - HELD THAT:- The assessee has furnished all the necessary details with respect to the credit entries which are placed on pages 12 to 44 of the paper book. Accordingly we hold that there was nothing which could lead to form believe that the assessee has concealed the particulars of income. In holding so we draw support and guidance from the judgment of Hon’ble Gujarat High Court in the case of Commissioner of Income-tax v. Bhuramal Manickchand [1980 (8) TMI 41 - CALCUTTA HIGH COURT] Penalty proceedings are distinct and independent to the quantum proceedings. Therefore, any addition made during the quantum proceedings cannot lead to the penalty until and unless the independent verification carried out by the authorities below during the penalty proceedings. For example, if any addition has been made under the provisions of section 68 of the Act in the absence of non-reply from the loan party during the quantum proceedings. Now, during the penalty proceedings the same exercise has also to be carried out by the revenue authorities. As such the revenue authorities cannot rely the basis enumerating from the quantum proceedings for levying the penalty. Thus order of the authorities below for levying the penalty under the provisions of section 271(1)(c) of the Act on account of concealment of income with respect to unexplained cash credit under section 68 rejected. Addition of short-term capital gain and disallowance of long-term capital loss and treating the long-term capital gain as income from other sources - Documents filed by the assessee during the penalty proceedings cannot be brushed aside for levying the penalty on the reasoning that such documents were not filed during the quantum proceedings. In the given case, the assessee has disclosed the capital gain income but failed to file the necessary documents during the assessment proceedings which were admittedly filed during the penalty proceedings in support of his transactions for the transfer of lands. As long-term capital loss declared by the assessee for ₹58,000 against the sale of properties. The property was sold at a price of ₹3 Lacs and the capital loss was calculated after claiming the index cost of acquisition of the property. But, the AO disallowed the loss shown by the assessee and treated the sale consideration of ₹3 Lacs as income from other sources. The action of the AO was based on the reasoning that the assessee failed to furnish the supporting documentary evidence. Indeed, the assessee before the learned CIT-A during the assessment proceedings has furnished the balance sheet for the year 2002-03 wherein such investment was shown. Once the assessee has filed the supporting documents, the onus is shifted upon the revenue to disprove the contention of the assessee based on the documentary evidence. However, we note that the learned CIT-A without giving any cogent reason has not considered the financial statement filed by the assessee for the year 2002-03 As the penalty proceedings are distinct and independent to the quantum proceedings, in our considered view, penalty cannot be levied merely on the reasoning that some addition was made by the AO during the quantum proceedings. There has to be independent verification by the revenue authorities with respect to the additions made during the quantum proceedings to arrive at the satisfaction that the assessee has concealed the particulars of income. But we find that, the authorities below have not done so. Addition of capital contribution made by the assessee - Penalty has been levied by the revenue authorities merely on the reasoning that there was the quantum addition made during the quantum proceedings. The penalty proceedings being distinct and independent to quantum proceedings, the additions made during quantum proceedings cannot be subject to the penalty until and unless the necessary verification is a carried out by the revenue authorities. In view of the above and after considering the facts in totality, we are not convinced with the finding of the authorities below for levying the penalty under the provisions of section 271(1)(c) of the Act. - Decided in favour of assessee.
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