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2022 (6) TMI 452 - AT - Income TaxUnexplained/ unaccounted income - Addition on account of mismatch of the cash shown in the cash book viz a viz audited financial statement at the end of the financial year as on 31st of March 2011 - whether the difference in the cash balance between the cash book viz a viz audited financial statement as on 31 March 2011 gives rise to the taxable income of the assessee? - HELD THAT:- Merely observing the difference in the manner as discussed above does not give any authority to draw an inference that there was unaccounted/undisclosed income of the assessee. The income cannot be determined merely on the basis of documents/papers until and unless it is corroborated by the tangible materials. There can be numerous reasons for the difference in the cash balance as discussed above but that difference does not lead to draw any adverse inference against the assessee. For example, there was the advance received by the assessee in cash which was entered in the cash book but the same was not incorporated in the balance sheet. Such advance received cannot be categorized as income of the assessee. Likewise there can be receipt of money from the debtors which can again not be categorized as income of the assessee. We are not in agreement with the basis adopted by the authorities below to draw an inference that there was unaccounted income/undisclosed income of the assessee until and unless it is based on some tangible materials. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. Penalty u/s 271(1)(c) - hundred percent of tax sought to be evaded on account of furnishing inaccurate particulars of income - HELD THAT:- Under the provisions of section 271(1)(c) of the Act the amount of penalty has been specified which shall not be less than hundred percent of the amount of tax sought to be evaded subject to the maximum limit of 300% of such amount. Under explanation 4 to section 271(1)(c) of the Act, the manner for quantifying the amount of tax sought to be evaded has been specified which has direct nexus with the additions/ disallowances made during the quantum proceedings. Therefore, where the quantum additions/disallowances have been deleted, then the manner of quantifying the amount of penalty under explanation 4 to section 271(1)(c) of the Act as discussed above fails. Accordingly, we are of the view that that there cannot be any penalty with respect to the quantum additions which have been deleted whether on merit or on technical grounds. Thus, we find no reason to uphold the order of the learned CIT-A and therefore the AO is directed to delete the penalty levied by him. Hence, the ground of appeal of the assessee is allowed.
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