Latest - TMI e-Newsletter
New User/ Regiser
2022 (9) TMI 655 - Income Tax
Penalty u/s 271(1)(c) - Addition for unsecured loan u/s 68 - HELD THAT:- Assessee claimed an amount as unsecured loan from M/s Ramfin Fortunes Pvt. Ltd., which was clearly shown in the balance sheet as well as other audited financial statements of the assessee and this fact has never been controverted by the authorities below at any stage of assessment or penalty proceedings. At this stage, it is also relevant to consider the judgement in the case of CIT vs. Baroda Tin Works [1995 (9) TMI 18 - GUJARAT HIGH COURT] wherein their Lordships held that even though the addition u/s 68 was made on admission of the assessee, the Tribunal, after considering the relevant material and evidence on record drew a conclusion that the presumption under Explanation u/s 271(1)(c) stood rebutted, it was justified in deleting the penalty in the absence of any positive evidence brought by the Department.
When we consider the proposition rendered by the coordinate Bench of ITAT Mumbai in the case of Pfizer Ltd. [2012 (4) TMI 261 - ITAT MUMBAI] then we find ourselves in agreement with the contention of the ld. Counsel that for invoking clause (B) of Explanation 1 to section 271(1)(c) of the Act and both the conditions must be cumulatively satisfied so as to bring a case within the scope of imposing of penalty u/s 271(1)(c).
If only one condition is satisfied and the other is not, the penalty would not follow. In the present case, the assessee was not found able to substantiate the explanation pertaining amount of unsecured loan from M/s Ramfin Fortunes Pvt. Ltd., but, the assessee successfully proved that the explanation is bona fide and all the material facts relating to the same was disclosed by him before the authorities below - In absence of cumulative satisfaction of both the conditions as per the requirement of clause (B) of Explanation 1 to section 271(1)(c) penalty imposed by the AO and confirmed by the ld.CIT(A) cannot be held as sustainable and, thus, the AO is directed to delete the penalty - Decided in favour of assessee.