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2005 (2) TMI 93 - KARNATAKA HIGH COURTPenalty levied u/s 271(1)(c) - concealment of income in respect of the unexplained cash credits - HELD THAT:- It is clear from Explanation 1(B) to section 271(1)(c) of the Act that while computing the total income of an assessee, if the assessee fails to prove that such explanation is bona fide then there will be a deemed concealment by the assessee. In the instant case, in response to the notice issued by the Income-tax Officer for addition of Rs. 2,01,000, the assessee replied that he borrowed the same from different creditors who are all agriculturists. When the assessee was asked to substantiate this claim, the assessee made attempts to secure those creditors to examine before the Income-tax Officer. Accordingly, the Income-tax Officer computed the total income of the assessee at Rs.2,99,500, vide order of assessment dated August 3, 1994, and on that the assessee has paid the taxes. Thus, it cannot be said that the explanation of the assessee for non-inclusion of an income of Rs. 2,01,000 in his return of income is not bona fide. The explanation offered by the assessee is available on record. Bona fide failure on the part of the assessee in not substantiating his claim is also available on record. The Income-tax Officer, while passing the order of penalty u/s 271(1)(c) of the Act, has not considered the available explanation of the assessee and whether the explanation so offered is bona fide or not. The Tribunal, by considering these facts, concluded that the levy of penalty by the Income-tax Officer and the confirmation of the same by the CIT (A) is not just and proper and set aside the same. The order of the Tribunal in setting aside the penalty proceedings on the basis of the material on record, in our opinion, is just and proper. Thus, the question of law referred to us is answered in the affirmative and against the Revenue. Ordered accordingly.
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