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2017 (2) TMI 855 - AT - Income TaxPenalty under section 271(1)(c) - addition on peak credit in view of the statement given by the assessee’s partner - Held that:- The fact remains is that the Assessing Officer has not given opportunity of cross-examining the partner Shri Korata Srinivasa Rao, however, by relying on the statement, addition is made. When the assessee has given a detailed explanation during the course of the penalty proceedings, the Assessing Officer simply disbelieved the explanation given by the assessee. It is not the case of the Assessing Officer that the explanation given by the assessee either false or not bonafide. The case law relied on by the assessee in the case of G.R. Rajendran (2002 (10) TMI 71 - MADRAS High Court) has held that section 271(1)(c) refers to the explanation offered by the person being found to be false or not being one which the person offering the explanation is able to substantiate. The consideration of the explanation offered is, therefore, duty cast upon the officer imposing penalty. In the absence of such consideration and the finding that the explanation is false or that the assessee had failed to substantiate the explanation offered, the officer cannot proceed to hold that there has been concealment of income attracting levy of penalty. Thus it is not a fit case for imposing penalty under section 271(1)(c) of the Act. - Decided in favour of assessee
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