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2017 (2) TMI 1088 - ITAT MUMBAIPenalty u/s 271(1)(c) - additions on the basis of the ‘material’ gathered by the department during the course of the survey proceedings - non submission of incriminating material - Held that:- The estimation of the income of the assessee firm was duly justified, but then in light of the fact that the lower authorities till date had failed to place on record any such incriminating material gathered during the course of the survey proceedings, which could establish beyond any scope of doubt the ‘concealment of income’ on the part of the assessee, and therein irrebutably prove that the ‘financial statements’ of the assessee firm so filed with the department were far from the true state of affairs, the levy of penalty u/s 271(1)(c) cannot be justified. We are rather surprised to find that despite tall claims that substantial corroborative evidence in the nature of incriminating documents was unearthed by the department during the course of the survey proceedings and Xerox copies of the same had been obtained during the course of the said proceedings, the A.O however only during the course of the original assessment proceedings had only referred to and acted upon a set of 4 documents which were obtained by the survey officials during the course of the survey proceedings for justifying the addition of ₹ 15 lac in A.Y. 1997-98 and ₹ 20 lac in A.Y. 1998-99, which too were undisputedly found to be relatable to the period relevant to A.Y. 1999-2000. We are unable to understand that despite specific directions by the Tribunal to the A.O to make additions on the basis of the ‘material’ gathered by the department during the course of the survey proceedings, what stopped him from so doing. We are of the considered view that such failure on the part of the lower authorities to make and support additions in the hands of the assessee by placing on record ‘material’ obtained during the course of the survey proceedings, can logically only be explained for the reason that there is no such incriminating material pertaining to the year under consideration lying available with the department. We are thus of the considered view that in the backdrop of the aforesaid facts, though on the basis of the conduct of the assessee an estimated addition was justifiably called for and as such made in its hands, but falling short of any such corroborative material which could inescapably and rather irrebutably prove the factum of concealment of income on the part of the assessee firm, the levy of penalty under Sec. 271(1)(c) as regards the said addition which is solely based on a simpliciter estimation of the income of the assessee by the CIT(A), cannot be justified. A perusal of the order of the CIT(A) reveals beyond any scope of doubt that the assessee had only brought to the notice of the CIT(A) the said serious infirmity in the penalty order of the A.O, but had at no stage given up its main contention that no penalty u/s 271(1)(C) was called for in its case. Thus in totality of the facts of the present case, we are of the considered view that the penalty imposed in the hands of the assessee u/s 271(1)(c) cannot be sustained, and therefore set aside the same. The penalty imposed in the hands of the assessee under Sec. 271(1)(c) is thus vacated. - Decided in favour of assessee
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