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2017 (2) TMI 1120 - ITAT PUNELevy of penalty u/s. 271(1)(c) - additions made u/s. 69C and u/s. 68 - cash credit entries found in the books of account of partnership firm in which the assessee was a partner - Held that:- In the present case, we find that addition u/s. 68 has been made on the basis of entries in the diaries found during survey at the premises of one of the former Director of the assessee company. There is no evidence on record to show that any transfer of money either through cheque or cash during the year under consideration was recorded in the books of account of the assessee. Under such circumstances we are of the opinion that the addition u/s. 68 is not sustainable. The Hon’ble Punjab and Haryana High Court in the case of Smt. Shanta Devi Vs. Commissioner of Income Tax (1987 (10) TMI 26 - PUNJAB AND HARYANA High Court ) deleted the addition u/s. 68 in the hands of assessee, where cash credit entries were found in the books of account of the partnership firm in which the assessee was partner. Since, the addition made u/s. 68 is itself not sustainable there is no question of levy of penalty on such addition. Thus, we are of the considered view that levy of penalty u/s. 271(1)(c) of the Act on addition made u/s. 68 of the Act is liable to be set aside. One of the contention of the assessee before the First Appellate Authority was to grant the benefit of telescoping in penalty proceedings in respect of the additions made during assessment. The Commissioner of Income Tax (Appeals) rejecting the contentions of the assessee on merits and accepting the alternate submissions of the assessee granted the benefit of telescoping. Neither the ld. AR nor the ld. DR could substantiate the error in the findings of Commissioner of Income Tax (Appeals) in extending the benefit of telescoping. Thus, we uphold the benefit of telescoping granted by the Commissioner of Income Tax (Appeals). Accordingly, the solitary ground raised by the Department in appeal and the submissions of the assessee assailing penalty on addition made u/s. 69C are dismissed. -Decided in favour of assessee.
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