TMI Blog2009 (10) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 17-12-2007 that she had taken unsecured loan from two persons the affidavit of whom were submitted before the Assessing Officer. The assessee expressed her inability about the personal presence of Sh. Rajiv Aggarwal and Smt. Sharda Devi as both the persons belong to Delhi and due to their family compulsions they are unable to commute Rudrapur. It was stated that certified copy of their personal bank account can be provided by the bank only after 10 to 15 days or the Assessing Officer can call for the information directly from the bank. The Assessing Officer noted that the assessee had submitted the copies of the affidavit of Sh. Rajiv Aggarwal and Smt. Sharda Devi from whom the assessee has shown to have taken the unsecured loan each of Rs. 5 lakh. On 17-12-2000 when the assessee attended following written submissions were made that : "...this is in reference to my earlier replies on the above subject. Further, as discussed with your kind self, I do not find myself in a position to go into litigation and in order to purchase peace, avoid litigation and to save the valuable time, request you to kindly add the amount of Unsecured Loans of Rs. 10 lakh to my income. My this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and with the condition that no penalty shall be imposed on the assessee. The assessee had duly submitted all the documentary evidence in connection with the receipt of the unsecured loan. The Assessing Officer was of the opinion that the assessee had surrendered the loan as a result of the investigation carried out by the department and after issuing notice under section 148 of the Income-tax Act, 1961 and, therefore, he took the view that it cannot be held that the assessee had not furnished inaccurate particulars of income or concealed his particulars of income and ultimately the Assessing Officer imposed the penalty on the assessee amounting to Rs. 328450 by observing as under : "In view of above discussion, the assessee is held liable for concealment of income and furnishing of inaccurate particular of income, hence, liable for penalty under section 271(1)( c ) of the Income-tax Act, 1961. Income in respect of which inaccurate particular were furnished or concealment is Rs. 10 lakh (Assessed income Rs. 11,23,463.00 minus returned income Rs. 1,23,463.00). The minimum and maximum penalty imposable is Rs. 3,28,450.00 and Rs. 9,85,350.00 respectively. However, the minimum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had concealed the income. Reliance was placed on the decision of the Apex Court in the case of Sir Sadilal Sugar General Mills Ltd. v. CIT [1987] 168 ITR 705, CIT v. Suresh Chand Mittal [2001] 251 ITR 9 that of Allahabad High Court in the case of CIT v. Mansa Ram Sons [1972] 106 ITR 307 All, CIT v. Saran Khandsari Sugar Works [2000] 246 ITR 216 (All.). Reliance was also placed on the decision of Gujarat High Court in the case of National Textiles v. CIT [2001] 249 ITR 125 for the proposition of the law that for the addition made under section 68 for the a recourse to Explanation 1 below section 271(1)( c ) is not justified. It was further contended that the Assessing Officer has not brought out any specific charge whether the assessee had concealed the income or file the inaccurate particulars of income for this our attention was drawn towards the assessment order as well the penalty order passed under section 271(1)( c ). The charge must be specific. Reliance was placed on the decision of the Gujarat High Court in the case of New Sorthia Engg. Co. v. CIT [2006] 282 ITR 642. 7. The ld. DR on the other hand, vehemently contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act, (A)such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the CIT(A) or the Commissioner to be false or (B)such person offers an explanation which he is not able to substantiate and [fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause ( C )of this sub-section be deemed to represent the income in respect of which particulars have been concealed." As per the provisions of section 271(1)( c ) the penalty under this section is leviable if the Assessing Officer is satisfied in the course of any proceeding under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. The penalty proceedings and the assessment proceedings both are different. Explanation 1 to section 271(1)( c ) in respect of any fact relating to the computation of total income states that the amount added or disallowed in comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 is being imposed, which the assessee is directed to pay." 10. We have gone through the decision of Hon ble Gujarat High Court in the case of New Sorathia Engg. Co. ( supra ) in which it was held: "It is incumbent upon the Assessing Officer to state whether the penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. Held, that the penalty order and the order of the CIT(A) showed that no clear cut finding had been reached. The Tribunal had failed to appreciate this legal issue. The ratio in CIT v. Manu Engg. Works 122 ITR 306 (Guj.) was applicable and the order of penalty could not be upheld by the Tribunal. The order was invalid. We are of the view that on this basis itself penalty order passed under section 271(1)( c ) cannot be sustained and accordingly the penalty imposed stand deleted." 11. Since both the parties has argued the case extensively, we, therefore, deal with the other submission made by them. We have noted from the facts of the case that the assessee has surrendered the sum of Rs. 10 lakh in respect of unsecured loan received by him thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). In this case the Hon ble Gujarat High Court while holding the imposition of penalty was not justified and observed : "In order to justify the levy of penalty, two factors must co-exist, ( i ) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee s income. It is not enough for the purpose of penalty that the amount has been assessed as income, and ( ii ) the circumstances must show that there was animus, i.e., conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. Explanation 1 to section 271(1)( c ) has no bearing on factor No. 1 but has a bearing only on factor No. 2. The explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income with the hypothesis that it does. If the assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1] 251 ITR 9, wherein Hon ble Court has held as under : "In the present case though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer, but once the revised assessment was regularized by the revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the CIT(A) in the facts and circumstances of the case. This reference is accordingly answered in the affirmative holding that the Tribunal was justified in doing so." The facts relating to this case are that the assessee had filed the Income-tax return showing the meager income. When after action under section 132 was taken against the assessee which led to reopening of the assessment. A notice under section 148 was served on him and pursuant thereto he filed r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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