TMI Blog2010 (3) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Divatia for the Appellant. Shri M.C. Pandit for the Respondent. D.C. Agrawal, Accountant Member .- These are three appeals on levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, one is filed by the assessee for the assessment year 1999-2000 and other two are filed for the assessment year 2000-01 and are the cross-appeals one filed by the assessee and the other filed by the Revenue arising from the order of the learned Commissioner of Income-tax (Appeals) dated August 10, 2009. 2. The facts of the case are that the assessee is an individual. A search was carried out by the Ahmedabad police on August 26, 2003 at the premises known as M/s. Kalgi from where cash, gold, jewellery and various documents were foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, in respect of other addition of treating gift as not genuine, the Assessing Officer rejected the explanation of the assessee filed in response to penalty notice and held that the assessee failed to prove the genuineness of the gift. He accordingly, levied penalty under section 271(1)(c) in respect of these two additions. 4. The learned Commissioner of Income-tax (Appeals) deleted the penalty in respect of the gift. He observed that the explanation furnished by the assessee has not been found to be false or inaccurate. He accordingly cancelled the penalty on gift but confirmed the penalty in respect of claim of short-term capital loss by holding that the entire transaction of claiming loss was sham and explanation/details furnished were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of levy of penalty Explanation 1 to section 271(1)(c) reads as under : "271. Failure to furnish returns, comply with notices, concealment of income, etc.-(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person-... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,- (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such explanation is bona fide and (iii) that all the facts relating to the same and material to the computation of total income have been disclosed by him. 9. In the instant case the assessee has offered an explanation which on the face of it appears to be bona fide inasmuch as the assessee has furnished the details of the persons to whom advance was given in addition to the agreement to purchase the land and consent deed. There is no finding by the Assessing Officer that the identity of the persons with whom transactions were entered into were fictitious or that they did not have the land or that they have returned the money or advance to the assessee. The payment of advance was given through cheque. Unless it is found that money as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention to hold the land as investment, or had enough resources to enable him to purchase the land, or whether the asset as such was capable of being transferred, or whether the asset under transfer existed at all. 10. Since no material has been brought on record by the Assessing Officer to show that transactions of entering into purchase agreement or consent deed was in fact sham, we are unable to uphold this inference of the authorities below. Once this inference is taken out of the reasoning given by the Assessing Officer or the learned Commissioner of Income-tax (Appeals) for levy of penalty then nothing survives to hold that the case of the assessee falls within Explanation 1(B) to section 271(1)(c). In fact, the assessee has offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer. Addition in respect of this amount has been confirmed by the learned Commissioner of Income-tax (Appeals) as well as by the Tribunal. 14. We have heard the parties. The facts relating to levy of penalty of this amount are similar to the facts for the assessment year 1999-2000. Penalty has been levied under Explanation 1(B) to section 271(1)(c). We notice that except rejecting the explanation of the assessee, the Assessing Officer has not brought any positive material on record to suggest that gift received by the assessee was not genuine. To reject the explanation of the assessee is one thing and to show by positive material that the claim of the assessee is not genuine is another thing. Penalty can be sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X
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