TMI Blog2011 (6) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's case as a source of investment. Therefore, penalty is leviable on this ground. AO is directed to recompute penalty - Decided partly in favor of asseseee. - IT Appeal No. 646 (Hyd.) of 2011 - - - Dated:- 30-6-2011 - G.C. GUPTA, CHANDRA POOJARI, JJ. A.V. Raghuram for the Appellant. T. Diwakar Prasad for the Respondent. ORDER Chandra Poojari, Accountant Member This appeal by the assessee for the assessment year 1992-93 is directed against the order of the Commissioner of Income-tax(Appeals)-II, Hyderabad dated 14.3.2011. 2. The only issue involved in this appeal relates to validity of the penalty imposed under S.271(1)(c) of the Income-tax Act, 1961. 3. Facts of the case in brief are that the assessee was working as a Government lecturer. During the year 1990-91, the assessee went on extraordinary leave and ventured into real estate business and made profits for the assessment years 1991-92 and 1992-93. On 4.11.1993, a search and seizure operation under s.132 of the Act was conducted at the premises of the assessee. During the said operation, certain papers/documents relating to real estate business/land deals were seized. It was found that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower authorities submitted that the assessing officer has treated even the income returned by the case of Rs.45,555 as the concealed income of the assessee. He also submitted that even the estimated additions/disallowances made in the assessment were treated as the concealed income of the assessee which is not justified. Since such estimated additions are made only on account of difference of opinion between the assessee and the Department or on account of assessee's inability to substantiate the claim for expenses to the satisfaction of the assessing officer, such estimated additions/disallowance cannot lead to the inference of concealment of income on the part of the assessee. As for the penalty levied with regard to unproved credits, which prompted the assessing officer to make an addition of Rs. 2,40,000 in the assessment, it is submitted that the assessee has done all that that was possible to establish the genuineness of the said credits, and still not satisfied with the evidence adduced by the assessee, the assessing officer has made the addition in question, but merely based on such additions made in assessment, it is not possible to impose penalty treating such additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) that "where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty u/s 271 (1) (c). A mere making of a claim, which is not sustainable in law, by itself, will amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars". On this count, in our opinion, penalty u/s 271(1) (c) is not leviable. 10.1 However, the same cannot be said about the following additions: Addition made on account of unexplained credits, which were claimed to have been received on account of- ( a ) Loan from Y. Venkateswara Rao Rs. 50,000 Rs. 2,40,000 ( b ) Loan from Ramabrahmam Rs.1,00,000 ( c ) Loan from N. Ramanujachari Rs. 50,000 ( d ) Sale of gold Bangles Rs. 40,000 Onus of the assessee during the assessment proceedings is confined to evidence regarding identity of the creditor, creditworthiness of the creditor and genuineness of the transactions, however, in penalty proceedings it is not the case that ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's claim would not be sufficient and the assessee cannot be held guilty of concealment. It is by virtue of explanation that Assessing Officer can raise the presumption about additions made to the total income or deduction disallowed that it represents assessee's concealed income or the income in respect of which assessee has furnished inaccurate particulars. When we examine part B of Explanation 1 carefully then we are of the view that the words 'not substantiate' used in that clause does not mean that is not accepted by the concerned authority, but it means that there is no substance in the claim made by the assessee. The word 'substantiate' is opposite to the word 'vague' or 'fanciful' or 'without any foundation or basis'. The phrase 'to prove that such explanation is bona fide' means that the assessee has to show that circumstances existed whereby it has made the claim, or that, as in the present case, it had in fact received the money from the creditors but their credentials cannot be established. It has to be proved that failure of the assessee to furnish evidence in support the claim was beyond his control. Assessee has to prove or furnish evidence that circumstances ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is apparently vague, fanciful and without any coordination or basis. In respect of second condition, in Explanation 1(B), we are of the view that explanation furnished by the assessee is not bona fide. The assessee has explained that the money has been received as a loan from three parties and sale of gold bangles. This explanation is found to be unsubstantiated coupled with the bundle of contradictions leading to the belief that it is untrue. There is no evidence that the assessee really availed any loan from Shri Y. Venkateswara Rao, Ramabrahman and Shri N. Ramanujacharilu or there was any sale of gold. The ingredient about a bona fide claim is that the assessee should be able to show or prove some immediate steps in the whole process of transaction., If it is not able to give evidence in respect of any step in the whole process of transaction then it can be said that the explanation furnished by the assessee is not bona fide. It is nothing but a bald claim. There is nothing to show that the details of the funds as claimed by the assessee have actually come from the alleged lender or sale of gold. Thus, the explanation furnished by the assessee cannot be treated as bona fide. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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