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2015 (4) TMI 757 - ITAT MUMBAI

2015 (4) TMI 757 - ITAT MUMBAI - TMI - Addition on account of unexplained credit u/s 68 - Concealment penalty u/s 271(1)(c) of the Income Tax Act, 1961 - Non substantiation explanation submitted during the assessment proceedings - School fees paid by close relatives i.e. Mother-In-Law - Held that:- We have heard both the parties and their contentions have carefully been considered. It is a case where the assessee had submitted the explanation during the assessment proceeding itself and the sourc .....

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pon assessment year 2005-06 and the addition has been confirmed for the reason that source and genuineness of the transaction was not accepted in A.Y 2005-06. It is also observed that assessee did not file corroborating evidence. Considering these facts and circumstances of the case, though the non-substantiation of explanation during the course of assessment proceedings may be a good ground for making the addition but while levying the penalty, there should be some material on record to suggest .....

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has been admitted on the impugned addition, then no case is made out for imposition of penalty. - Decided in favour of assessee. - ITA NO.4224/MUM/2013 - Dated:- 5-3-2015 - Shri I.P. Bansal And Shri R.C.Sharma JJ For the Appellant : Shri Jeetendra Jain For the Respondent : Shri Akhilendra Yadav ORDER PER I.P.BANSAL, J.M: This is an appeal filed by the assessee and is directed against order passed by Ld. CIT(A)-3, Mumbai dated 26/04/2013 for assessment year 2006-07. Grounds of appeal read as un .....

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payment and as such he has not concealed the identity or source of payment of the same and that merely because the Appellants explanation has not been accepted by the ITO cannot lead to addition as unexplained credit under section 68 of the Act so as to enable the ITO to levy concealment penalty under section 271(1)(c). 2. At the outset it may be mentioned here that Ld. CIT(A) has given substantial relief to the assessee, therefore, it was considered necessary to enquire from the Department that .....

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t against impugned order passed by Ld. CIT(A). 3. The impugned penalty was levied on two additions aggregating to ₹ 1,37,26,052/- (Rs.16,44,426/- as school fee of the children and ₹ 1,20,81,606/- being amount received from producers as advance). The subject matter of present appeal is addition on account of school fee, as on other additions Ld. CIT(A) has deleted the concealment penalty. 3.1 School fee of children was added by the AO in the assessment order as per following observati .....

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same ₹ 16,44,426/- is being added to the total income being unexplained investment u/s. 68 of the Act. Penalty proceedings u/s. 271(1)(c) is being separately initiated for furnishing inaccurate particulars of income. The aforementioned addition has been confirmed by the Tribunal in quantum proceeding vide order dated 21/11/2012 passed in ITA No.7843/Mum/2010, copy of which is placed at pages 8 to 14 of the paper book. The addition has been confirmed as per following observations: 12. Grou .....

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that on the basis of the information received from the office of the Addl. Commissioner of Income Tax (CIB)-II, the notices are exhibited at Pages 39 & 40 of the Paper Book, the AO confronted the information received from the CIB to the assessee and gave reasonable opportunity to explain the sources of payment of fees of ₹ 7,83,313/- +8,22,213/- to American School of Bombay. We also find that the assessee has filed a simple confirmation and copy of the passport exhibited at pages 42 & .....

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which has been paid by Mrs. Claude M. Grout nor she has given any details of her bank account , further , the mode of payments has also not been mentioned . Even the assessee has not filed any other corroborative evidence to substantiate his claim that the payment of school fees has been made by his mother-in-law. Even before us the assessee could not supply the copy of the bank statements from which the amount has been transmitted to India. But the fact is that payment Of ₹ 1644426.00 has .....

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and the source and the genuineness of the transaction has not been accepted by us in the earlier year, following our own findings, ground No.8 is dismissed. 3.2 Against the aforementioned order passed by the Tribunal an appeal was filed by the assessee before Hon ble Bombay High Court and vide order dated 03/04/2013 passed in Income Tax Appeal No.240 of 2013 the following questions of law have been admitted and copy of such order has been filed at page-15 of the paper book. INCOME TAX APPEAL No. .....

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d of accounting regularly employed by the appellant and accepted by the Revenue? b) Whether discharge of moral obligation of the Appellant directed by his motherin- law without any repayment obligation can be brought to tax under Section 68 of the Income-tax Act? (M.S. Sanklecha, J) (J.P.Devadhar, J.) 3.3 On these facts, it is the case of the assessee that on merits penalty is not leviable as the assessee has submitted an explanation that in view of financial difficulty being faced by the assess .....

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same is enclosed herewith for your record. 3.4 It was submitted that mother-in-law of the assessee is non-resident and her confirmation and copy of passport was also submitted. As assessee could not submit bank account of his mother-in-law the addition was made. It was further submitted by Ld. AR that since question of law has been admitted by Hon ble Bombay High Court, the issue of levy of concealment penalty would become debatable as per decision of Tribunal in the case of Nayan Builders and D .....

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levy of penalty cannot be held to be justified. 4. On the other hand, it was submitted by Ld. DR that assessee could not prove genuineness and creditworthiness of the mother-in-law of the assessee, therefore, the addition has been confirmed by the Tribunal and in view of these facts the assessee has concealed particulars of his income and Ld. CIT(A) has rightly upheld the penalty. His order should be upheld. 5. We have heard both the parties and their contentions have carefully been considered. .....

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he source of payment was mother-in-law is not correct. The aforementioned addition was made on account of information received by the Department and explanation was filed by the assessee. The Tribunal also upheld the addition by relying upon assessment year 2005-06 and the addition has been confirmed for the reason that source and genuineness of the transaction was not accepted in A.Y 2005-06. It is also observed that assessee did not file corroborating evidence. Considering these facts and circ .....

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e opinion that it is not a very fit case for levy of concealment penalty. 5.1 Moreover, as per decision of Hon ble Bombay High Court in the case of Nayan Builders & Developers (supra) when a question of law has been admitted on the impugned addition, then no case is made out for imposition of penalty. For the sake of completeness, the relevant portion of the findings recorded by the Tribunal in that case and the observation of their Lordships from High Court decisions are reproduced. Observa .....

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luding Rupam Mercantile Vs. DCIT (2004) 91 ITD 237 (Ahd) ™ and Smt. Raila Ratilal Shah vs. ACIT [1998] 60 TTJ (Ahd) 171. The admission of substantial question of Law by the Hon ble High Court lend credence to the bona fides of the assessee in claiming deduction. Once it turns out that the claim of the assessee could have been considered for the deduction as per a person properly instructed in law and is not completely debarred at all, the mere fact of confirmation of disallowance would not .....

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