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2016 (1) TMI 601 - ITAT DELHI

2016 (1) TMI 601 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - Held that:- The penalty in dispute is not sustainable in the eyes of law, because the AO has not recorded any clear finding whether the assessee was guilty of concealment of income or furnishing of inaccurate particulars of income. Secondly, the notice u/s. 271(1)(c) has been issued to the assessee levying the penalty for furnishing of inaccurate particulars of income, whereas the penalty in dispute has been levied by the AO on accoun .....

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grounds of appeal read as under:- 1. The Ld. CIT(A) has failed to appreciate that no penalty can be imposed in the facts and the circumstances of the case which are equally consistent with the hypothesis that the amount does not represent concealed income with the hypothesis that it does. The explanation of the assessee merely remaining disproved, it cannot tantamount to a positive inference that the assessee s contention is false. The impugned order be therefore, quashed. 2. That the Ld. CIT(A .....

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s of the case are that the assessee is a firm, engaged in the business of Civil Construction. Assessment was completed on 29.12.2008 on total income of ₹ 13,87,426/- against returned of ₹ 3,30,470/-. The total income assessed at ₹ 13,87,426/- included ₹ 7,49,145/- which stood unexplained. The assessee firm had shown gross turnover of ₹ 1,21,03,459/-. Statement on oath of Sh. Baljeet Singh Bakshi, partner revealed that no books of accounts were maintained. It was als .....

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of the parties to whom payments has to be made as on date. Furthermore, it is not possible to conduct a business of such a huge size without keeping any account of receipts and payments. As per the AO during the course of entire assessment proceedings, the assessee had been evading reply to the queries raised and also failed to comply with the statutory notices u/s. 142(1). From the bank statement filed by the assessee and the incomplete narration of these entries filed by him the credit entry d .....

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#8377; 5,32,000/-. 4. Against the Penalty order the Assessee appealed before the ld. CIT(A), who vide impugned order dated 18.7.2014 has restricted the penalty to ₹ 3,54,771/- instead of ₹ 5,32,000/- and partly allowed the appeal of the assessee. 5. At the time of hearing, Ld. Counsel for the Assessee has stated that the penalty proceedings ought to fail, that in terms of the satisfaction note recorded in the assessment order, the penalty was initiated for furnishing of inaccurate pa .....

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of income. In other words, no proper or reasonable opportunity was given by the AO to meet the charge. The charge itself was stated to be nebulously. It has been held by the Hon ble Gujrat High Court that where the show cause notice of penalty is vague or ambiguous, no penalty is sustainable. The penalty notice contains both ingredients of penalty without satisfying the particular contravention for which the proceedings have been initiated. In such circumstances, the penalty as levied by the AO .....

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les of natural justice, in as much as, without specifying the exact charged on the Assessee, the penalty has been levied on a premise which the assessee was never told and or allowed to meet. He requested that on legal issue the issue may be cancelled. 6. On the contrary, Ld. DR relied upon the order of the Ld. CIT(A) and stated that the quantum in dispute has been upheld by the Revenue Authority and the penalty in dispute has rightly been levied by the AO, because the Assessee has not offered a .....

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how Cause to the assessee stating therein that why an order imposing the penalty of amount should not be made u/s. 271(1)(c) of the I.T. Act, 1961. After perusing the notice dated 29.12.2008 issued by the AO to the assessee, I am of the view that the AO has initiated the penalty for furnishing inaccurate particulars of income, but in the penalty order dated 28.6.2011 he has stated that he is satisfied that the assessee has concealed the true particulars of his income. For the sake of convenience .....

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of convenience, the relevant lines of para 4.1 of the impugned order passed by the Ld. CIT(A) is reproduced as under:- 4.1………….From an analysis of the original assessment order, appellate order as well as the penalty order it is clear that enough opportunity to explain the credit entries were given to the appellant at the stage of assessment, appeal and penalty proceedings. The AO as well as Ld. CIT(A) has given clear findings regarding concealment of income by the A .....

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