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TMI Blog2015 (10) TMI 2476X X X X Extracts X X X X X X X X Extracts X X X X ..... company is engaged in the business of manufacturing sarees and it filed its return of income on 3.2.2006 declaring a total income of Rs. 1,242/-. Assessment proceedings were initiated by Assessing Officer by issuance of notice u/s 143(2) which was served on assessee on 12.10.2007. However, even after various opportunities provided to assessee it did not turn up before the Assessing Officer and as a result, the Assessing Officer passed best judgment order under section 144 of the Act, assessing the income at Rs. 12,06,240/- making two additions; (i) at Rs. 12,00,000/- under section 68 for not establishing the identity of unsecured loans of Rs. 12,00,000/- and (ii) at Rs. 5,000/- income from sale of scraps. 3. Against the order passed u/s 144 by the Assessing Officer, assessee went in appeal before the CIT(A) on account of addition of Rs. 12,00,000/- on account of unexplained cash credit u/s 68 of the Act. During the appellate proceedings the assessee submitted before the CIT(A) that this Rs. 12,00,000/- was taken as loan from assessee's group company namely M/s Poonam Dyeing & Printing Mills Pvt. Ltd. during financial year 2005-06 by account payee cheque. Assessee also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is unanswered, the addition made by the A.O. is confirmed and this ground of appeal is dismissed." 5. Aggrieved assessee in now in appeal before the Tribunal. Ld. A.R. submitted that assessee has furnished necessary details before the A.O. as well as CIT(A) during the penalty proceedings u/s.271(1)(c) but none of lower authorities have looked into the merits of the documents submitted by the assessee and also placed reliance on the decision of Hon'ble Jurisdictional High Court in case of National Textile vs. CIT 249 ITR125 and CIT vs. Jalaram Oil Mills 253 ITR 192. On other hand, ld. D.R. supported the orders of lower authorities. 6. We have heard the rival submissions and gone through the facts and circumstances of the case and perused the material available on record. The issue in appeal is imposition of penalty of Rs. 4,03,920/- by the A.O. and confirmed by the CIT(A) in regard to the confirmed addition of quantum of Rs. 12lacs up to the level of 6.1 Assessment proceedings u/s.143(3) and penalty proceedings u/s.271(1)(c) are separate proceedings and the A.O. should pass his order on the basis of facts and supporting evidences available at the particular point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the assessee's case is false, the Explanation cannot help the Department because there will be no material to show that the amount in question was the income of the assessee. Alternatively, treating the Explanation as dealing with both the ingredients (i) and (ii) above, where the circumstances do not lead to the reasonable and positive inference that the assessee's explanation is false, the assessee must be held to have proved that there was no mens rea or guilty mind on his part. Even in this view of the matter the Explanation alone cannot justify levy of penalty. Absence of proof acceptable to the Department cannot be equated with fraud or willful default. Held, that in the instant case the cash credits were not satisfactorily explained by evidence and documents. The parties who had advanced the alleged temporary loans were neither disclosed nor were there any supporting documents on record. The accountant, who had arranged the loans was not produced and it was stated that he had left the service as relations wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause an addition has been made by invoking the provisions of section 68 of the Act, penalty under section 271(1)(c) of the Act would follow as a natural corollary. Held accordingly, that in the present case, on the basis of the assessee agreeing to have credit entries in its books of account treated as its income by virtue of the provisions of section 68 of the Act, the said sums would be deemed to be income of the year under consideration. However, de hors the said provision, it was not possible to state with certainty that the said sums would be "concealed income" of the assessee for the year under consideration. The Tribunal had recorded a finding of fact to the effect that there was no past history of the assessee to show that the assessee had been earning business income outside the books, nor was there in the books relating to the year under consideration any instance pointed out indicating any transaction outside the books. The Tribunal was justified in holding that the penalty of Rs. 30,000 imposed by the Inspecting Assistant Commissioner under section 271(1)(c) could not be sustained." From the ratio of above decisions, it emerges that in order to justify the levy of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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