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2015 (10) TMI 2476 - ITAT AHMEDABAD

2015 (10) TMI 2476 - ITAT AHMEDABAD - TMI - Penalty u/s 271(1)(c) - cash credit taken from the sister concern - Held that:- Relying upon the decisions of Hon’ble Jurisdictional High Court in case of National Textile vs. CIT (2000 (10) TMI 19 - GUJARAT High Court ) and CIT vs. Jalaram Oil Mills (2001 (6) TMI 15 - GUJARAT High Court) as well as to discussions made it is of the confirmed view that proceedings u/s. 271(1)(c) of the Act are separate proceedings and the observations and findings made .....

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ear directions to examine on merit the evidences and supporting documents to be submitted by assessee before him for proving the identity, creditworthiness and genuineness of the cash credit taken from its sister concern M/s Poonam Dyeing & Printing Mills Pvt. Ltd. and accordingly, should decide the issue of imposing penalty u/s.271(1)(c) of the Act. - Decided in favour of assessee for statistical purposes. - ITA No. 3180/Ahd/2011 - Dated:- 23-10-2015 - S/Shri Rajpal Yadav, JM, & Manish Bora .....

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e case learned assessing officer erred in imposing penalty of ₹ 4,03,920/- for concealment of income by way of furnishing inaccurate particulars u/s 271(1)(c) on account of unsecured loan of ₹ 12,00,000/- received from sister concern. 2) The appellant craves leave to add, alter, delete or modify any ground appeal. 2. Briefly stated the facts of the case are that the assessee company is engaged in the business of manufacturing sarees and it filed its return of income on 3.2.2006 decla .....

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establishing the identity of unsecured loans of ₹ 12,00,000/- and (ii) at ₹ 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 ₹ 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 ₹ 12,00,000/- was taken as loan from assessee s group company namely M/s Poona .....

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CIT(A) without adjudicating the facts brought before him, sustained the addition made by the Assessing Officer on the reason that during the assessment proceedings before the Assessing Officer, appellant failed to discharge its onus to prove the identity of the loans and genuineness of the transaction as also the creditworthiness of the loans. Assessee was not able to get any relief from ITAT in the appeal filed against the order of CIT(A). As a result, A.O. went ahead to initiate the penalty pr .....

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ions and supporting documents filed by the assessee. 4. Aggrieved assessee went in appeal before the CIT(A) against the penalty imposed by the A.O. at ₹ 4,03,920/- and again filed all the relevant details before the CIT(A), but was unable to convince CIT(A) who confirmed the penalty imposed by the A.O. who observed in his order as under: 3.3 I have considered the submission made by the appellant and the observation of the A.O. Neither during the assessment proceedings nor during the appell .....

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rmation from the said company. Since this 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 Ho .....

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cs 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 of time and should not co-relate the two proceedings and nor should have a pre-determined view taken by him in the previous proceedings. In the case under appeal, A.O. made addition of ₹ 12lacs in his order passed u/s.144 on account of unexplained cash cr .....

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e has not furnished the required details at the time of regular assessment proceedings. Further, Hon ble Jurisdictional High Court in the case of National Textile vs. CIT (supra) has held as under :- The provisions of section 68 of the Income-tax Act, 1961, permitting the Assessing Officer to treat unexplained cash credits as income are enabling provisions for making certain additions where there is failure by the assessee to give an explanation or where the explanation is not to the satisfactio .....

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nt has been assessed as income, and (ii) the circumstances must show that there was animus, i.e. conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. Explanation 1 to section 271(1)(c) has no bearing on factor No.1 but has a bearing only on factor No.2. The explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equa .....

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planation 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 ca .....

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t merely on that basis by recourse to Explanation 1, penalty under section 271(1)(c) could not have been imposed without the Department making any other effort to come to the conclusion that the cash credits could in no circumstances have been amounts received as temporary loans from various parties. Admittedly the assessee in the quantum proceedings failed to produce the accountant but the Department also in penalty proceedings made no effort to summon him. Therefore, it was a case where there .....

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271(1)(c) of the Income-tax Act, 1961, provides that in case there is a difference, as statutorily provided, between the total income returned by any person and the income assessed, such person shall have to prove that the failure to return the correct income was not due to any fraud or any gross or willful neglect on his part. In the absence of such burden being discharged by the person concerned it will be deemed that particulars of income have been concealed or inaccurate particulars of incom .....

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ed may be charged as the income of the assessee for that previous year. The word may has been used in section 68 and so if an addition is not warranted in each and every case, there cannot be a situation where, merely because 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 boo .....

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ncome 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 ₹ 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 penalty two factors must co-exist; (i) there must be some material or circumstances .....

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