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2016 (3) TMI 414 - ITAT AHMEDABAD

2016 (3) TMI 414 - ITAT AHMEDABAD - TMI - Penalty under section 271(1)(c) - undisclosed deposits - Held that:- The assessee has given explanation about the source of deposits in the accounts. The explanation could not be substantiated with the supporting evidence, but the explanation was not held by the AO as false. Had the assessee gave confirmation from M/s.Shrinathji Corporation in the Asstt.Year 2002-03, then the addition itself would have been deleted, but the AO has not issued any notice t .....

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not held to be false. Therefore, in view of our discussion, we are of the view that the assessee does not deserve to be visited with penalty under section 271(1)(c) of the Act, and accordingly impugned penalty in both the appeals are cancelled. - Decided in favour of assessee - ITA. No. 904 and 905/Ahd/2014 - Dated:- 1-3-2016 - Shri Rajpal Yadav, Judicial Member And Shri Manish Borad, Accountant Member For the Petitioner : Shri Aseem Thakkar, CA For the Respondent : Anita Hardasani, Sr.DR ORDER .....

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sident Indian. He has FDRs. with Dena bank in FCNR NRE category. The interest income out of these FDRs is exempt from tax. Against these FDs., an overdraft facility account was opened. The assessee has given power of attorney to one Shri Hasmukhbhai Patel who has maintained FDR/OD account with fixed deposit overdraft facility. According to the AO, certain amounts have been deposited in FD/OD account. He, therefore, recorded reasons and reopened the assessment in both these years by issuance of n .....

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FD/OD account which remained unexplained. He made addition with the help of section 69 on account of unexplained investments. 4. Dissatisfied with the addition, the assessee carried the matter before the CIT(A). The ld.First Appellate Authority has deleted the addition of ₹ 25,99,806/- and confirmed addition of ₹ 5 lakhs. 5. In the Asstt.Year 2003-04, the ld.AO has made an addition of ₹ 1,50,000/-. The ld.AO has initiated penalty proceedings in both the years under section 271 .....

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deposited in this account. Out of these thirteen occasions, cash was deposited on six occasions. A major amount of ₹ 12 lakhs was deposited through bank transfer on 9.4.2011. Then again ₹ 7.00 lakh was deposited through transfer on 10.4.2001. Similarly on 24.10.2001, ₹ 5 lakhs was transferred through bank. The CIT(A) has deleted all these additions on the ground that the assessee has explained the source of deposits. The only addition confirmed was a sum of ₹ 5.00 lakhs .....

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the source of deposits. The amounts have been deposited through banking channels, and the AO failed to collect any evidence on record to prove that the assessee has taxable income in India or explanation given by him is false. 7. As far as the facts in the Asstt.Year 2003-04 are concerned, a sum of ₹ 3.50 lakhs was given to Shri Anvarbhai Kapadia. He has repaid ₹ 1.50 lakhs. The assessee has deposited this amount in the FD/OD account. The AO has rejected the explanation of the assess .....

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to furnish returns, comply with notices, concealment of income, etc.- (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the of course of any proceedings under this Act, is satisfied that any person (a) and (b) ** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) or Clause (d), in a .....

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which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income or such person as a result thereof shall, for the purposes of Clause (c) of this su .....

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his section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fict .....

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me under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer .....

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