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2016 (5) TMI 36 - ITAT HYDERABAD

2016 (5) TMI 36 - ITAT HYDERABAD - TMI - Penalty u/s. 271(1)(c) - undisclosed share application money introduced - Held that:- As can be seen from the order of the AO as well as CIT(A) in the assessment proceedings, the entire share application money in this Private Limited company was from the Directors or from their minor children. The proceedings were also consequent to search operations conducted in that group. Still AO records that assessee has not proved the genuineness of creditors, ident .....

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Act. Mere disallowance in assessment or addition by invoking the deeming provisions does not automatically attract the provisions of Section 271(1)(c), unless the conditions thereon are satisfied. The facts of the case does not fall either under the head ‘concealment of income’ or under the head ‘furnishing of inaccurate particulars’. All the necessary details were furnished by assessee and there is no furnishing of inaccurate particulars in this case. - Decided in favour of assessee - I.T.A. No .....

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n the business of manufacture and sale of MS steel ingots on which a search and seizure operation u/s. 132 of the Act was conducted on 29-01-2009. Assessee filed return declaring total income of ₹ 25,06,470/-. This case was taken up for scrutiny and Assessing Officer (AO) has made an addition of ₹ 34,25,000/- out of the share application money introduced in the company in the name of thirteen individuals. Assessee preferred an appeal before the Ld. CIT(A) vide his order dt. 22-06-200 .....

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he order of the CIT(A) was confirmed by the ITAT. Since the quantum addition at ₹ 4 Lakhs has reached finality, AO completed the proceedings u/s. 271(1)(c) and levied penalty u/s. 271(1)(c) for furnishing inaccurate particulars of income. Assessee contested before the Ld. CIT(A) that there were no inaccurate particulars of income and mere addition in the assessment does not warrant any penalty u/s. 271(1)(c). 2.1. On merits, it was submitted that the Ld. CIT(A) in his wisdom confirmed the .....

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o, the appellant filed the same written submissions which are produced before the AO, and simply stated that since the tax effect was low, the same was not appealed before the Hon'ble ITAT, which is not acceptable, because though the tax effect is small it involves legal issue. The CIT(A) has confirmed ₹ 4,00,000/-, since the Directors could not satisfactorily explain the sources. Hence, it is clear that the appellant could not satisfactorily explain the above sources neither before th .....

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of search and AO only enquired the share application money transferred through banking channels and made the addition. Ld. CIT(A) confirmed only ₹ 4 Lakhs on the reason that the minor children are not assessees, whereas the Directors were assessed tax and the funds have been transferred through banking channels. It was submitted that those minor children are not assessees as their incomes are being assessed in the hands of their parents as per the provisions of the IT Act and the funds ar .....

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of inaccurate particulars when there was no furnishing of inaccurate particulars. Since only deeming provisions u/s. 68 were invoked, the facts does not call for penalty u/s. 271(1)(c). There is no furnishing of inaccurate particulars on the facts of the case. 4. Ld. DR however, relied on the orders of the AO and CIT(A) to submit that the addition was confirmed and assessee did not contest the same. 5. We have considered the issue and rival contentions. As can be seen from the order of the AO as .....

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