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Ms. Babitha Versus The Assistant Commissioner of Income Tax, Central Circle- IV (2) , Chennai.

2016 (5) TMI 1091 - ITAT CHENNAI

Penalty under section 271(1)(c) - Held that:- Revenue has made additions and sustained the same only for the reason that the assessee could not convince the Revenue with respect to her claim though she had produced confirmation statements from the creditors and the Revenue on their part failed to ascertain the documentary evidence furnished by the assessee, we are of the view that the levy of penalty by the learned assessing officer is not justifiable. In the present case before us we find that .....

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Appellant by : Mr. T.Vasudevan, Advocate For The Respondent : Mr. P.Radhakrishnan, JCIT ORDER Per A. Mohan Alankamony, AM:- This appeal is filed by the assessee aggrieved by the order of the learned Commissioner of Income Tax-Appeals (Central)-I, Chennai, dated 19.08.2014 in ITA No.3/2013-14 passed under section 271(1)(c) r.w.s.250(6) of the Act. 2. The assessee has raised several grounds in its appeal, however the crux of the issue is as follows:- i) The learned Commissioner of Income Tax (Appe .....

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ome on 31.05.2006 declaring income of ₹ 20,80,063/- which included additional income of Rs. .20,06,019/- offered during the course of survey under section 133A(6) of the Act under the head Income from other sources . Thereafter the learned Assessing Officer had completed the assessment under section 153C r.w.s. 153A & 143(3) of the Act by making addition of ₹ 13,85,000/- on account of potli loan [out of which the learned Commissioner of Income Tax (Appeals) has granted relief of .....

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,90,456, because the assessee could not produce satisfactory explanation with documentary evidence regarding the source of loan. 4. On appeal, the learned Commissioner of Income Tax (Appeals) confirmed the order of the learned Assessing Officer by observing as under:- 7. I have perused the penalty order, grounds of appeal and the contentions of the AR in this regard. It is seen from the facts of the case that the appellant filed her return of income for the A.Y 2005-06 admitting an income of  .....

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ennai vide order in ITA No.182,183/07-08 dated 17-10-2011, confirmed an amount of ₹ 7,35,000/- out of potli loan of ₹ 13,85,000/-. Since the appellant failed once again before the AO, during remand proceedings, to furnish satisfactory explanation with supporting evidence, in respect of khata petti loan of ₹ 4,25,000/-, the CIT(A) confirmed this addition. Consequently the AO levied penalty u/s 271(1)(c) on the said addition totaling to ₹ 11,60,000/- (Rs.7,35,000 + 4,25,000 .....

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ticulars of his income or (ii) furnished inaccurate particulars of such income, he may, in addition to the tax, if any payable, direct that such person shall pay by way of penalty a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of concealment of particulars of his income or the furnishing of inaccurate particulars of such income. 7.2. The appellant has not substantiated with cogent evidence with regard to the sources for .....

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y difference between the reported and the assessed income as concealed income. But, at the same time, it provides the criteria where penalty would be warranted. Penalty is leviable for concealment, where an assessee fails to offer any explanation for the difference or offers an explanation, which is found to be false. In these cases, penalty can be treated as mandatory. 7.3. Thus, it is clear from the above, the additional income which was sustained by the CIT(A) to the extent of ₹ 11,60,0 .....

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has been positively established by the Assessing Officer warranting levy of penalty U/s.271(1)(c) on this addition of ₹ 11,60,000/- is in order. Hence the penalty of ₹ 3,90,456/- under section 271(1)(c) levied by the Assessing Officer is hereby confirmed. All the grounds raised in this regard are hereby dismissed. 5. The learned Authorized Representative submitted before us that the assessee had furnished the confirmation letters from the concerned creditors before the Revenue and th .....

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presentative on the other hand argued in support of the orders of the Revenue. 6. We have heard both the parties and carefully perused the materials available on record. From the order of the learned Commissioner of Income Tax (Appeals) in para 6 at page no.4 it is apparent that the assessee had produced confirmation letters with respect to potli loan received of ₹ 7,35,000/- and the transaction relating to ₹ 4,25,000/- were routed through bank. The relevant portion of the order is r .....

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rs from the persons concerned. This fact is confirmed by the Assessing Officer in her remand report dated 20-7- 2011. The evidence produced, according to the Assessing Officer was not acceptable. The appellant submits that when the parties had appeared before the Assessing Officer and confirmed that they had advanced monies to the appellant, the course open to the Assessing Officer was not to punish the appellant, but to proceed against those persons [ (CIT vs Value Capital Services Pvt Ltd 307 .....

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required for levy of penalty is different from that at the assessment stage (CIT vs Mata Prasad [278 ITR 354 (AII]. It is accordingly submitted that the Commissioner of Income tax may be pleased to delete penalty levied. 6. Coming to the addition of ₹ 4,25,000/- which has also been considered for levy of penalty, total of khata petti loans asRs.24,60,000/. Out of this, Rs.l,50,000/- related to assessment year 2004-05, ₹ 4,25,000/- was an advance given by account payee cheque, and th .....

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cannot be construed that she had concealed the income attracting levy of penalty. 7. From the above, it is evident that the learned Assessing Officer has made the addition without verifying the confirmation letters by issuing summons to the creditors and also without verifying the bank transactions. No doubt, the assessee was not able to completely satisfy the Revenue on the veracity of her claim, but it is the duty of the Revenue to verify the bank transactions and confirmation balance statemen .....

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