TMI Blog2014 (8) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... its total income. This could only be described as a human error which we are all prone to make. The calibre and expertise of the assessee had little or nothing to do with the inadvertent error. That the assessee should have been careful could not be doubted, but the absence of due care, would not mean that the assessee was guilty of either furnishing inaccurate particulars or was attempting to conceal its income. Consequently, given the peculiar facts of this case, the imposition of penalty on the assessee was not justified. - Decided in favour of assessee Unexplained investments - Held that:- As merely because the explanation furnished by the assessee was considered as un-satisfactory or unreasonable it would not ipso facto justify the invocation of clause (a) to levy penalty u/s. 271(1)(c). Hence we find no infirmity in the order of the CIT(A) in holding that penalty is not leviable on the addition of ₹ 1,17,50,000 representing unexplained investment in the hands of the assessee since no concealment is shown to have been established and additions have been made by merely disbelieving the submissions of the assessee. We confirm the order of the CIT(A) and dismiss the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated for passing the penalty order is six months from the financial year in which the order of CIT(A) or ITAT is received on the appeal, against the assessment proceedings and in this case order of ITAT was passed/received on 25.01.2012 and as such time was available to the AO for passing the penalty order up to 30.09.2012. There is no dispute regarding the passing of order of penalty u/s. 271(1)(c) on 27.09.2012. As could be seen from the above information read with provision concerned, there is no infirmity in the order of the AO. Further, this issue was never raised by the appellant during the course of the penalty proceedings, including the show-cause notice dated 11.07.2012. Thus, based on the above facts of case, the ground raised by appellant in this regard is not maintainable and this ground of appeal is treated as dismissed. 4. On the issue of addition of ₹ 1,17,50,000 representing the amount of investment in the property, it was explained by the AR of the assessee that contributions were received from 7 members who had come together with the assessee and had invested through the assessee. The AO examined the sources of the 7 members and held that there was stro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sources from agricultural incomes, and some of them also shown to have income from dairy and some of the shown to have sold agricultural lands. The CIT(A) noted that in case of Mr. Raghunatha Reddy, who was not examined by the AO, it was shown that he is a Software Engineer and the credits are shown to be out of salary savings for 3 to 4 years. It was observed by the CIT(A) that in quantum appeal, the CIT(A) has upheld the addition on the ground that no material was filed to prove the credits, without noticing the fact that the creditors were examined and statements were recorded and the assessee's appeal was unsuccessful. The CIT(A) further noted that for the same reasons the ITAT confirmed the addition with reference to ₹ 1,17,50,000. 6. It was pointed out by the CIT(A) that the CIT(A)'s order was confirmed by the ITAT on the issue of addition of ₹ 1,17,50,000 in spite of bringing of such material on record and the same has resulted in filing of MA before the ITAT. The CIT(A) noted that while disposing the MA the ITAT has not discussed the issue of availability of such material and dismissed the MA. The CIT(A) was of the opinion that all these facts only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of concealment is not fully established, on the issue of investments which were treated as unexplained to attract the penalty u/s. 271(1)(c), as per the explanation l(B). Hence, the CIT(A) held that no penalty is leviable on the amount of ₹ 1,17,50,000/- representing the contributions for the investments by assessee, which were treated as unexplained investments, without proving the angle of concealment. The CIT(A) relied on the decision of High Court of A.P. in the case of CIT Vs. H. Abdul Bakshi Others (160 ITR 94), wherein the Hon'ble High Court while relying on the decisions of Supreme Court in the cases of CIT vs. Anwar Ali (76 ITR 696) and CIT vs. Khoday Eswaraiah Sons (83 ITR 369), held that by merely disbelieving the explanation of the assessee, the revenue cannot come to the conclusion that the assessee concealed income or furnished inaccurate particulars of income. To this extent, the CIT(A) gave relief to the assessee. 8. With respect to the addition of ₹ 25 lakhs treating 25% of ₹ 1 crore which was shown to have been paid by the assessee along with others as undisclosed as per the information available in the impounded material during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. DCIT (66 TTJ 758) (Bom); and e) DCIT v. Rahoul Siemens Engg. (P) Ltd. (140 Taxman 100) (Del) 11. We find that the CIT(A) held that penalty is leviable on the addition of ₹ 25 lakhs representing the unexplained investment where concealment was established by the facts and the CIT(A) held that penalty is not leviable on the addition of ₹ 1,17,50,000 which also represented unexplained investment in the hands of the assessee since no concealment of income was established by the AO as he has merely disbelieved submission of the assessee i.e., hence the appeal was partly allowed by the CIT(A). Since the CIT(A) allowed the appeal of the assessee partly, both the Department and the assessee have come in appeal before the Tribunal. 12. The assessee raised the following grounds of appeal in his appeal in ITA No. 1519/Hyd/2013 as follows: 1) The order of the learned CIT(A) confirming the levy of penalty u/s. 271(1)(c) is erroneous both on facts and in law. 2) The learned CIT(A) erred in holding that the order passed u/s. 271(1)(c) is within time u/s. 275 without appreciating the legal position that as per the provisions of proviso to Sec. 275(1) in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e completed, or six months from the end of the month in which the order of the [***] Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later : 15. Time limit stipulated for passing the penalty order is 6 months from the financial year in which the order of the CIT(A) or ITAT is received on the appeal against the assessment proceedings. In this case the order of the ITAT was passed on 25.1.2012 and as such time was available to the AO for passing the penalty order up to 30.9.2012. Hence, we do not find any infirmity in the order of the CIT(A). The Delhi High Court reported in 345 ITR 41 in the case of CIT vs. Mohair Investments and Trading Co. P. Ltd. held as follows: A proviso is merely a subsidiary to the main section and must be construed in the light of the section itself. It has to be construed harmoniously with the main provision. The period of six months provided for imposition of penalty under section 275(1)(a) of the Income-tax Act, 1961, starts running after the successive appeals from an assessment order has been finally decided by the Commissioner (Appeals) or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to register 18 acres whereas only 11.15 acres were ultimately registered. The agreement entered on 18.11.2006 was cancelled and the vendors had returned ₹ 2.3 crores, all these were given as additional evidence by way of affidavit to the AO on 14.2.2008. It was argued that the advance paid was only ₹ 4.9 crores and ₹ 25 lakhs at of ₹ 1 crore had been wrongly added by the lower authorities. 18. The learned counsel for the assessee submitted that relief was granted by the CIT(A) on the addition of ₹ 25 lakhs in quantum proceedings which was reversed by the ITAT and hence when two views are possible penalty is not leviable. 19. We have heard both the parties. We find that the assessee has offered explanation stating that the total amount received was only ₹ 4.9 crores and not ₹ 5.9 crores and had explained that the amount of ₹ 1 crore had been taken twice by the Assessing Officer while computing the advances given. It is also a fact that the ld. CIT(A) has deleted the addition whereas ITAT restored it. 20. The Supreme Court in Price Waterhouse Coopers (P.) Ltd. v. CIT [2012] 348 ITR 306/25 taxmann.com 400/211 Taxman 40, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee the Revenue cannot come to the conclusion that the assessee concealed the income or furnished inaccurate particulars of income. The assessee has filed confirmatory letters and the AO examined the persons and all of them have confirmed advancing the amounts. The Hon ble jurisdictional High Court of Andhra Pradesh in the case. H. Abdul Baskhee Others (supra) held on similar facts that no penalty can be levied. In the case of Mahavir Irrigation Pvt. Ltd. vs. CIT (314 ITR 160) (AT) it was held that since the assessment proceedings and penalty proceedings were separate and distinct findings in the assessment proceedings cannot be relied as conclusive for the purpose of penalty proceedings. 26. In the case of Roshanlal Madan vs. ACIT 67 ITD 33 it has been held that if the assessee is able to furnish a bona-fide and plausible explanation in respect of the material facts the burden cast by Explanation 1 of section 271(1)(c) would be discharged and the case would not be hit by the mischief of that section. Further it was held that merely because the explanation furnished by the assessee was considered as un-satisfactory or unreasonable it would not ipso facto justify th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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