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COMMISSIONER OF INCOME TAX-IV Versus SOMA TEXTILES & INDUSTRIES LTD

2016 (8) TMI 216 - GUJARAT HIGH COURT

Penalty imposed u/s. 271(1)(c) - Held that:- As the assessee is not found to be guilty of concealment or misappropriation but was found to be negligent in furnishing the accurate facts. Therefore, the entries which were made by the assessee were not found to be acceptable. The explanation with regard to the same surfaces at Paragraphs 12 and 13 of the findings of the Tribunal which have been reproduced hereinabove. Therefore, we are in complete agreement with the findings of the Tribunal. Conseq .....

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come Tax Appellate Tribunal, Ahmedabad Bench 'C' in ITA No.278/Ahd./2004 for the Assessment Year :1992-1993. 2. While admitting the matter on 27.08.2009, the following substantial question of law was framed by the Court for consideration :- Whether the Appellate Tribunal is right in law and on facts in reversing the order passed by the CIT(A) and thereby canceling the penalty imposed u/s. 271(1)(c) of the Act, when quantum additions stood confirmed? 3. The facts of the case are as under .....

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before the Appellate Tribunal whereby the Appellate Tribunal deleted the penalty imposed u/s.271(1)(c) of the Act. 4. Learned Counsel for the appellant - Department Mr. Nitin K. Mehta has submitted that the Tribunal has seriously committed an error in deleting the penalty imposed u/s.271(1)(c) of the Act inasmuch as the decision to impose penalty was taken on account of submission of inaccurate particulars by the assessee. Therefore, it is submitted that both the Assessing Officer and CIT (Appea .....

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u, M/s. Rahul & Co. had given loan of ₹ 20,40,000/- to you on 1-6-1991 which has been subsequently repaid by you in the month of July 1991. 3. However, on going through the details filed in Form No.3C (Audit Report u/s.44AB of the Act), no where the name of M/s. Rahul & Co., appeared in the said report and in the annexure attached to this report. This means that you have suppressed this amount and not entered in the books of accounts as maintained by you. Please state your reasons .....

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assessee has discharged his onus and has rebutted the presumptions available to the Revenue under Explanation 1 to section 271(1)(c). From the admissions made by the learned AR and on page 73 and 69 of the paper book which represent the bank book of RB Rodda & Co., on the basis of which the show cause notice was given by the AO dated 7-3-95 to the assessee, we find that first the assessee has made the payment of the sum of ₹ 20,40,000/- on account of difference of purchase and sale of .....

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on the assessee. Even this fact has also borne out of the show cause notice as well as observation made in para 6.5 of the assessment order that the assessee has received the sum of ₹ 20,40,000/- from RB Rodda & Co. We have also gone through the decision of the Hon. Gujarat High Court in the case of National Textile v. CIT 249 ITR 125 (Guj) on which the learned AR has vehemently relied. 13. In the case of National Textile v. CIT 249 ITR 125 (Guj) the question before the Hon'ble Gu .....

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gh for the purpose of penalty that the amount 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 imp .....

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of the assessee. Alternatively, treating the Explanation as dealing with both the ingredient (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 can not justify levy of penalty. Absence of proof acceptable to the Department cannot be equated with fraud or wi .....

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reported in [1973] 88 ITR 192 (SC) • Commissioner of Income-tax v. Orissa Corpn. (P.) Ltd. reported in 159 ITR 78 and • T. Ashok Pai v. Commissioner of Incometax, Bangalore reported in 292 ITR 11; 5.3. Reliance was also placed on a decision of this Court; (I) in the case of National Textiles v. Commissioner of Income-tax reported in 249 ITR 145 and paragraphs 19 to 22 of the decision reads as under :- 19. In the quantum proceedings, the explanation of the assessee in relation to cash .....

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temporary loans were obtained were not furnished. 20. The question before us is whether the above mentioned facts which resulted in addition of the cash credits as income of the assessee in themselves, without any further evidence, are sufficient for imposition of penalty by recourse to Explanation 1 of section 271(1)(c) as it stood in the relevant assessment year or at the time when the penalty proceedings were initiated and concluded. We do not considered it necessary to go into the question .....

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ome shall be deemed to represent his concealed income. The newly introduced Explanation 1 considerably reduces, but does not altogether remove the department's onus to prove concealment in assessment based on unexplained cash credit or unexplained investment and like. (See Addl. CIT v. Mangalsen Mohanal [1982] 136 ITR 90 5 1 (All.). There has not been any significant difference by the introduction of new Explanation 1 in place of original Explanation 1 with effect from 1-4- 1976. The previou .....

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ection 68 permitting the Assessing Officer to treat unexplained cash credit 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 satisfaction of the Assessing Officer. However, the addition made on this count would not automatically justify imposition of penalty under section 271(1)(c) by recourse only to Explanation 1 below section 271(1)(c). 22. In order to justify the levy of penalt .....

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ctor No.(ii). 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 equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. If an assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and positive in .....

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by fire and its plea that the claim of double deduction in that behalf was simply a bona fide mistake resulting from the clerical mistake or due to oversight of the Chartered Accountant is concerned. Mr. Vyas submitted that the assessee's own conduct would have spoken of its bona fide or good faith had the assessee rectified or even agreed to rectify the said mistake as and when the same was pointed out to it by the ITO. But the insistence of the assessee in reagitating the said claim in app .....

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