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2016 (8) TMI 1084 - ITAT AHMEDABAD

2016 (8) TMI 1084 - ITAT AHMEDABAD - TMI - Penalty u/s.271(l)(c) - Held that:- aAssessee has declared business loss of ₹ 64,89,606/- in the return of income duly processed u/s 143(1) of the Act and in the reassessment proceedings u/s 147 of the Act no material record was available before the Assessing Authority to assess the income as the records were destroyed. We also observe that assessee company incurred heavy losses due to which even quantum appeal was also withdrawn due to non-availa .....

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accurate particulars. In these circumstances, we are of the view that no penalty is required to levied u/s 271(1)(c) except on the unexplained cash credit of ₹ 30,000/-. We find no reason to interfere with the order of ld. CIT(A). This ground of Revenue is dismissed. - ITA No.1503/Ahd/2012 - Dated:- 25-7-2016 - Shri R. P. Tolani, JM, and Shri Manish Borad, AM. For The Appellant : Shri Prasoon Kabra, Sr.DR For The Respondent : None ORDER PER Manish Borad, Accountant Member. This appeal of R .....

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s per the facts and circumstances of the case and in law, the Ld.CIT(A) has grossly erred in interpreting the order of the Ld. CIT(A) bearing No. CAS-III/16/2009-10 dated 10,08.2009 and directed to the A.O.to cancel the penalty of ₹ 25,78,504/- levied u/s.271(l)(c) of the IT Act. 2. As per the facts and circumstances of the case arid in law, the Ld.CIT(A) has erred and directed to cancel the penalty of Rs,25,78,504/- levied u/s.271(1)© of the I.T. Act, on concealment of income of S .....

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st. Year 2001-02 was filed on 31.10.2001 declaring business loss of ₹ 64,89,606/-. Case was processed u/s 143(1) of the Act accepting the returned loss. Thereafter, proceedings u/s 147 of the Act were initiated and during the course of re-assessment proceedings assessee could not produce any details as computer hard disc in which the accounts of the company have been stored got corrupted and the hard copy of the books of accounts and vouchers of the company have also been destroyed by the .....

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and levied penalty of ₹ 27.12.082/-. 6. Aggrieved, assessee preferred appeal before ld. CIT(A) against the penalty order u/s 271(1)(c) of the Act and the same was partly allowed. Pursuant to appeal effect by ld. Assessing Officer there arose a dispute as regards the relief given by ld. CIT(A). As per assessee penalty u/s 271(1)(c) of the Act was sustained only with regard to addition on unexplained cash credit of ₹ 30,000/- whereas ld. Assessing Officer while giving effect was of the .....

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/s 154 of the Act. 7. Assessee thereafter preferred an appeal against the order u/s 154 of the Act and got succeeded and penalty u/s 271(1)(c) of the Act was sustained only on the unexplained cash credit. 8. Aggrieved, Revenue is now in appeal before the Tribunal. 9. Ld. DR supported the order of ld. Assessing Officer. 10. We have heard the contentions of ld. DR and perused the material on record. Revenue is aggrieved with the order of ld. CIT(A) passed u/s 154 of the Act giving relief to the as .....

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er travelled to the first appellate authority and ld. CIT(A) dealt with the alternative submissions made by assessee which were given effect to by ld. Assessing Officer as per his wisdom. Assessee did not agree to the appeal effect given by ld. Assessing Officer. Thereafter we observe that ld. CIT(A) while adjudicating appeal u/s 154 of the Act has clearly made out the crux of the order of ld. CIT(A) passed u/s 271(1)(c) of the Act by observing as under :- 2.3. I have gone through the facts of t .....

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r, i.e. para-7, 8, 9 & 10 of the appellate order dated 10.08.2009 is reproduced below for clarity :- "7. I have considered the. facts of the case and the circumstances made by the learned AR, I have also perused the various judicial pronouncements on this issue. As regards the legal aspect regarding applicability of Explanation 4 to section 27l(l)(c) of the Act, as amended by the Finance Act, 2002, it has been held by the Hon'ble ITAT, Ahmedabad in the case of ACIT Vs Apsara Process .....

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)] also, it was held by the Apex Court that the said amendment to Explanation 4 to section 271(l)(c) could not be applied in respect of any period prior to 1st April, 2003 and hence, prior to this amendment penalty for concealment could not be levied in the absence of any positive income. The said judgment was delivered by the Hon'ble Court on 06.02.2007. However, while admitting the SLP filed in the case of CIT Vs Raman Lal C Hathi [(2008) 217 CTR )SC) 105], on 07.01,2008, having regard to .....

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arificatory and not substantive, and is hence applicable retrospectively. Thus, even during the period between 1s' April, 1976 to Ist April, 2003, the position was that the penalty was leviable even in a case where addition of concealed income reduced the returned loss. And, in such a case, "the tax sought to be evaded" will be the tax chargeable on the concealed income, as if it is the "total income" of the assessee. In view of the aforesaid legal position in the matter, .....

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ceptable and is rejected. It is, accordingly, held that penalty was leviable u/s. 27l(l)(c) in the instant case under consideration, even though the assessed income was a loss/Nil. 8. As regards the second argument of the learned AR that the A 0 has erred in computing the "amount oj tax sought to be evaded", the contentions of the appellant are found to be correct. It is seen that the AO has, at para 9(c) of the impugned penalty order, adopted the figure of 'concealed income' a .....

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nt of two additions made to the total income viz; (i) addition of ₹ 3,40,274/- on the basis of ad-hoc estimation of g.p @ 5% of total turnover, and (ii) addition of ₹ 30.000/- on account of unexplained credits. As regards the first addition of ₹ 3,40,274/-, the same is apparently an estimated addition, which has bten made to the g.p. declared by the appellant in the facts and circumstances of the case discussed above. This addition of g.p. @ 5% of the turnover declared by the a .....

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e particulars thereof Penalty u/s.27l(l)(c) of the Act is thus not leviable in cases where income is assessed on estimate basis and there is no material/evidence to show that the assessee has concealed his taxable income or furnished inaccurate particulars thereof. It is further seen that a similar g.p. addition was also made in the preceding A.Y. in the appellant's case of identical grounds, and penalty proceedings were initiated u/s.271(l)(c) in that year also. However, in the penalty orde .....

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the AO in the impugned penalty order) and, to this extent, the penalty levied is deleted. 10, As regard the second addition of ₹ 30,000/- on account of unexplained credits/loans, however, the contentions of the appellant are not acceptable. When a cash credit appears in the books of account, the burden lies on the assessee to prove prima-facie the source and nature thereof. Such roof includes proof of (i) the identity of the creditors, (ii) their credit worthiness/capacity to advance the .....

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on it to prove the said cash credits. The confirmatory letters filed by the appellant were not even properly signed by the alleged creditors not were other details in this regard furnished before the AO to prove their credit worthiness etc. The said cash credits totaling to Rs. 30,000/-, thus remain unproved. In the above facts of the case, the penal provisions of we 271(l)(c) are, therefore, clearly attracted in regard to the addition of ₹ 30.000/- on account of unexplained cash credits a .....

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me was a positive figure and therefore the explanation-4 has no application. The A.O. has therefore wrongly interpreted the observations of the CIT(A) to mean that the penalty was leviable on the "book loss". This aspect becomes abundantly clear from the decision of my predecessor in para-8 and 9 where she, after taking into consideration the facts that addition to GP was on estimated & adhoc basis only, that there was no evidence of concealment of income or furnishing of inaccurat .....

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377; 68,59,880/- by the A.O. Further, she has categorically mentioned in para-8 as well as para-9 that the figure of concealment had been wrongly adopted by the A.O. as ₹ 68.59.880/- instead of the correct figure oft 3,40,274/-. The A.O. may not be in agreement with this finding in the order but then the correct course would have been to seek clarification from the appellate authority or make an application u/s. 154 before the appellate authority or file an appeal to the ITAT. The A.O. cou .....

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quired to be deleted and only the penalty to the extent levied on "second addition" of ₹ 30,000/- on account of unexplained credit / loans was confirmed and required to be retained. The A.O. will modify his order accordingly. 11. From going through the observation of ld. CIT(A) we find that in the order passed u/s 271(1)(c) of the Act by ld. CIT(A) penalty was sustained only towards unexplained cash credit of ₹ 30,000/- and the remaining penalty invoked by ld. Assessing Off .....

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