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2016 (9) TMI 117 - RAJASTHAN HIGH COURT

2016 (9) TMI 117 - RAJASTHAN HIGH COURT - TMI - Penalty u/s.271 (D) - deemed income u/s 68 versus loan or deposits u/s 269SS - Held that:- If any sum is found credited in the books of account and the assessee fails to offer satisfactory explanation regarding the nature and source so offered by him or fails to tender satisfactory explanation, the said amount can be treated as deemed income of the assessee, in our view once it has been held as deemed income of the assessee or an addition u/s.68, h .....

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ppellant Mr. Anuroop Singhi, for the Respondents JUDGMENT ( Per Ranka, J. ) 1. Instant income tax appeal u/s.260A of the Income Tax Act, 1961 is directed against the order dt.26.9.2001 passed by Income Tax Appellate Tribunal, Jaipur Bench, Jaipur. It relates to the assessment year 1991-92. Following question of law was admitted by this Court :- "Whether on the facts and in the circumstances of the case the tribunal was justified in sustaining the penalty of ₹ 20000/- u/s.271 (D) of th .....

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of ₹ 20000/- is treated as un-explained deposit and the AO made a separate addition of ₹ 20000/- by invoking provisions of section 68. The said addition u/s.68 was confirmed by the CIT (A) as also by the Tribunal. 3. Proceedings for initiation of penalty u/s.271-D was initiated on the premise that the said amount of ₹ 20,000/- having been received in cash from Smt. Rukmani Devi, wife of the appellant is in violation on provisions of section 269-SS, penalty as such u/s.271-D was .....

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e said amount of ₹ 20,000/- has been held as a cash credit u/s.68 and separate addition of ₹ 20,000/- was made u/s.68 and once it has been held to be deemed income of the assessee it cannot be treated for the purposes of section 269-SS as a loan or deposit and thus this found favour with the CIT (A), who deleted the penalty. 5. The revenue assailed the said deletion before the Tribunal however the Tribunal upheld the penalty by holding that violation of section 269-SS and section 68 .....

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. Rukmani Devi as loan or a deposit. Alternatively he contended that there is a reasonable cause as the transaction is in between husband and wife and there can always be inter se transaction between husband and wife on account of a bonafide belief that either spouse can deposit certain amount taking into consideration the close relationship. He further contended that once it has been held to be deemed income of the assessee u/s.68, it becomes real income of the assessee, then the character of t .....

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0,000/- found shown in the incriminating documents and therefore addition of ₹ 20,000/- was made. Since the said amount was shown as amount having been received in cash, therefore, there was violation of section 269-SS as well and admittedly the amount has been received from wife and it could not be anything except loan or deposit and the amount being in excess of the prescribed limit u/s.269-SS, penalty has been rightly sustained by the Tribunal. 8. We have considered the arguments advanc .....

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to quote section 68 :- "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : [Provided that where the assessee is a company (not being a company in which the public are substant .....

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