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2013 (5) TMI 918

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..... nce of the assessee is with regard to the levy of penalty under Section 271(1)(c) of the Act amounting to ₹ 3,26,695/-. 3. In brief, the facts are as follows. The appellant is a company incorporated under the provisions of the Companies Act, 1956 and is inter-alia engaged in the business of construction. For the assessment year 2005-06, it filed a return of income declaring total income of ₹ 49,150/- which was subject to scrutiny assessment under Section 143(3) of the Act vide order dated 28.12.2007 whereby the total income was determined at ₹ 26,19,192/-. In the determination of the total income, the Assessing Officer made an addition of ₹ 8,92,790/- on account of certain sundry creditors. As per the Assessing Of .....

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..... was any falsity in the claim of the assessee. Even with regard to the third creditor i.e. Mr. Zamal Khan, it was pointed out that the said person appeared before the Assessing Officer and admitted of having carried out the work for the assessee. The only discrepancy was that the quantum of work admitted did not correspond to the amount shown by the assessee as outstanding to the said creditor. The learned counsel pointed out that having regard to the parity of reasoning in the case of National Textiles vs. CIT (2001) 249 ITR 125 (Guj.), no penalty is leviable on additions made in terms of the deeming Sections, for the instance, Section 68 of the Act in the present case. 5. On the other hand, the learned Representative for the Revenue poi .....

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..... dit balances were indeed false. Therefore, in so far as the penalty levied with respect to the credit balances pertaining to M/s Mahavir Construction and M/s Ganesh Construction is concerned, the same is untenable, and is hereby directed to be deleted. 7. The case of the third creditor i.e. Mr. Zamal Khan amounting to ₹ 2,96,500/-, in our view stands on a different footing. In this case, the verification exercise carried out by the Assessing Officer established that the credit balance was false and therefore, in our view the same falls within the mischief of Section 271(1)(c) of the Act. Accordingly, with respect to the aforesaid addition, penalty levied under Section 271(1)(c) of the Act is hereby affirmed. 8. In the result, th .....

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