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2016 (12) TMI 456 - ITAT AHMEDABAD

2016 (12) TMI 456 - ITAT AHMEDABAD - TMI - Penalty under section 271(1)(c) - unaccounted gift received - Held that:- The explanation of the assessee is that sum of ₹ 36,000/- was deposited out of the gifts received on the birth-day of his son. Such gifts were received from relatives. As far as second addition is concerned, it is based on a document which was found during the course of search at the residence of the assessee. This document is unregistered sale deed. An unregistered sale dee .....

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s for prosecution of the assessee on account of corruption. Allegation against the assessee was that he was accepting ₹ 80,000/- as bribe. This appears to be main reasons for making addition on the basis of circumstantial evidence. AO failed to prove that explanation of the assessee was false. There is no concrete positive evidence against the assessee exhibiting unexplained investment, except unregistered sale deed, which does not confer any title. Addition might have been confirmed, but .....

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in confirming the penalty of ₹ 45,285/- under section 271(1)(c) of the Income Tax Act, 1961. 3. Assessee at the relevant time was employed as an inspector in the Department of Custom and Central Excise, Govt. of India at Bhavnagar. He has filed his return of income on 26.6.2000 declaring total income at ₹ 99,597/-. This return was processed under section 143(1) of the Income Tax Act, 1961 on 1.1.2002. It emerges out that two months prior to 3.11.2011 two trucks of one firm of Arvind .....

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s well as a trap was laid to catch the assessee redhanded for accepting a sum of ₹ 80,000/-. Criminal case bearing ACB No.13/2003 was instituted against the assessee and charge-sheet was framed. It appears that in consequence of the search by ACB at the residence of the assessee, the AO has got information and assessment of the assessee was reopened by issuance of notice under section 148 of the Income Tax Act on 12.5.2004. In the re-assessment order, the ld.AO has made two additions i.e. .....

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i. This deed was not materialized and ultimately cancelled. On the basis of this document, it was harboured by the AO that the assessee had made payment of ₹ 1,15,000/- out of unexplained source, and therefore, an addition equivalent to this amount deserves to be made in the income of the assessee. Both these additions were upheld by the CIT(A) as well as by the ITAT. 3. The ld.AO has initiated penalty proceedings under section 271(1)(c) of the Income Tax Act. He ultimately imposed a penal .....

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on 23.4.2010. This judgment was challenged by State Government in Criminal Appeal No.1391 of 2011. The Hon ble Gujarat High Court has rejected the appeal of the State Government and upheld the acquittal of the assessee vide order dated 7.3.2012. The judgment of the Hon ble High Court was challenged before the Hon ble Supreme Court in CRLMP No.24543/2014. The Hon ble Supreme Court has dismissed the SLP of the State Government vide order dated 18.12.2014. Copy of the Hon ble Supreme Court s order .....

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f his son from his relatives as gift and the assessee has made deposits. Similarly, with regard to the investment in land, the case of the assessee is that no such investment was ever made. It was an unregistered sale deed, which was cancelled in the month of March, 2000 i.e. which prior to the action taken by the ACB. Had it been not cancelled, then ACB would have filed charge sheet against the assessee on accumulation of disproportionate assets. No such plea has been raised against the assesse .....

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"271. Failure to furnish returns, comply with notices, concealment of income, etc.- (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the of course of any proceedings under this Act, is satisfied that any person (a) and (b) ** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i)and (Income-tax Officer,)** ** ** (iii) in the cases referred to in Clause (c) .....

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fers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income or such person as a result thereof shall, for the purposes of C .....

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lty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important feature of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, stat .....

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tion of total income under the provisions of the Act, the assessee is not able to substantiate the explanation and the assessee fails, to prove that such explanation is bona fide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the .....

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tation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 8. In the light of the above, .....

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