TMI Blog2017 (2) TMI 1104X X X X Extracts X X X X X X X X Extracts X X X X ..... t out before us, the case of the assessee should not have been visited with levy of penalty. The assessee brought on record all the primary evidences as could have been adduced by the him, but AO did not place on record even a single piece of evidence to controvert or negate the evidences brought on record by the assessee. Thus, the peculiar facts of this case do not permit the AO to levy penalty on the assessee. - Decided in favour of assessee. - I.T.A. No. 217/Mum/2015 - - - Dated:- 15-2-2017 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTATN MEMBER For The Appellant : Shri M.C. Omi Ningshen (DR) For The Respondent : Ms. Chandani Patel and Sh. S. Sriram ORDER PER ASHWANI TANEJA, AM: This appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-35, Mumbai (hereinafter called as Ld. CIT (A), in short) passed against the penalty order u/s 271 (1) (c) of the Assessing Officer on the following grounds: (I) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied u/s. 271(1)(c) of the I.T. Act. The quantum addition was not disposed of by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department and the sale tax department has granted the registration only after physical verification and visit of premises of supplier. The supplier may not have paid the sale tax or VAT and hence the sales tax department deemed such supplier who is avoiding the VAT/sale tax payment. You have made addition without holding any affidavit from the supplier or any certified copy from the sales tax department or you have not produced any confirmation from the supplier as hawala transaction if you have submitted such declaration of affidavit then we can take appropriate legal action under civil law. Your penalty proceeding is against the principle of natural justice as you have not given any opportunity to cross examine the supplier or any affidavit which confirm the hawala transaction. The AO however did not accept the submissions of the assessee and levied the penalty @ 200% of tax sought to be evaded which came to ₹ 10,35,568/-. 3. Aggrieved, the assessee filed appeal before Ld. CIT (A) and contested the penalty vehemently. The submissions of the assessee in a nutshell were that the assessee has submitted complete documentary evidences during the course of assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x [2010] 39 SOT 210 (Hyderabad). 6. We have gone through the orders passed by the Lower Authorities. It is noted by us that Ld. CIT (A) examined all the facts and circumstances of this case as well as evidences brought on record by the AO as also by the assessee and thereafter held that penalty was not leviable in this case, with following observations: I have gone through the facts of the case and the contentions of the AO and the appellant in this regard. The quantum addition has been made on the basis of information received from the Sales Tax Department. It is also a part of the office record that the appellant filed appeal against that order beyond time and the said appeal has been dismissed by this office. However, looking into the facts of the case for the purpose of imposition of penalty it is found that it is a case where the appellant has purchase expenses for which, name of the parties is given and also payments have been made through account payee cheque. It is only the enquiry made by the Sales Tax Department which has led the AO to believe that the said transaction needed to be further enquired into. Considering the ratio of the decision of Hon ble Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese basis are indeed insufficient and not tenable in the eyes of Law. It is well established law that parameters for making the addition/disallowances are a different from levy of the penalty u/s 271 (1) (c) of the Act. There may be cases where claim of the assessee may remain unproved during the course of assessment proceedings for want of substantiation, but for the purpose of levy of penalty the AO is required to disprove the claim of assessee. The AO must show that the claim of the assessee is bogus or false. In the facts of this as were brought before us, in our opinion, the claim of the assessee was not proved as bogus or false. The AO levied the penalty merely on the basis of his allegations which were unsupported with any cogent material or evidences. We find that in the facts as have been brought out before us, the case of the assessee should not have been visited with levy of penalty. The assessee brought on record all the primary evidences as could have been adduced by the him, but AO did not place on record even a single piece of evidence to controvert or negate the evidences brought on record by the assessee. Thus, the peculiar facts of this case do not permit the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the Department cannot be equated with fraud or wilful default. As there is no material difference between the original Explanation 1 and Explanation 1 as substituted, it has to be so construed as to harmonise it with basic principles of justice and fairness, as in the case of original Explanation. On the state of accounts and evidence in the quantum proceedings, the Department was justified in treating the cash credit as income of the assessee but merely on that basis by recourse to Explanation 1, penalty under s. 271(1)(c) could not have been imposed without the Department making any other effort to come to a conclusion that the cash credits could in no circumstances would have been amounts received as temporary loans from various parties. The assessee in the quantum proceedings failed to produce the accountant but the Department also in penalty proceedings made no effort to summon him. Applying the test (ii) discussed above, therefore, it was a case where there was no circumstance to lead to a reasonable and positive inference that the assessee s case-that the cash credits were arranged as temporary loans, was false. The facts and circumstances are equally consistent with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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