TMI Blog2018 (2) TMI 1823X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction’ of the AO [unless initiated by CIT(A)] and non-else. The ground for action by AO was allegation of ‘concealment’. This ground has been substituted by CIT(A) to ‘furnishing inaccurate particulars of income’ while confirming the penalty quantified by the AO. Thus, in the absence of continuity in the findings of the AO and the CIT(A), the order of the penalty passed by the AO is liable to be struck down on this ground alone - Decided in favour of assessee. - I.T.A. No.2880/Ahd/2014 - - - Dated:- 15-2-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For the Appellant : Shri Sulabh Padshah, AR For the Respondent : Shri S.K. Dev, Sr.DR ORDER PER PRADIP KUMAR KEDIA - AM: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the year. The AO however found serious infirmities in the explanation offered by the assessee and after giving allowances for the cash withdrawals etc., the AO found that the assessee has failed to provide explanation or to prove the sources of cash deposits to the extent of ₹ 25,37,395/-. The aforesaid amount of unexplained cash credit was added to the total income of the assessee as unexplained income. The penalty proceedings were also simultaneously initiated towards the aforesaid addition under s.271(1)(c) of the Act. 4. The quantum additions made in the assessments proceedings were appealed before the CIT(A). The CIT(A) granted partial relief and admitted the contention of the assessee towards applying peak credit theory on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e V. Thus, as per law the Assessing Officer was perfectly justified in levying the penalty by issuing relevant notice for the same. During the appellant proceedings, the Authorized Representative of the appellant Mr. Manish Baxi submitted that the Gujarat High Court in the case of New Sorathia Engineering Co. 282 ITR 642 has clearly held that in case there is no clear cut finding with regard to the concealment and the inaccurate particulars, penalty could not be sustained. I have considered the decision of the Hon'ble Gujarat High Court relied upon by the appellant. It is noticed that in the above referred case, the assessment was completed u/s. 144 of the Act whereas in the present case, the assessment is completed u/s. 143(3) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorized Representative). The Hon'ble court has held that if the appellant makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bonafide, It would be difficult to say that the assessee would still not be liable to penalty u/s. 271(1)(c) of the Act. It is a case where no two views with regard to the addition sustained by the CIT(A) are possible as the addition sustained was in the light of the debit and credit in the bank account which was not disclosed in the books and the CIT(A) has sustained only that addition which is the most reasonable one in as much as it is drawn from the theory of peak credit. Accordingly, the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO. Thus, in the absence of continuity in the findings of the AO and the CIT(A), the order of the penalty passed by the AO is liable to be struck down on this ground alone. For such a view, we usefully refer to the decision of the Hon ble Gujarat High Court in the case of New Sorathia Engineering Company vs. CIT (2006) 282 ITR 642 (Guj.) and CIT vs. Manu Engineering Works (1980) 122 ITR 306 (Guj.). Similar view has been taken by the Coordinate Bench of the Tribunal in Gian Chand Batia vs. DCIT 61 ITD 24(All.). Therefore, where concurrent I.T.authorities are not sure about nature of default, the penal action under s.271(1)(c) of the Act is not sustainable in law. 9. Consequently, the penalty order of the AO dated 25/11/2013 is s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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