TMI Blog2019 (10) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... h and even otherwise the identity of the creditor and genuineness of the transaction has not been found fault with, therefore, we are of the view that the explanations and the documents relied upon by the assessee to prove the creditworthiness were only found to be inadequate and not found to be false. Under the set of facts, we are of the view that the Explanation to Section 271(1)(c) of the Act would come to help of the assessee. Hence on conspectus of the matter, we are of the view that the addition of cash credit confirmed by the ITAT in the facts and circumstances of the instant case, would not necessitate levy of penalty u/s 271(1)(c) of the Act, as the same in our view cannot be considered to be concealment of income. Accordingly, we set aside the order of the ld. CIT(A) on this issue and direct the AO to delete the penalty. - Decided in favour of assessee. - ITA No. 1354/JP/2018 - - - Dated:- 30-9-2019 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri S.L. Poddar , Advocate For the Revenue : Smt. Runi Paul, (JCIT) ORDER PER: SANDEEP GOSAIN, J.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ₹ 8.00 lacs sustained by the ITAT. 2.4 Against this order of sustaining of penalty on the addition of ₹ 8.00 lacs, the assessee has preferred an appeal before us on the ground mentioned hereinabove. 3.1 The Ground No. 1 and 2 raised by the assessee are interrelated and interconnected and relates to challenging the order of the ld. CIT(A) in confirming the order passed by the AO u/s 271(1)(c) of the Act without striking off the irrelevant portion of the printed show cause notice dated 25-03-2015. We therefore, thought it fit to dispose off these grounds by a common order. 3.2 During the course of hearing, the ld.AR of the assessee submitted that penalty levied by the AO is unlawful, illegal and unjustified. The ld.AR of the assessee has filed the following written submission. The levy of penalty is unlawful, illegal and unjustified. The same is assailed on the following grounds: - 1. Show cause notice issued on 25.03.2015 11.08.2015 are routine: - The show cause notice issued along with the assessment order was in routine manner and the Learned Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty proceedings under above mentioned section of the Income Tax Act were initiated during the course of assessment proceeding in your case for the above mentioned Assessment Year and the statutory notice has already been issued to you and duly served upon you. Now these proceedings are to be finalized and for the purpose you are again given an opportunity to explain your case and to show cause as to why penalty under above mentioned section of the Income-tax Act may not be levied upon you. You may explain and show cause in writing either personally or through your authorized Representative duly authorized in this behalf on 21-08-2015 at 4.20 PM in my office at Room No. 324, NCRB, Statue Circle, C-Scheme, Jaipur Please note that no further opportunity will be provided and matter will be decided as per the material available on the records. Yours faithfully, Sd/- (Navindra Saini) Income Tax Officer, Ward 6(2), Jaipur 3.3 On the order hand, the ld. DR relied on the orders passed by the Revenue authorities. 3.4 We have heard the rival contentions and perused the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2 During the course of hearing, the ld.AR of the assessee prayed for deletion of penalty confirmed by the ld. CIT(A) for which the ld.AR of the assessee filed the following written submission. After the order of the Hon'ble ITAT out of total addition of ₹ 1,36,50,000/- only addition of ₹ 8,00,000/- were sustained in respect of share application money by Mr. Amit Kumar Sharma who made application for ₹ 8,00,000/-. The assessee submitted the confirmation, complete address as well as bank statement. But the Learned Assessing Officer as well as the appellate authorities did not consider the evidence furnished regarding creditworthiness and sustained the addition. In this regard our submission is that the person was in existence. The transaction was also through the proper banking channel. The revenue did not bring any evidence on record that the person was not in existence or the claim of the assessee was not genuine. Only the explanation furnished by the assessee was not accepted because of the evidences furnished by the assessee was not sufficient for determining the creditworthiness of the share applicant. Therefore on such type of addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly, the same is confirmed. Accordingly, ground raised by the revenue stands dismissed. Therefore the facts of the assessee's case is similar and no penalty is leviable. Likewise in the case of Remex Pharmaceuticals Ltd vs. ACIT in ITA No. 2234/Mum/2013 dated 14.10.2015 the Mumbai Bench has held as under: - 6. It is well settled proposition that addition made during the course of assessment proceedings would not automatically give rise to penalty under section 271(1)(c) of the Act. During the course of penalty proceedings, the AO is required to examine the entire issue afresh and for that purpose the deliberations made in the assessment order can be taken as a guide. In the instant case, the penalty has been levied u/s 68 of the Act in respect of loan taken by the assessee, since the evidences furnished by the assessee to prove the creditworthiness of the creditor was found to be inadequate. It is also pertinent to note that the addition prescribed u/s 68 of the Act is a legal fiction and the same need not necessarily as a result of concealment of particulars of income. Whether a cash credit addition would f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions carried out by Shri Amit Kumar Sharma. The ld.AR further submitted that merely because the additions were upheld then the penalty cannot be automatic. On this aspect, we found force in the arguments of the ld.AR of the assessee and we are of the view that penalty is not automatic merely because the additions were upheld which has been already upheld by the Coordinate Bench in the case of Sonu Khandelwal vs ITO (ITA N01/JP/2015) vide order dated 27-09-2016. However, the Hon'ble Gujarat High Court in the case of CIT vs Baroda Tin Works, 221 ITR 661 had also given verdict on the same principles. ITAT Mumbai Bench in the case of Remex Pharmaceuticals Ltd vs ACIT (ITA No. 2234/Mum/2013 vide order dated 14-10-2015 had also held that even if the assessee could not succeed with regard to the addition both before the ld. CIT(A) as well as ITAT in the quantum assessment proceeding. Even the AO was required to examine the issue afresh during penalty proceedings and for that purpose the deliberations made in the assessment order can only be taken as a guide. Since in the present case the AO in the penalty proceedings had not examined the entire issue afresh and even o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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