TMI Blog2020 (4) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, following the ratio of SHRI OJAS ASHOKBHAI MEHTA VERSUS ITO, WARD 3 (1) , SURAT. [ 2013 (8) TMI 1127 - ITAT AHMEDABAD] the explanation of assessee is required to be treated as bonafide and consequently no penalty u/s 271(1)(c) can be imposed in view of explanation to section 271(1)(c) of the Act and we have also considered that merely because additions have been made the same is confirmed in first appeal, it does not at all mean that penalty for concealment of income is automatically required to be imposed. Explanation 1 to section 271(1)(c) only raises rebuttable presumption, which can be discharged by assessee on balance of probability. The penalty can be justified only if assessee fails to offer an explanation or his explanation is found to be false. If these circumstances are not present, the penalty can be avoided if assessee is able to substantiate his explanation. Respectfully following the aforesaid decision of the Co-ordinate Bench and decision of Hon'ble Gujarat High Court decision CIT Vs. President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] we are of the considered opinion that present penalty does not survive - Decided in favour of assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th. It was further submitted that assessee has withdrawn money from the said bank for payment of purchase of Art Silk Cloth. Although assessee had not maintained any books of accounts, therefore, he requested to treat the above account, as detailed business account and club the income from retail business u/s.44AF of the Income Tax Act. The ld.AR also drawn our attention to the month wise pattern of deposit and withdrawals in the ICICI Bank Account which has been reproduced by him in his written submissions and submitted that the entire table of withdrawal and cash deposits goes to prove that the assessee was into business activities. The assessee also relied upon the decision of the Co-ordinate Bench of ITAT Ahmedabad Bench in the case of S.K.Sharma vs. ITO in ITA No.2302/Ahd/2011 wherein under identical facts and circumstances of the case, the contention of the appellant that deposits represents turnover of the Art Silk Cloth has been accepted and the profit from the same was estimated @8% of the turnover. The ld.Authorised Representative(AR) also relied upon the decision of Co-ordinate bench in the case of Shri Ojas Ashokbhai Mehta vs. ITO in ITA No.296 297/Ahd/2013 for A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore he had requested to treat the above account as retail business account and club the income from retail business u/s.44AF of the Income Tax Act. We have also considered the decision cited by the assessee in the case of Shri Ojas Ashokbhai Mehta vs. ITO in which in para 4 it is held We have considered the rival submissions and perused the material available on record. We find that in the case of Muralilal Ratanlal Agarwal vs. ACIT (supra), the facts as noted by the tribunal were that a search and seizure action was taken wherein one bank account was found. On being confronted, the assessee admitted that it is his benami bank account and also admitted that all the transactions reflected in this bank account belonged to him. The assessee declared ₹ 5.50 lacs on this account but the A.O. noted that a sum of ₹ 60,000/- was introduced by the assessee as seed money and he worked out the peak at ₹ 14,45,702/- total ₹ 15,05,702/- and after deducting ₹ 5.50 lacs, he made addition of ₹ 955,702/-. For this, he imposed a penalty of ₹ 507,300/- u/s 271(1)(c) of I T Act since, the addition was upheld by learned CIT (A). Under these facts, penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the car-Said finding cannot be said to be perverse or unreasonable- Therefore, Tribunal was justified in confirming the penalty only in respect of addition of ₹ 31,000 and cancelling the balance of penalty and in the case of CIT vs. Raj Bans Sing it was held as Penalty under s. 271(1)(c)-Concealment-Assessment at higher figure-Declared income from truck enhanced in assessment-Findings recorded by Tribunal that it is a case of estimate of income in the absence of any books of account and that the assessee has not deliberately concealed the income-Penalty under s.271(1)(c) not leviable and in the case of CIT Vs. Valimkbhai H. Patel it was held as Penalty under s. 271(1)(c) Concealment-Claim for estimated loss of stock-Assessee carrying on business of manufacturing sale claimed loss of stock on account of cyclone and rain-AO revalued the stock and made substantial addition-On appeal CIT(A) directed the AO to value the stock at the rate declared by the assessee-Thus, one estimate was substituted by another estimate CIT(a) held that merely because assessee could not substantiate his claim in terms of quantity, penalty under s. 271(1)(c) cannot be imposed Tribunal also held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of M/s VIP Industries Ltd. ITA No.4524/Mum/2006 wherein it is categorically held that confirmation of addition cannot per se lead to confirmation of penalty. It is further held that necessary elements for attracting the explanation 1 to section 271(1)(c) are three fold i.e.. (i) the person fails to offer an explanation or (ii) he offers an explanation which is found by authorities to be false or (iii) the person offers and 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 have been disclosed. If the case falls in any of such categories in that case only the amount in question can be said to represent concealed income on which penalty can be imposed. 3. Respectfully following the aforesaid decision of the Co-ordinate Bench and decision of Hon'ble Gujarat High Court decision CIT Vs. President Industries 158 CTR 372 (supra), we are of the considered opinion that present penalty does not survive hence it is directed to be deleted, thus direct the AO to allow the same to the assessee and grounds of appeal is allowed in favour of the assessee. 11. In the result, groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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