TMI Blog2017 (3) TMI 1885X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby the Tribunal has partly allowed the appeal of the assessee and remanded the matter back to the Assessing Officer. 2. This Court while admitting the appeal on 01.03.2006 has framed the following substantial question of law: Whether penalty can be levied under Section 271(1)(c) solely because the additions were confirmed in the quantum appeal, without examining the issue again in penalty proceedings with reference to the law and principles underlying the levy of penalty? 3. Counsel for the appellant has contended that the Assessing Officer has considered the case of the assessee and observed as under: As for bogus purchases of cut goods shown in the name of the said two parties, it is to stated that the sources of purchase are not explained as these parties have not been produced for my examination and that the same are not available at the given addresses. It is the assessee itself who introduced own money as invested in the shape of above purchase/shown initially as credit purchases in the name of the persons who do not exist. The assessee introduced its own unaccounted money in the shape of these purchases which were later on labled as credit purchases so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted by proper invoices papers etc. It was stated that the payments had been made to Shanu Traders by cheques drawn on the bank of Baroda, the details of which had been supplied to the AO. The AO made no enquiry and still he refused to entertain the pieces of evidence filed by the appellant. The AO had not independently examined the issue in the penalty proceedings. The AO had not brought on record any evidence to show that the purchases were bogus. 5. It has further been contended that the Tribunal while considering the case in para 3 has observed as under: After hearing both the parties and on perusal of material available on record, it appears that in quantum appeal (ITA No.1874 to 1877/JP/95) dated 26.09.2002 the Tribunal finally reduced the additions to ₹ 2,23,945/- pertaining to the following components: Trading Addition ₹ 39,092/- ITAT Page 11 Bogus Purchase ₹ 1,71,917/- 2-9 Salarly to Babu Bhai ₹ 10,800/- 14 Disallowance of Dalali ₹ 2,136/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department cannot be equated with fraud or willful default. As we find no material difference between the original, Explanation 1 and Explanation 1 as substituted, in our opinion it has to be so construed as to harmonise it with basic principles of justice and fairness, as in the case of original Explanation. We are guided by the commentaries of the learned authors Kanga Palkhiwala, Law and Practise of Income Tax, Vol., 1, pp. 1637, 1639 to 1640. 24. In the instant case, the cash credits were not satisfactorily explained by evidence and documents. The parties who had advanced the alleged temporary loans were neither disclosed with their particulars nor any supporting documents were on record. Only 2 entries were explained. The accountant who had arranged the loan was not produced stating that he had left the service and relations with him are strained. On this 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 section 271(1)(c) could not have been imposed without the department making any other effort to come to a con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. It was, thus, a case where the assessee could not discharge the onus and it cannot be said that it was the case of the concealment of the case by the assessee. 48. Thus, while not accepting all the observations made by the Tribunal in the impugned order, we are of the view that the Tribunal is right in holding that insofar as penalty proceedings are concerned, case against the assessee of concealment of income is not made out. We would not like to interfere with the order of the Tribunal on this aspect and dismiss this appeal of the Revenue a no substantial question of law arises. 8. Counsel for the appellant has contended that the view taken by the Tribunal is required to be reversed. 9. Counsel for the department has contended that the Supreme Court in the case of Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Ltd. reported in [2010] 322 ITR 158 (SC) has observed in para 10 11 as under: 10. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word inaccurate has been defined as:- not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be on the assessee to rebut the same, and, if he fails to do so, it can be held against the assessee that it was a receipt in the nature of an income. 4. In the present case, the assessee, when confronted with the sizable credits in his account, merely stated that the sums were received from his brother without giving any further details of either the source or the creditworthiness thereof. Though before us counsel for the revenue contended that the amounts were received for the construction of a hospital before the Revenue Authorities all throughout apparently, the stand of the assessee was that such amount was received as loan from his brother. In the result, tax appeal is dismissed. 11. We have heard counsel for both the sides. 12. Taking into consideration the observations which are made by the Assessing Officer, CIT(A) and the Tribunal, the expenses or the credits which were shown by the creditors cannot be proved, therefore, no substantial tax is paid. Therefore, in that view of the matter, on the basis of the observations made by the Delhi High Court and Gujarat High Court, in our view, the issue is required to be answered in favour of the assessee and against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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