TMI Blog1995 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to prove the genuineness of these credits by producing the books of accounts. However, the books of accounts and other vouchers were not produced on the plea that these have been lost. However, the assessee furnished certificate in the form of confirmatory letters in respect of the cash credits whose genuineness was required to be proved by the AO. The AO asked the assessee to give complete addresses of the creditors or produce them for verification of the credit. In response to the above query from the AO, the assessee furnished a written explanation stating that the amount credited in the name of three persons, namely, Rs. 1,00,000 each in the names of Shri Pradeep Gupta and M/s. Bharat International and Rs. 14,000 in the name of Shri Brij Mohan, were, in fact, received by the assessee from M/s. Kuldip Industrial Corpn. with the instructions that these amounts may be credited in the names of the persons mentioned against each and M/s. Kuldip Industrial Corpn. also sent the assessee the three certificates which were submitted by the assessee to the AO. However, when the assessee requested M/s. Kuldip Industrial Corpn. to give the complete addresses of the persons to be furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be confirmed as the assessee has not furnished any explanation to prove the genuineness of this credit. The Tribunal in ITA Nos. 85, 86 87/Chandi/88 relating to assessment year 1979-80 in respect of penalties imposed by the departmental authorities under sections 271(1)(c), 271(1)(b) and 273(1)(b), which were disposed of by the common order along with ITA No. 867/Chandi/88 in the quantum appeal vide order dated 17-2-1993, upheld the levy of penalty but directed that the minimum penalty as levied by the AO should be recomputed on the basis of income finally assessed after giving appeal effect to the Tribunal's order. 5. The reference application filed by the assessee under section 256(1) was rejected by the Tribunal and no petition under section 256(2) has been filed by the assessee against the order of the Tribunal dated 17-2-1993 and as such the Tribunal's order in the quantum appeal has become final. 6. The AO, in the course of penalty proceedings, held the assessee guilty of concealment of income in relation to the amount of Rs. 2,24,140 which was added by the AO on account of unexplained cash credits under section 68 vide order dated 28-2-1989. The AO considered the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve proof of concealment of income. He accordingly submitted that the penalty as sustained by the ld. CIT(A) should be deleted. Alternatively, Shri D.S. Gupta pleaded that in view of Explanation 4 to section 271(1)(c), the penalty has to be levied on the basis of the income as finally assessed and since in this case the income finally determined after giving appeal effect to the Tribunal's order was only a sum of Rs. 62,651, subject to verification of another amount of Rs. 10, 140 relating to the credit in the name of M/s. Himachal Rang Udyog, the penalty should be calculated only on the basis of the income as finally assessed. Reliance was placed on the observations of the Hon'ble Punjab and Haryana High Court in the case of CIT v. Prithipal Singh Co. [1990] 183 ITR 69, as also the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT v. Jaora Oil Mill [1981] 129 ITR 423. 9. Shri K.S. Minhas, the Id. D.R., on the other hand, supported the order of the ld. CIT(A) and further submitted that this is the case of an assessee who has introduced its own concealed income in the name of fictitious persons and when he was called up on to explain the source of these credits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that inasmuch as the assessee had shown a loss of Rs. 2 lakhs whereas its income was computed at Rs. 50,000, the entire sum of Rs. 2,50,000 was the concealed income of the assessee and accordingly, the AO levied penalty of Rs. 2,50,000. On appeal, the Tribunal held that the income concealed was the income actually determined, i.e., Rs. 50,000 and the order of the Tribunal was upheld by the Hon'ble High Court who held that the income which was determined by the AO under section 144 was the sum of Rs. 50,000 and it was that income which was concealed by the assessee. Applying the ratio of the above decision to the facts of the present case, we will hold that the penalty has to be levied only in relation to the income which has been finally determined after giving appeal effect to the Tribunal's order. We direct accordingly. 12. We may point out that the above view which we have taken is also supported by the analogy of the decision of the Hon'ble Punjab and Haryana High Court in the case of Prithipal Singh Co., wherein the Hon'ble High Court held that if the income finally determined was loss, no penalty under section 271(1)(c) can be levied. The above view which we have take ..... 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