{"id":7007,"date":"2013-07-12T11:55:38","date_gmt":"2013-07-12T06:25:38","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=7007"},"modified":"2013-07-12T11:55:38","modified_gmt":"2013-07-12T06:25:38","slug":"saket-agarwal-vs-ito-itat-delhi-no-s-2711c-penalty-even-if-explanation-unproved-if-it-is-not-disproved-by-ao","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/saket-agarwal-vs-ito-itat-delhi-no-s-2711c-penalty-even-if-explanation-unproved-if-it-is-not-disproved-by-ao\/","title":{"rendered":"Saket Agarwal vs. ITO (ITAT Delhi)"},"content":{"rendered":"\n\n
Click here to download the judgement (saket_agrawal_upendra_mithani_penalty_271_1_c.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nNo s. 271(1)(c) penalty even if explanation unproved if it is not disproved by AO
\n<\/strong><\/p>\n

The assessee had a cash credit of Rs. 7.33 lakhs in his books. He also claimed agricultural income of Rs. 1 lakh. He offered an explanation on both issues which was not accepted by the AO. He accordingly surrendered both amounts to tax to buy peace. The AO imposed penalty u\/s 271(1)(c) which was confirmed by the CIT(A). Before the Tribunal, the assessee claimed that the additions were made on “voluntary surrender<\/em>” and to avoid further litigation and to buy mental peace and that the same could not be considered as furnishing of inaccurate particulars of income or concealment of income. HELD by the Tribunal allowing the appeal: <\/p>\n

If the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee\u2019s case is false, then the penalty is not imposable. In the present case, the assessee’s explanation remained unproved but it cannot be said as disproved. Further, s. 68 is an enabling provision for making an addition where the assessee fails to give an explanation regarding the cash credit but such addition does not automatically justify imposition of penalty u\/s 271(1)(c) r\/w Explanation 1 thereto. In order to justify levy of penalty, there must be some material or circumstances leading to a reasonable conclusion that the amount does represent the assessee\u2019s income and the circumstances must show that there was a conscious concealment or act of furnishing of inaccurate particulars. From a bare reading of s. 271, it is clear that the provisions of Explanation 1 to s. 271 do not make the assessment order conclusive evidence that the amount assessed was, in fact, the income of the assessee and that the assessee did not satisfactorily explain the cash credits by producing evidence and documents. Accordingly, penalty u\/s 271(1)(c) is not leviable (Upendra V. Mithani<\/strong> (Bom) (included in file<\/em>) and National Textile<\/strong> 249 ITR 125 (Guj) followed)<\/p><\/blockquote>\n

\nContrast with MAK Data<\/a><\/strong> 352 ITR 1 (Del) & the cases referred therein\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The assessee’s contention is that the assessee voluntarily surrendered and consented to pay tax to avoid further litigation and to buy peace of mind though the department’s contention is that the surrender was only because the assessee failed to establish the genuineness of the claim. If the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee\u2019s case is false, then the penalty is not imposable. In the present case, the assessee’s explanation remained unproved but it cannot be said as disproved. Further, s. 68 is an enabling provision for making an addition where the assessee fails to give an explanation regarding the cash credit but such addition does not automatically justify imposition of penalty u\/s 271(1)(c) r\/w Explanation 1 thereto. In order to justify levy of penalty, there must be some material or circumstances leading to a reasonable conclusion that the amount does represent the assessee\u2019s income and the circumstances must show that there was a conscious concealment or act of furnishing of inaccurate particulars. From a bare reading of s. 271, it is clear that the provisions of Explanation 1 to s. 271 do not make the assessment order conclusive evidence that the amount assessed was, in fact, the income of the assessee and that the assessee did not satisfactorily explain the cash credits by producing evidence and documents. Accordingly, penalty u\/s 271(1)(c) is not leviable (Upendra V. Mithani<\/strong> (Bom) (included in file<\/em>) and National Textile<\/strong> 249 ITR 125 (Guj) followed)<\/p>\n

Read more ›<\/a><\/div>\n

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