TaxTMI 
TaxTMI 
2007 (12) TMI 246
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....creditworthiness and other components of the gift of the donor, the assessee was asked to produce the donor, but the assessee failed to produce the donor on one pretext or the other in spite of affording several opportunities to her. Therefore, the assessee was afforded final opportunity. The assessee vide her letter dt. 7th Jan., 2004 surrendered an amount of Rs. 5 lacs in order to buy peace and to avoid litigation subject to the condition of no penalty. Accordingly, the AO made an addition of Rs. 5 lacs treating the same as income from undisclosed sources. On appeal, the CIT(A) confirmed he same. Accordingly, the AO issued a show cause notice under s. 271(1)(c) of the Act. The AO, after having considered the reply of the assessee to the s....
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....plete bed rest for 15 days, he could not be produced before the AO. To this effect, the donor addressed a letter dt. 4th Oct., 2003 to the AO, a copy of which is placed on p. 11 of the paper book. The learned counsel has further submitted that since Shri Sunil Jain was not well, the assessee made a request to the AO to issue commission to examine the donor. Alternatively, the assessee also stated that the assessee made a surrender of Rs. 5 lacs in order to buy peace and to avoid litigation subject to no penalty for the year under consideration vide letter dt. 7th Jan., 2004 p1aced at pp. 12 and 13 of the paper book. Thus, he has argued that the addition made on this account would not automatically justify imposition of penalty under s. 271(....
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....ing the course of assessment proceedings. Therefore, in view of the decision of the jurisdictional High Court in the case of CIT vs. Ram Commercial Enterprises Ltd. (2001) 167 CTR (Del) 321 : (2000) 246 ITR 568 (Del), the penalty levied under s. 271(1)(c) of the Act is liable to be quashed. 4. On the other hand, the learned Departmental Representative has submitted that under s. 68 of the Act the onus is on the assessee to prove the identity, creditworthiness and genuineness of the transaction, which, however, in the instant case, has not been discharged. Therefore, the assessee had no alternative, but to surrender the amount of gift of Rs. 5 lacs. Even in the penalty proceedings the said onus has not been discharged. Therefore, the AO was....
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....mmission nor issued any summons under s. 131 to the donor to be present before the AO. In the circumstances, the assessee made a surrender of Rs. 5 lacs subject to no penalty. Thus, the AO made an addition of Rs. 5 lacs, because the assessee failed to produce the donor. We find that there is no material on record to prove that the claim of the assessee was false. As per Expln. I to s. 271(1)(c), penalty for concealment can be imposed only if both the conditions, namely, the assessee has failed to substantiate his explanation and has also failed to prove its bona fide, have been fulfilled. In case any of the two conditions is not fulfilled, no penalty under s. 271(1)(c) is imposable. In other words, even if the assessee was not able to subst....