TaxTMI 
TaxTMI 
1992 (7) TMI 127
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....shmani Patel Rs. 15,000 (ii) Dadulal Pd. Gupta Rs. 10,000 (iii) Achhelal Patel Rs. 10,000 The AO included the amount of all the three cash credits amounting to Rs. 35,000 as assessee's own income from undisclosed sources. The CIT(A) sustained the addition of Rs. 15,000 standing in the name of Sheshmani Patel. 3. The Tribunal, on appeal by the assessee, sustained the addition amounting to Rs. 10,000 and Rs. 10,000 in the names of Dadulal Prasad Gupta and Achhelal Patel respectively. The AO initiated penalty proceedings and issued show cause notice to the assessee and the explanation of the assessee was that it had neither concealed any particulars of its income not it had submitted any false particulars, but the ad....
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....heir statements which were recorded on oath and it is his misfortune that the deponents were not relied upon but the assessee has narrated all true facts before the authorities below and no penalty should have been imposed on the assessee merely because the deponents were not believed by the AO as well as by the Tribunal but according to the authorised representative for the assessee he has given all necessary details before the AO and he has not concealed anything. In this way he is neither guilty nor furnished inaccurate particulars nor he has concealed any part of his income. On the basis of the aforesaid facts and circumstances of the case, the authorised representative for the assessee contended that no case of penalty is made out agai....
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....and they have accepted having advanced the amount and even if the explanation of the assessee was not believed, the assessee could not be made liable for penalty. On the reasoning that the AO has not stated in the penalty order that the explanation submitted by the assessee was either false or the assessee failed to substantiate it. The AO before levy of penalty also failed to establish that the explanation is not bona fide. In view of these facts, it cannot be said that the assessee furnished inaccurate particulars or he has concealed the particulars of income. The deponents had been disbelieved without being cross-examined. In case the AO or the CIT(A) were not inclined to believe the statement recorded on oath, they would have cross-exam....
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....rtment can take recourse to Explanation 1 to s. 271(1)(c) of the Act. This explanation has been designed to get over by legislation what the Supreme Court in its wisdom laid down to be the law. The new Explanation 1 provides in substance that where in respect of any item of credit, etc. (a) (i) the assessee fails to offer an explanation or (ii) the assessee offers an explanation which the ITO considers to be false or (b) the assessee offers an explanation but no material or evidence to substantiate it, he shall be deemed to have concealed such item within the meaning of s. 271(1)(c). Thus, what ss. 68, 69, 69A, 69B & 69C deem for the purpose of assessment, the new Explanation 1 inject the deeming provision for the purpose of penalty also. H....