TaxTMI 
TaxTMI 
2010 (3) TMI 852
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Revenue arising from the order of the learned Commissioner of Income-tax (Appeals) dated August 10, 2009. 2. The facts of the case are that the assessee is an individual. A search was carried out by the Ahmedabad police on August 26, 2003 at the premises known as M/s. Kalgi from where cash, gold, jewellery and various documents were found and seized. Later on these documents were requisitioned under section 132A by the Income-tax Department. Statement of one Shri Tarun Karia, who was under the employment of the assessee was recorded by the police authorities. Shri Tarun Karia, has stated that he is engaged in the business of cricket betting. On the basis of search and seized material notice under section 153A was given to the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y in respect of the gift. He observed that the explanation furnished by the assessee has not been found to be false or inaccurate. He accordingly cancelled the penalty on gift but confirmed the penalty in respect of claim of short-term capital loss by holding that the entire transaction of claiming loss was sham and explanation/details furnished were inaccurate or mala fide. 5. Against this the learned authorised representative submitted that there is no material with the Assessing Officer to show that the claim made by the assessee, of short-term capital loss was sham/bogus or mala fide. The assessee had entered into an agreement with the land owners/power of attorney holders to whom money was paid by cheque which has not been doubted b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate particulars of such income, he may direct that such person shall pay by way of penalty,- (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or (B) such person offer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the agreement to purchase the land and consent deed. There is no finding by the Assessing Officer that the identity of the persons with whom transactions were entered into were fictitious or that they did not have the land or that they have returned the money or advance to the assessee. The payment of advance was given through cheque. Unless it is found that money as per the cheque did not really go to the payee, it cannot be presumed that payment so made was actually not made. The Assessing Officer ought to have carried out the inquiries further, and should have recorded the statements of the power of attorney holders/land owners to find out whether transaction was real or was only sham. What the authorities below have done is to draw infe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act sham, we are unable to uphold this inference of the authorities below. Once this inference is taken out of the reasoning given by the Assessing Officer or the learned Commissioner of Income-tax (Appeals) for levy of penalty then nothing survives to hold that the case of the assessee falls within Explanation 1(B) to section 271(1)(c). In fact, the assessee has offered an explanation and he has substantiated by way of documentary evidence. There is nothing to hold that explanation of the assessee is not bona fide and also there is nothing to hold that any material fact for computation of income has been withheld by the assessee from the tax authorities. In view of the above, there is no case for levy of penalty on either count. Accordingl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e notice that except rejecting the explanation of the assessee, the Assessing Officer has not brought any positive material on record to suggest that gift received by the assessee was not genuine. To reject the explanation of the assessee is one thing and to show by positive material that the claim of the assessee is not genuine is another thing. Penalty can be sustained only when the Assessing Officer brings some positive material on record to show that arrangement made by the assessee is not real but sham. So long as there is no material on record brought in by the Assessing Officer contradicting or negativing the claim of the assessee, it cannot be said that the assessee has failed to substantiate its explanation particularly when he has....