2014 (11) TMI 608

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....ax appeal in a nutshell are set out as under: 2.1 The assessee Company filed its return of income for the assessment year 1992-93. Notice was issued by the revenue for framing scrutiny assessment and ultimately after considering the submissions assessment order was passed on 22.03.1995 after making certain additions/disallowances. Two of the major additions were in respect of unsecured loan of Rs. 4,02,000/- from promoter and investment made by him in share capital which was brought in by way of additional share capital of Rs. 2,01,000/- . However, the Assessing Officer initiated penalty proceedings u/s 271(1)(c ) of the Act. 2.2 Being aggrieved by the assessment order, the appellant preferred first appeal before CIT(A) who dismissed ....

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....f the transactions under consideration and the creditworthiness of the loaner. He submitted that inspite of repeated opportunities given to the assessee the assessee could not explain reasonable cause. Mr. Mehta submitted that the Tribunal was justified in relying upon the Calcutta High Court decision in the case of M/s. Shanker Industries vs. CIT Calcutta reported in 114 ITR 689. 5. The present appeal was admitted for consideration of the following substantial question of law:           "Whether on the facts and in the circumstances of the case and in light of documentary evidence on record and explanation of the appellant the Tribunal was justified in law in confirming the levy of penalty....

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....nbsp;     10. Apart from above judicial view, the finding of AO that the assessee had introduced bogus cash credits in the form of unsecured loan and had invested in shares which were not explained satisfactorily neither at the time of assessment proceedings nor at the time of penalty proceedings. Under the circumstances we are of the view that penalty u/s. 271(i)(c ) has been correctly levied by AO and then confirmed by the CIT(A)." 7. As a result of hearing and perusal of records, we find that the Tribunal erred in coming to the conclusion that penalty u/s 271 of the Act was rightly imposed upon the assessee. In this context it shall be relevant to peruse the decisions of this court in the cases of Manu Eng. Works (....

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....s income and/or that it had furnished inaccurate particulars of such income". Now, the language of "and/or" may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasicriminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear-cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down."             12. The penalty order and the order of Commissioner (Appeals) show that no clearcut finding ....