AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (12) TMI 225
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....ify in sustaining the same. The appellant appeals for cancellation of the same. 2. That without any prejudice to the first ground of appeal, on the facts and in the circumstances of the case, the learned A.O. did not justify in imposing the impugned penalty of Rs. 1,82,596/- and the Ld. CIT(A) did not justify in sustaining the same. The appellant appeals for cancellation of the penalty so imposed. 3. That the appellant craves opportunity for furnishing any other ground/s of appeal on or before the date of appeal hearing." 3. The assessee also raised the following additional grounds vide application dated 18/06/2014 stating therein as under:- "1 The appellant very humbly requests your honour to kindly admit the following additional ground nos. 1A and 1B to the memorandum of appeal bearing appeal no. ITA/569/JODH-2013:- "1A. That in the assessment order, the Id. AO recorded satisfaction that the assessee concealed income of Rs. 5,40,000 whereas in the impugned penalty order, he imposed penalty on the ground of furnishing of inaccurate particulars of income. In view of this fact, the impugned penalty order is not sustainable in law and the appellant appeals for its canc....
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....the material available on the record, therefore, the additional grounds are admitted. 7. The grievance of the assessee in this appeal relates to the sustenance of penalty levied by the Assessing Officer u/s. 271(1)(c) of the I.T. Act, 1961 (hereinafter referred to as 'the Act' in short). 8. Facts relating to the additional ground raised by the assessee, in brief, are that the assessee filed the return of income on 28/01/2009 declaring total income at Rs. 22,86,140/-. The assessment was completed u/s. 143(3) of the Act on 25/10/2010 determining the total income at Rs. 29,33,640/- thereby making two additions, first was Rs. 1,07,500/- on account of difference in valuation of plots u/s. 50C and second was addition of Rs. 5,40,000/- being unexplained cash creditors. The Assessing Officer initiated the penalty proceedings u/s. 271(1)(c) of the Act in respect of addition of Rs. 5,40,000/- and subsequently sought explanation from the assessee, who submitted that since name and addresses of the relatives from whom the loans were taken were not available, therefore, to avail peace of mind, she herself offered Rs. 5,40,000/- for addition and as such no penalty u/s. 271(1)(c) of....
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....the particulars of income or furnished inaccurate particulars of such income are to be fulfilled and there is no justification to see these conditions in isolation. The Ld. CIT(A) observed that in the present case it is clear that the assessee furnished wrong particulars or her income to the tune of Rs. 5,40,000/- and there was no contradiction in conclusion of the Assessing Officer, who observed as under:- "In view of these facts and circumstances of the case, it is held that the assessee is guilty of furnishing inaccurate particulars of its income with respect to addition of Rs. 5,40,000/- made on account of bogus cash credit u/s. 68 of the Act. I hereby impose a penalty of Rs. 1,82,596/- (Rs.one lacs eighty two thousand five hundred ninety six) which is equivalent to 100% of the tax sought to be evaded." 11. The Ld. CIT(A) observed that the Assessing Officer imposed the penalty for the reason that the assessee failed to prove her claim of cash credit by furnishing details such as name and identity, capacity of the lenders and the decision relied in the case of Padma Ram Bharali Vs. CIT 110 ITR 54 (Gau.) will be applicable to the facts of the assessee's case as no contr....
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....d and explained, at all, the same are added as unexplained credits u/s. 68 of the I.T. Act. Penalty proceedings u/s. 271(1)(c) of the I.T. Act are also initiated with reference to this addition as the assessee has tried to make clear concealment of income by way of claiming unexplained credits." 15. From the above observations of the Assessing Officer, it is crystal clear that the penalty proceedings u/s. 271(1)(c) of the Act were initiated in respect of addition of Rs. 5,40,000/- and the Assessing Officer clearly mentioned that the assessee tried to make clear concealment of income by way of claiming unexplained credits. Therefore, both the conditions i.e. concealment of income and furnishing inaccurate particulars of income by way of claiming unexplained credits existed in this case and the penalty u/s. 271(1)(c) of the Act was rightly initiated by the Assessing Officer. We, therefore, do not see any merit in this additional ground raised by the assessee. 16. As regards to the merit of the case, the assessee submitted to the Ld. CIT(A) that the cash credits of Rs. 5,40,000/- were voluntarily surrendered by her as income and the amount of Rs. 5,40,000/- was taken from a larg....
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.... been termed as cash credits, in the balance sheet prepared and produced by the assessee herself. The Ld. CIT(A) was of the view that the balance sheet could not be prepared out of thin air but represented sum total of financial affairs which may or may not be recorded in the form of formal cash book and ledger, but the balance sheet in itself may be construed as books of accounts in miniature and that once a balance sheet is produced to explain the financial affairs of an assessee then the Assessing Officer has no option but to treat it as an extract of books of accounts reflecting all financial activities on the assessee during the year under consideration and therefore, confronted to explain the nature of certain entries appearing in the balance sheet submitted by the assessee itself, he or she could not take the shelter under the plea of non-maintenance of regular books of accounts and even in a case, where the books of accounts are rejected, which implies non-maintenance or non-existence of books of accounts for the purpose of assessment proceedings, there was no objection to the proposition that the ITO can rely upon rejected books of accounts for the purpose of making additi....
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....nsidered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is an admitted fact that the assessee had shown cash credits of Rs. 5,40,000/-, but failed to explain the names of the persons from whom those credits were received. When the assessee was unable to explain those cash credits to the satisfaction of the Assessing Officer she preferred to surrender the income and offered the same for taxation. The Assessing Officer, however, did not accept the explanation of the assessee and credited the same as concealment of income and accordingly initiated the penalty proceedings u/s. 271(1)(c) of the Act. In the present case, had the case been not selected for scrutiny and the Assessing Officer did not ask for explanation from the assessee, the addition was not possible because only when the assessee was cornered the amount was surrendered and merely on this basis that the assessee made the surrender, it cannot be said that there was no concealment of income. Recently, the Hon'ble Supreme Court in the case of MAK Data P. Ltd. Vs. CIT reported in (2013) 358 ITR 593 has held as under:- "Explanation to section 271(1....