2007 (8) TMI 740

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....under section 144 on 28-3-2003, the amount was added as unexplained cash credit under section 68 of the Act on the ground that the genuineness of the transactions was not proved and the assessee did not render any evidence in support of the receipt of the share application money. The assessee carried the matter in appeal before the CIT (Appeals) but without any success and the further appeal to the Tribunal was also dismissed by order dated 23-2-2005 in ITA No. 1670/Delhi/2004. 3. After the order of the Tribunal, the Assessing Officer issued notice under section 274 read with section 271(1)(c) calling upon the assessee to explain why penalty could not be levied for concealment of income in respect of the cash credit added under section 68.....

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....duced before the CIT (Appeals) in appeal against the assessment order. It was submitted that the findings in the assessment proceedings are not conclusive for the purpose of levying penalty for concealment and in the penalty proceedings, there has to be a reappraisal of the entire evidence afresh in order to determine the guilt of the assessee. It was contended that the evidence adduced before the CIT (Appeals) which had also been sent to the Assessing Officer was completely not taken into account by the Assessing Officer while levying penalty which is contrary to well established principles. Our attention in this connection is drawn to the entire evidence compiled in the paper book. It was contended finally that the impugned orders suffer ....

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.... accept the submissions of the learned counsel for the assessee. Though the Assessing Officer would appear to have reached the satisfaction that the "alleged share holders are fictitious identities or men of straw as held by the Kerala High Court who had been created by the company in order to substantiate the investment made in the share application money" in his letter dated 7-3-2003 addressed to the assessee and referred to in paragraph 5.6 of the assessment order, in the operative portion of the assessment order, the Assessing Officer appear to have climbed down from that position and was less sure of his satisfaction, which is clear from his observation 'in paragraph 58(b) of the assessment order that "Under the above circumstances, ge....

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.... penalty on this ground. 7. Even on merits, we are satisfied that it cannot be said that the assessee concealed its income or furnished inaccurate particulars thereof. Though the assessee did not comply with all the directions of the Assessing Officer in the course of the assessment proceedings and could produce only five or six share applicants before the Assessing Officer, all the confirmations, addresses, evidence to prove the identity, certificates from chartered accountants, evidence of allotment of shares, etc. in respect of all the applicants were adduced before the CIT (Appeals) who admitted the same and sent them to the Assessing Officer for remand report. In his remand report dated 23-12-2003, the Assessing Officer stated that no....