TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 216
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....nimum penalty u/s. 271(1)(c) of the Act, i.e. Rs. 21,06,225/- was passed by the Assessing Officer on 28.03.2003 for furnishing inaccurate particulars. The assessee filed an Appeal before the CIT (Appeals) against the above order of the Assessing Order but the CIT (Appeals) confirmed the order of penalty. Aggrieved by the order of the CIT (Appeals), the assessee filed an Appeal before the Appellate Tribunal whereby the Appellate Tribunal deleted the penalty imposed u/s.271(1)(c) of the Act. 4. Learned Counsel for the appellant - Department Mr. Nitin K. Mehta has submitted that the Tribunal has seriously committed an error in deleting the penalty imposed u/s.271(1)(c) of the Act inasmuch as the decision to impose penalty was taken on account of submission of inaccurate particulars by the assessee. Therefore, it is submitted that both the Assessing Officer and CIT (Appeals) were justified in imposing penalty on the assessee as books of accounts were not produced. 5. On the other hand, learned Counsel for the respondent - assessee has submitted that the Assessing Officer had issued the notice to assessee and relevant part reads as follows :- "2. As revealed from the independent inqu....
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....e decision of the Hon. Gujarat High Court in the case of National Textile v. CIT 249 ITR 125 (Guj) on which the learned AR has vehemently relied. 13. In the case of National Textile v. CIT 249 ITR 125 (Guj) the question before the Hon'ble Gujarat High Court was about the levy of penalty u/s. 271(1)(c) in respect of the addition made u/s. 68 by recourse to explanation 1 below section 271(1)(c). In this case the Hon'ble Gujarat High Court while holding the imposition of penalty was not justified observed :- "In order to justify the levy of penalty, two, factors must coexist, (1) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income. It is not enough for the purpose of penalty that the amount has been assessed as income, and (ii) the circumstances must show that there was animus, i.e., conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. Explanation 1 to section 271(1)(c) has no bearing on factor No.1 but has a bearing only on factor No.2. The Explanation does not make the assessment order conclusive evidence that the amount assessed was in fact ....
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....tries were explained and regarding the remaining entries, there were no documents or evidence brought on record. The names of parties from whom the temporary loans were obtained were not furnished. 20. The question before us is whether the above mentioned facts which resulted in addition of the cash credits as income of the assessee in themselves, without any further evidence, are sufficient for imposition of penalty by recourse to Explanation 1 of section 271(1)(c) as it stood in the relevant assessment year or at the time when the penalty proceedings were initiated and concluded. We do not considered it necessary to go into the question as to whether the Explanation 1 below section 271(1)(c) is a provision of substantive law or procedural law and whether it is prospective or retrospective in operation. The Explanation is to the effect that where in respect of any fact or material for purposes of his assessment, an assessee offers an explanation which is found by the Assessing Officer or the Deputy Commissioner (Appeals) to be false or where the assessee is unable to substantiate his explanation, then the amount added to his income shall be deemed to represent his concealed incom....
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....stances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the department because there will be no material to show that the amount in question was the income of the assessee." (II) The decision of this Court in the case of BTX Chemicals (P.) Ltd. v. Commissioner of Income-tax reported in 288 ITR 196 and Paragraphs 25 and 29 of the said decision reads as follows :- "25. So far as the deletion of penalty referable to the deduction of Rs. 1,00,112 on account of loss to its stock by fire and its plea that the claim of double deduction in that behalf was simply a bona fide mistake resulting from the clerical mistake or due to oversight of the Chartered Accountant is concerned. Mr. Vyas submitted that the assessee's own conduct would have spoken of its bona fide or good faith had the assessee rectified or even agreed to rectify the said mistake as and when the same was pointed out to it by the ITO. But the insistence of the assessee in reagitating the said claim in appeal to the CIT(A) despite knowing or having reasons to believe the same to be false and untrue insisting upon its acceptance as true by the authori....