TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 501
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....alidity or otherwise in law of the penalty levied (at the minimum rate of 100% of the tax sought to be evaded) u/s. 271(1)(c) of the Act on cash credits aggregating to Rs. 50 lacs, considered unexplained and, accordingly, assessed u/s. 68 of the Act, having been since deleted by the first appellate authority. 3. The background facts are that the assessee-firm was assessed to tax at an income Rs. 51.95 lacs by bringing the impugned sum of Rs. 50 lacs, credited in its accounts to the account of five family members of a partner, Shri G. B. Mahajan, being cash deposits at Rs. 10 lakh each on 30.11.2006, to tax. The same, as explained during hearing by the ld. counsel, Shri Jayant Bhatt, was to pay off the other partner, Shri K. N. Hinge, who r....
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....and perused the material on record, and given our careful consideration to the matter. The primary facts of the case are simple and undisputed. The addition stands made on account of furnishing non-satisfactory explanation by the assessee-firm in respect of the cash credit appearing in its books (as to nature and source thereof), i.e., establishing the same, described as loans from family members of the the continuing partner, as genuine credit/s. The same, as is well-settled, requires proving the credit on the parameters of identity, creditworthiness and genuineness, each of which is to be independently established. The confirmations, vide statements on oath by the creditors, would prove only the identity of the creditor/s. The other two ....
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....e transaction is carried out in a manner to have no trail, with no specifics forthcoming, so as not to be borne out by any material/ evidence and/or subject to any verification or confirmation. Further on, though all of them (creditors) are stated to also have some agricultural income, the same is again wholly un-evidenced. There is no mention of land holding, or of what is the agricultural produce, much less its' quantity or evidence qua sale thereof. There is also no iota of evidence toward proving financial capacity to any extent, with four of the five creditors being themselves dependents and the fifth, Shri Panditrao Mahajan, having nominal income, barely sufficient to meet the requirements of himself and his family. No wonder, no retu....
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....P. Mohankala [2007] 291 ITR 278 (SC), the expression "the assessee offers no explanation" in section 68 means where the assessee offers no proper, reasonable and acceptable explanation (at pg. 285). In fact, the entire transaction is, as apparent, calculated to introduce liquid capital in the firm for payment to the outgoing partner, whose share thus gets acquired by the outgoing partner, introducing his family members as partners in his stead. The stated depositors, with no financial means of their own, are only ostensible sources of finance, introducing cash together on an appointed day, as if they were waiting with cash in their hands to be deposited with the firm and, further, shifting the source thereof to non-specified identities. It ....
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....es were fully entitled to look at the surrounding circumstances to find out the reality of the transaction and not put blinkers while looking at documents produced before them. In the present case, we have 'statements' instead of 'documents', so that the said decision is in ratio fully applicable in the facts and circumstances of the case. The Apex Court therein also emphasized the primacy of the test of human probabilities in appreciating and evaluating evidence - absent in the instant case (also refer ss. 103 and 114 of the Indian Evidence Act and Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC)). In Chuharmal vs. CIT [1988] 72 ITR 250 (SC), the Hon'ble Apex Court, applying the test of human probabilities, upheld the levy of penalty u/s. 271(....