TaxTMI 
TaxTMI 
2016 (12) TMI 245
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....learned CIT(A) erred in holding that that the explanation furnished by the assessee was found to be false and therefore, the explanation 1 to section 271(1)(c) was attracted in the case of the assessee and hence, the levy of penalty was justified. 4] The learned CIT(A) failed to appreciate that the said amount of Rs. 40,98,148/- was actually paid by the three creditors on behalf of the assessee towards purchase of scrap from auction and subsequently, the assessee had also made bank payments to these persons and therefore, there was no reason to levy penalty in respect of the above addition. 5] The learned CIT(A) ought to have appreciated that the assessee had filed supporting evidences to show that the amounts were paid by the above persons on behalf of the assessee and the explanation of the assessee was a plausible one which was not found to be false and hence, explanation 1 to section 271(1)(c) was not attracted in the case of the assessee and thus, the levy of penalty was not justified. 6] The learned CIT(A) erred in not appreciating that penalty proceedings are different from asst. Proceedings and hence, merely because the claim of the assessee was not supported by co....
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....ssee had failed to furnish any confirmation from the creditors to prove any identity. The assessee was in the business of scrap and bidding auctions of MSRTC. The payments were shown in the names of different persons but the auctions were taken by the assessee. The assessee claimed that the said payments were made by those identified persons and the Tribunal in this regard held that the burden was upon the assessee to prove who were the said persons and also to establish the genuineness of said transactions. The addition made in the hands of assessee was confirmed under section 68 of the Act. The next addition made in the hands of assessee was in respect of disallowance of interest relatable to interest free advances which issue was set aside to the file of CIT(A) for fresh adjudication by the Tribunal. 6. The Assessing Officer while passing the order levying penalty under section 271(1)(c) of the Act issued show cause notice to the assessee. In reply, the assessee claimed that no penalty is leviable as the payments made to the Government Department were supported by receipts and the payments were subject to tax deduction and VAT collection. The assessee reiterated that the paym....
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....ove not only the identity of creditors but also to prove the nature and source of the amounts. The aforesaid addition has been made after properly examining the fact and also after due verification of the details furnished by the appellant. The contention now being raised by the appellant is with respect to the merits of the quantum matter and issue involved which has already been considered earlier at all stages including the ITAT, which also upheld the aforesaid addition and the issue has reached a finality and the appellant cannot raise the said issues again during the penalty proceedings contesting the merits of the addition. The jurisdiction under penalty proceedings is limited to the issue of penalty as held by the High Court of Allahabad in the case of Bharat Rice Mill Vs CIT (2005) 278 ITR 599 (All). The findings of the High Court that validity of the assessment cannot be canvassed has to be understood only in sense that the assessee cannot ask for cancellation of assessment which has become final in the penalty appeal. In view of the above facts the contention raised by the appellant in this regard cannot be considered and is not tenable under law. 4.2.1 In the case of ....
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....e provision of Explanation-1, the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation. The burden is on the assessee. If he fails to discharge that burden hence, the presumption that he had concealed the income or furnished inaccurate particulars thereof is available to be drawn. It was so held in CIT Vs Prathi Hardware Stores (1993) 203 ITR 641 (Ori). In the present case the appellant has failed to furnish an acceptable explanation hence the presumption that he has concealed the particulars of income gets drawn. The explanation offered is not bona fide and all the facts & material relating to' the computation of his income have not been disclosed nor substantiated. The reasoning of the A.O. and the material on record goes on to establish the fact that the explanation furnished by the appellant has not been substantiated. The claim made by the appellant was not bona fide rather it was with malafide intent and wa....
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....to operation as the two conditions as required to be satisfied before applying the explanation gets satisfied viz. a) Such person fails to offer an explanation or offers an explanation which is found by the assessing officer to be false or b) Such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide. In the instant case, the appellant has offered an explanation in respect of the claim and the claim made is not bona fide. There is material on the record to suggest that the explanation offered by the appellant is false. Likewise, there is indication as well as material on the record that the explanation offered by the appellant is not bona fide. The conditions stated u/s 271 (1)(c) exist in the case on hand and hence the leviability of penalty u/s 271(1)(c) is clearly attracted. In the case of Ahluwalia Contracts (I) Ltd. Vs JCIT (2007) 213 CTR 157 (Del), it was held that since the assessee had failed to explain cash receipts which were not found recorded in his books of account, penalty u/s 271(1)(c) was rightly levied. 4.2.4 In the case of DCIT Vs Smt. K R Kalarnathi (2006) 99 ITD 359 (Chennai....