TaxTMI 
TaxTMI 
2017 (1) TMI 890
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....t the assessee has filed his return of income on 1.11.2004 declaring total income at Rs. 4,66,590/-. The assessee at relevant time was running a proprietorship concern in the name and style of "Laxmi Steels". An assessment order was passed on 28.12.006 under section 143(3) of the Act, and total income of the assessee was determined at Rs. 6,20,570/-. It was found that the assessee had obtained loan of Rs. 9,85,500/- from five concerns. According to the AO, these loans were accepted in cash, therefore penalty proceedings under section 271D of the Income Tax Act, 1961 were initiated. During the penalty proceedings, the assessee has produced Shri Mayur Rana, representative of S.N. Traders from whom a loan of Rs. 2,07,500/- alleged to have been....
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....efore, it was contended that no penalty be imposed upon the assessee. On the other hand, the ld.DR relied upon the order of the AO. 5. I have considered the submissions of the ld. representatives, and gone through the record. Section 271(1)(c) of the Act has a direct bearing on the controversy, therefore, it is pertinent to take note of this provision, which reads as under: "271. Failure to furnish returns, comply with notices, concealment of income, etc.- (1) The Assessing Officer or the Commissioner (Appeals) or the CIT in the of course of any proceedings under this Act, is satisfied that any person (a) and (b) ** ** ** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may d....
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....see has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Expla....
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....nation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. 7. In the light of the above, if explanation of the assessee is being examined, then it would reveal that though on paper the assessee has tried to fulfill the requirement of section 68 i.e. he has tried to prove the identity of alleged creditors and genuineness of alleged transactions, but it is important to note that when the AO has cross-verified its details and called for....
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....ore the A.O. is also of no avail as these confirmatory letters were not signed by the parties and no address and PAN were mentioned in the letters and therefore they have no evidentiary value. That it is so is clear from the para-10 of the Hon'ble ITAT order in quantum appeal where this fact has been mentioned. The claim of the appellant that he had given an explanation which he has been able to substantiate is based on these confirmations which are unsigned and do not carry PAN or address of the creditor. The claim of substantiation is without any basis and cannot be accepted. The appellant is clearly caught within the mischief of explanation-1 to Sec. 271(l)(c). His claim that the A.O. should have carried out investigations cannot hel....