2017 (2) TMI 1018

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....ceedings u/s.271(1)(c) of the Income Tax Act, 1961; in short "the Act". 2. We come to relevant facts first. This assessee is a company manufacturing plywood, black boards and flush doors. It had claimed sundry creditors of Rs. 87,48,322/-. The Assessing Officer sought details of the said creditors. We notice from assessment order dated 18.12.2009 that the assessee furnished only one creditor's details involving a sum of Rs. 1lac. This made the Assessing Officer to propose the above creditors to be treated as bogus ones. The assessee thereafter filed confirmation of M/s. Mahesh Timbermart Pvt. Ltd., Gandhidham only. The Assessing Officer then noticed assessee's above stated gross sum included new creditors of Rs. 49,35,116/- and the remai....

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....essing officer held that the creditors appearing in appellant's books are not genuine. Assessing officer made the addition in respect of credits introduced during the year under section 68 of IT act and in respect of old creditors the addition was made under section 41 (1) being cessation of liabilities. Assessing officer initiated penalty under section 271 (1) (c) of IT act. Against the additions made by the assessing officer, appellant did not prefer appeal and accordingly the additions made by the AO have become final. During penalty proceedings also appellant did not submit any information relating to the creditors and therefore the additions made an account of unexplained credits and cessation of liabilities were not explained a....

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....the issue of furnishing of inaccurate particulars of income or concealment of income as per main section. The penalty in this case is sustainable as per explanation-1 and therefore the decisions relied upon by the appellant are not applicable. As against this, assessing officer relied upon certain decisions which are applicable since appellant failed to give any explanation with regard to the additions made. Just by keeping the creditors in the books without explaining the nature and source thereof, appellant can't take help of the decisions wherein primary onus was discharged with regard to the genuineness of the credits. Considering these facts, penalty is leviable on the additions in respect of unexplained credits and cessation of li....