TaxTMI 
TaxTMI 
2010 (1) TMI 1249
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....he learned A.O. ought to have dropped the penalty proceedings initiated under section 271(1)(c) of the income Tax Act 1961 as in quantum appeal, Hon'ble High Court of Bombay admitted the appellant's Appeal on the ground that Question of Law out of the order of the Tribunal." 2. The facts, which reveal from the record are as under. The assessee is a firm which is engaged in the trading of cloth and shares and return of income was filed by the assessee in which total loss was declared, which was selected for scrutiny and assessment was framed u/s 143(3). From the previous year relevant to assessment year 2001-02 the partners of the firm namely Smt Sofia Abdul Khalik and Salman Abdul Khalik (minor) have introduced capital of Rs. 25 lakhs and 2 lakhs respectively. The Assessing Officer sought the explanation of both the partners in respect of source of the capital introduced in the assessee firm. Smt Sofia Abdul Khalik explained that she has received the gift from Smt Aziza Abdul Latiff. and out of said gift she introduced capital in the Assessee Firm. Smt Sofia Abdul Khalik filed the details in respect of the bank account maintained by Smt Smt Az....
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....ng Officer, therefore, concluded that there was no nexus between the cash withdrawals and cash deposits and the source of the cash deposits in donor's bank a/c. has not been convincingly explained. The Assessing Officer, therefore, made the addition of Rs. 25 lakhs u/s 68 of the Act and also initiated the penalty proceedings u/s 271(1)(c) of the Act. Same way, as Salaman Abdul Khalik also claimed that he received a gift from Smt. Aziza Abdul Latiff and that was the source for introduction of capital of Rs. 2 lakhs. For the reasons given in the case of Sofia A. Khalik by rejecting the explanation, the Assessing Officer also made addition of Rs. 2 lacs, thus made total addition of Rs. 27 lakhs in the hands of the Assessee firm under sec. 68 of the Act. The assessee challenged the said additions before the Learned CIT (A) and the additions were deleted. The Revenue challenged the impugned order of Learned CIT (A) dated 12.3.2004, by which the said additions were deleted, before the Tribunal and Tribunal allowed revenue's appeal being ITA 3476/Mum/2004 vide order dated 31.3.2008 and reversed the order of the Learned CIT (A) accepting the plea o....
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....his argument. The appellant has not filed any case law supporting its argument that no penalty can be levied in case of admission of question of law by the High Court. In the facts and circumstances, the Hon'ble High Court may decide the issue either in favour of appellant or in favour of department. If the issue is decided in favour of appellant then addition u/s 68 as well as penalty levied by A.O. will be cancelled/deleted automatically. But in case the Hon'ble High Court decide the issue in favour of department, the fact will be confirmed that the appellant had concealed the particulars of income and also filed inaccurate particulars of such income. Therefore, in the facts and circumstances, the A.O. was correct in levying penalty of Rs. 10,58,400/- u/s 271(1)(c) of the Act." 4. Now, the assessee has challenged the impugned order of Learned CIT (A) before us. Learned Counsel for the assessee vehemently argued that as per the facts on record the capital was introduced by the two partners of the assessee firm and identity of the donor as well as source was explained. It is further argued that it is not disputed by the....
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....It is submitted that assessee filed the details in respect of Mrs Aziza Abdul Latiff before the Assessing Officer and also explained how the cash deposits were made in the account of Smt. Aziza Abdul Latiff. The Learned Counsel referred to the page 39 and 40 of the paper book where the copy of the gift declaration dated 5.12.2000 is filed. The Learned Counsel also referred to the Page No. 47 of the Paper Book (copy of cash flow statement) in which the source of the cash deposits was duly explained. He also argued that the donor namely Smt. Aziza Abdul Latiff who is a NRI residing in UAE is known to the partners of the assessee firm since 1982 and she is closely related to the partners' family. The Learned Counsel also referred to the copy of the power of attorney given by the donor to Shri D. M. Shah, Page nos. 35 to 37 of the Paper Book and argued that as per the terms of the power of attorney, Shri D. M. Shah was empowered to operate her bank account also. It is argued that nowhere it is case of the Revenue that the power of attorney is bogus. He also argued that there is divergence of opinion as per different judicial pronouncements whether addition....
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....) Kanbay Software India (P) Ltd vs Dy CIT 31 SOT 153 (Pune) (ix) Glorious Realty (P) Ltd vs ITO 29 SOT 292 (Mum) (x) DCIT Central circle vs K Natarajan 33 SOT 92 (Bang) 5. Per contra, the Learned Departmental Representative vehemently argued that the additions have been confirmed by the Hon'ble Tribunal and, hence, the facts in this case are not disputed. It is argued that assessee tried to conceal the income and also furnished inaccurate particulars of income and hence, the Assessing Officer has rightly levied the penalty. The Learned Departmental Representative did not specifically rel....
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....ng Officer also that Smt. Aziza Abdul Latif was benamidar of the assessee-firm. In our humble opinion lot of questions are remained unanswered in this case. So far as the penalty proceedings are concerned, the principles are well settled that it is distinct and separate from the assessment proceedings. Though the Tribunal has confirmed the addition that cannot be sole basis to decide a fate of the penalty levied by the A. O.. The additions made by the Assessing Officer were deleted by Learned CIT (A) and the Learned CIT (A) has held that the bank a/c. was not belonging to the assessee firm. We do not go into the controversy of the reasons given by the Tribunal for approving the addition made by A. O. Under Sec. 68 of the Act. As admittedly in this case, there are missing link in respect of certain facts which are relevant so far as penalty proceeding is concerned. It is also well settled that Explanation 1 to section 271(1)(c) raises debatable presumption and the onus is shifted on the assessee, to explain the bona fides of the claim, but at the same time, merely because explanation of the assessee is not accepted by the Assessing Off....