TaxTMI 
TaxTMI 
2020 (4) TMI 554
X X X X Extracts X X X X
X X X X Extracts X X X X
....and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of assessing officer in levying penalty of Rs. 7,14,662/- u/s 271(1)(c) of the I.T.Act, 1961. 2. It is therefore prayed that above penalty levied by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 3. Brief facts of the case are that during the assessment proceedings, the ld.Assessing Officer(AO) found that assessee was maintaining bank account at ICICI Bank, which was not reflected. It was further noticed tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e pattern of deposit and withdrawals in the ICICI Bank Account which has been reproduced by him in his written submissions and submitted that the entire table of withdrawal and cash deposits goes to prove that the assessee was into business activities. The assessee also relied upon the decision of the Co-ordinate Bench of ITAT Ahmedabad Bench in the case of S.K.Sharma vs. ITO in ITA No.2302/Ahd/2011 wherein under identical facts and circumstances of the case, the contention of the appellant that deposits represents turnover of the Art Silk Cloth has been accepted and the profit from the same was estimated @8% of the turnover. The ld.Authorised Representative(AR) also relied upon the decision of Co-ordinate bench in the case of Shri Ojas Ash....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for payment of purchase of Art Silk Cloth. Although it is an admitted fact that assessee was not maintaining any books of accounts, therefore he had requested to treat the above account as retail business account and club the income from retail business u/s.44AF of the Income Tax Act. We have also considered the decision cited by the assessee in the case of Shri Ojas Ashokbhai Mehta vs. ITO in which in para 4 it is held "We have considered the rival submissions and perused the material available on record. We find that in the case of Muralilal Ratanlal Agarwal vs. ACIT (supra), the facts as noted by the tribunal were that a search and seizure action was taken wherein one bank account was found. On being confronted, the assessee admitted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal decision, we delete the penalty and in Murarilal Ratanlal Agarwal Vs. ACIT it was held as "We have heard the rival submissions and perused the material on record. We find that the Assessee had disclosed income of Rs. 5,50,000/- based on the peak credit worked out from the bank account found during the course of search. The peak credit as worked out by the Assessee was not found correct by Assessing Officer and he worked out peak credit of Rs. 15,05,702/- and on the enhanced peak credit u/s.271(1)(c) was levied by Assessing Officer. The addition made by the Assessing Officer is on estimation basis and is not based on any tangible material on record. It is a settled law that penalty cannot be levied merely on estimation of income. Furt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and rain-AO revalued the stock and made substantial addition-On appeal CIT(A) directed the AO to value the stock at the rate declared by the assessee-Thus, one estimate was substituted by another estimate -CIT(a) held that merely because assessee could not substantiate his claim in terms of quantity, penalty under s. 271(1)(c) cannot be imposed -Tribunal also held that penalty was not leviable, though for different reasons-No interference warranted in view of findings of fact recorded by CIT(A) and Tribunal. 10. After having gone through the facts of the present case and also considering the judgments as mentioned above, we are of the view that the Co-ordinate Bench has already held that in case addition is made on the basis of peak wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at all mean that penalty for concealment of income is automatically required to be imposed. Explanation 1 to section 271(1)(c) only raises rebuttable presumption, which can be discharged by assessee on balance of probability. The penalty can be justified only if assessee fails to offer an explanation or his explanation is found to be false. If these circumstances are not present, the penalty can be avoided if assessee is able to substantiate his explanation. Reliance can be placed on latest Mumbai ITAT decision in the case of M/s VIP Industries Ltd. - ITA No.4524/Mum/2006 wherein it is categorically held that confirmation of addition cannot per se lead to confirmation of penalty. It is further held that necessary elements for attracting the....