1982 (1) TMI 11

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....s justified in deleting the penalty levied u/s. 271(1)(c) of the Income-tax Act ? " The relevant assessment years are 1962-63 and 1964-65. The ITO made trading additions of Rs. 62,821 and Rs. 1,35,145 in the respective years. Similarly, a sum of Rs. 58,899 was treated as cash credit in the first year and a sum of Rs. 58,868 was treated as cash credit in the second year. The dispute relating to the quantum was finalised in appeals before the Tribunal. The Tribunal gave a set-off of the unexplained cash introductions against additions in the trading account. In the proceedings u/s. 271(1)(c) of the Act, the IAC imposed penalty of Rs. 58,899 for the assessment year 1962-63 and of Rs. 57,068 for the assessment year 1964-65. On the asse....

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....efit of which can be given to him. In the case of Addl. CIT v. Sadiq Ali & Bros. [1973] 92 ITR 276 (J & K), it has been held that no penalty under the Explanation can be levied in a case of unproved cash deposits. In that case, the assessee gave no explanation about the cash deposits in its books which was partly accepted. The court did not approve the imposition of the penalty under the Explanation relating to the unaccepted part. In the case of CIT v. S.P. Bhatt [1974] 97 ITR 440 (Guj), it has been held that the Income-tax Officer may very well reject the book results of the assessee and estimate a higher profit but it does not follow therefrom that the accounts maintained by the assessee were false or incorrect. In that very case, it was....

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....n that the cash introductions came from the savings of his past business. As the assessee could not establish the flawless nature of his accounts, the trading additions were made. Again, as he could not produce the accounts of the earlier years to establish the quantum of savings made from the business carried on in the earlier years, the explanation was regarded as unsatisfactory. The Income-tax Officer was quite justified to make both the additions on the above grounds and the same has already been confirmed by the Appellate Tribunal. But, it is well settled that the penalty proceedings are different. As pointed out by the learned representative for the assessee at the time of the present hearing, the assessee is entitled to claim that th....