2022 (6) TMI 477

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.... by DCIT, Circle 26(1), New Delhi ( herein after referred to as 'Ld. Assessing officer or in short Ld. AO'). 2. The facts in brief are the assessee Appellant has filed return of income for A.Y. 2009-10, declaring income of Rs. 8,84,000/-. The income was assessed at Rs. 61,54,354/- after setting off of the b/f loss. The addition of Rs. 1,13,30,664/- on account of bogus creditors u/s 68 and Rs. 1,26,136/- on account of short and excess being debited to P&L, were made. During the appellate proceedings, despite several opportunities, the appellant had failed to appear and make submissions and the appeal was dismissed. However, the matter was restored that to the file of, CIT(A) by the Hon'ble ITAT vide it's order dated 29.10.2013. The ....

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....sallowance of Rs. 1,26,136/- on account of Short and excess expense debited in P&L account; c. Disallowance of INR 1,00,000/- of deduction claimed under section 80C of the Act 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that a mere disallowance of a claim does not automatically result in levy of penalty. 4. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) has failed to appreciate that the provisions of section 271(i)(c) of the Act are not applicable'in this case as the Appellant has furnished complete facts in the return of income and offered a bonafide explanation. 5. That on the facts and in the circumstances of the case and in la....

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....observed that primarily the penalty has been sustained for the reason that Ld. CIT(A) was of the opinion that the assessee was given sufficient opportunities still failed to disclose material facts and submitted no explanation as to why it claimed deductions, which were on its face bogus. 7. Appreciating aforesaid and what transpires is that the increase in amounts of certain creditors during the year under consideration compared to the rest of creditors required proof of their genuineness. Accordingly the expenses booked appeared to be bogus in nature to ld. AO and were disallowed and added back to the income of the assessee. It appears that there was non-satisfaction of the ld. AO but prima facie the bogus nature was not established on t....

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....rrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income. 46. The explanation, having regard to the decisions of this Court, must be preceded by a finding as to how and in what manner he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the Income Tax Officer must arrive at a satisfact....