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2019 (7) TMI 26 - ITAT CHANDIGARHPenalty u/s 271(1)(c) - Appellant failed to disclose the details and source of cash deposits in its bank account - Investigation carried out for cash deposit as per AIR information - explanation offered in the penalty proceedings has to be considered - claim of business deposit in penalty proceeding claiming assessee is a labour contractor - HELD THAT:- Assessee needs to demonstrate that these were business receipts. In order to address the issue, it may be appropriate to address the past history of the assessee on his nature of activity etc. over the years. In case the assessee is able to demonstrate by way of supporting evidences etc. for instance filing affidavits etc. of responsible people where and for whom he is stated to have performed his work, the tax authorities in such an eventuality can then well consider the feasibility of allowing relief in the penalty proceedings. As such an eventuality will enable the tax authorities to consider the prayer consistently made that the amount should have been taxed u/s 44AD. In such an eventuality, the prayer in the penalty proceedings may qualify to be a valid argument justifying the quashing of the penalty orders. However, the occasion to make such a prayer would only arise after the assessee meets the bar first i.e. the assessee needs necessarily to demonstrate that these were contract receipts. Accordingly, in the interest of substantial justice, accepting the prayer of the ld. AR made on behalf of the assessee, the impugned order is set aside back to the file of the CIT(A). While so doing it is made clear that in the eventuality of abuse of the trust reposed in the assessee, the CIT(A) would be at liberty to pass an order on the basis of material available on record. Any fresh evidence the assessee seeks to file is directed to be admitted and in case it is found to be not sufficient or incomplete, the CIT(A) would be free to give any suitable direction for production of necessary evidences considered relevant for addressing the issues. - Appeals of the assessee are allowed for statistical purposes.
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