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2023 (1) TMI 317 - ITAT RAJKOTPenalty passed u/s 271(1)(c) - unexplained cash credit addition u/s 68 - HELD THAT:- Admittedly, the assessee has shown receipt of unsecured loan which was treated as unexplained cash credit u/s 68 of the Act and same was also confirmed by the learned CIT (A). The AO also initiated the penalty proceeding under section 271(1)(c) of the Act and levied penalty for furnishing inaccurate particular of income. Penalty proceedings are different from assessment proceeding. Any addition made under the assessment proceeding will not automatically lead to concealment of income or furnishing inaccurate particular of income. As such, the AO has to reach at independent finding that the assessee has concealed income or furnished inaccurate particular of income. In holding so we find support and guidance from the judgment of Hon’ble supreme court in case of T Ashok Pai [2007 (5) TMI 199 - SUPREME COURT] Assessee during the penalty proceedings furnished documentary evidences in support of identity, genuineness and credit worthiness of parties by stating that same were not furnished earlier due non-cooperation from the parties. The above explanation of the assessee was not found to be incorrect by the AO. The AO neither made any independent inquiry with regard to fact whether the loan credit indeed represent income of the assessee and the consciously furnished inaccurate particulars of income. As such, the entire basis of the AO treating such credit as unexplained was based on the doubt and human probabilities. There was no cogent material brought on record by the AO that assessee furnished inaccurate particular of income and the explanation furnished by the assessee is not true. Therefore, merely an addition made during the quantum proceeding will not attract penalty under section 271(1)(c) - Appeal of the assessee is hereby allowed.
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