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2017 (4) TMI 708 - AT - Income TaxPenalty under section 271(1)(c) - Unexplained cash credit - Held that - Tribunal has confirmed the addition only on the basis that the assessee did not obtain any confirmation letter from this party, however, the assessee placed reliance on repayment of ₹ 93,000/- made on 10-05-1991 to the creditor. Hence, it is a debatable issue whether the assessee has repayment or not. Tribunal in respect to this cash credit, we are of the view that there is a debate about re-payment of ₹ 93,000/- made on 10-05-1991 by the assessee to this creditor Shri Ronak Patel. Hence, in any case penalty for concealment cannot be levied. We delete the penalty and allowed the appeal of the assessee on this issue. The assessee before Tribunal explained that the assessee has furnished copy of account of creditor, copy of receipts issued to the creditor, confirmation letter obtain for the year ended 31-03-1989 and 31-03-1991. It is admitted fact that the confirmation letters contained the GIR No. of the creditor. Now, it was claimed before us that the assessee could not obtain fresh confirmation for the year ending 31-12-1987 due to long passage of time. Even the books of account were available for inspection only in August 2009 as per the direction of the Hon ble Bombay High Court. We find from the penalty order of the AO that he has no were discussed the element of concealment in respect to this cash credit and hence we have no reason to sustain the same. The penalty levied by AO and confirmed by CIT(A) is deleted. In respect to other items on which penalty was levied by AO and confirmed by CIT(A) in all these three years, the Tribunal has deleted the additions, the penalties levied and confirmed will not sustain. AO is directed to delete the penalties in respect to those items which have already been deleted by the Tribunal in quantum. All the three appeals of the assessee are allowed.
Issues Involved:
1. Confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Years 1987-88, 1988-89, and 1989-90. Issue-wise Detailed Analysis: 1. Assessment Year 1987-88: - Unexplained Cash Credit of ?28,000: - The Tribunal confirmed the addition solely because the assessee did not obtain a confirmation letter from Ronak Patel, despite the assessee's reliance on a repayment of ?93,000 made on 10-05-1991. - The Tribunal acknowledged that the source of ?12,000 was explained due to the payment of interest. - The Tribunal concluded: "Thus, we are of the view that the sources to the extent of ?12,000/- can be considered to have been explained in view of the payment of interest, referred above. Accordingly, we modify the order passed by Ld CIT(A) on this issue and direct the AO to sustain the addition in respect of this cash credit to the extent of ?28,000/-." - Given the debate about the repayment, the Tribunal decided that penalty for concealment could not be levied. Hence, the penalty was deleted, and the appeal of the assessee was allowed on this issue. 2. Assessment Year 1988-89: - Unexplained Cash Credit of ?3,00,000 from M/s Mamta Enterprises: - The Tribunal confirmed the addition, noting that the assessee provided an account copy of the creditor, copy of receipt, and confirmation letters for the years ending 31-03-1989 and 31-03-1991, which contained the GIR number of the creditor. - The Tribunal stated: "It is not clear as to whether this credit was received by way of cheque. Apart from giving GIR number, the assessee has not provided the address of the creditor. It is also not clear as to whether the assessee is paying interest to this creditor and the details of repayment were also not given." - The Tribunal concluded that the assessee failed to discharge the initial burden placed upon him under Section 68 of the Act in respect of this creditor. - However, the penalty order of the AO did not discuss the element of concealment regarding this cash credit. Therefore, the Tribunal found no reason to sustain the penalty and deleted it. 3. Assessment Year 1989-90: - General Observations: - The Tribunal noted that all additions for this year were deleted. Consequently, any penalties levied and confirmed based on these additions would not sustain. - The AO was directed to delete the penalties in respect to those items which had already been deleted by the Tribunal in the quantum appeal. Conclusion: - The Tribunal found that penalties under Section 271(1)(c) could not be sustained due to the lack of clear evidence of concealment and the debatable nature of the issues. - All the appeals of the assessee were allowed, and the penalties levied by the AO and confirmed by the CIT(A) were deleted. Order Pronouncement: - The order was pronounced in the open court on 15-03-2017.
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