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TMI Blog2012 (9) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee, he treated the total amount of Rs.4,61,500/- received as gifts as unexplained cash credit and added it u/s. 68 of the Act. The assessee carried the matter before CIT (A) but the appeal of assessee was dismissed. Thereafter he A.O. initiated penalty proceedings on the additions made. The A.O. concluded that while filing the return of income, assessee furnished inaccurate particulars regarding the taxable income earned by it. He further observed that it was obligatory on the part of assessee to furnish accurate particulars while filing the return of income but the assessee failed to discharge the obligation cast upon it. The A.O. held that the onus of proving that there was no concealment of income was not discharged by assessee. He accordingly held that Assessee was liable for penalty in view of Explanation1 of Cl. (c)of sub-section 1 of section 271 and therefore levied penalty of Rs.1,41,219/-.Aggrieved by the order of A.O. the assessee carried the matter before CIT (A). CIT (A) vide order dated 22-12-2009 upheld the order of A.O. by holding as under:- "6. I have gone through the facts of the case, findings of the A.O. and submissions of the appellant. The submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised before us and the matter is restored to the file of Assessing Officer with the direction that A.O. will furnish the reasons recorded before issuing notice under section 148, thereafter, the assessee may file the objection thereon, on which the A.O. may pass appropriate order. Thereafter, if requires, he will re-adjudicate the addition of Rs.4,61,500/- afresh in accordance with law. We order accordingly." 8. Pursuant to the direction of Co-ordinate Bench, the A.O. passed order u/s. 143(3) r.w.s. 254 on 27-12-2011 wherein he has held as under :- "4. Reasons for reopening the case as under: The assessment of A.Y. 2002-03, in the case of Shri Labhubhai D. Lakhani, father of the assessee and Smt. Leelaben L. Lakhani, mother of the assessee had been finalized u/s. 143(3) of the I.T. Act by ITO Ward 9(2),Surat.It was informed by the A.O. Ward 9(2),Surat, that while completing these assessments,. It was noticed that in these cases there were alleged gifts involving huge amounts. On enquiry conducted on the alleged gifts at various levels, revealed that those gifts were not genuine and added accordingly. As the assessee shown to have received gifts totaling to Rs.4,61,500/- durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 is of Rs.1,27,500/. The penalty proceedings against which the assessee is in appeal before us is against penalty levied on the addition of Rs.4,61,500/-. Since the addition on which the penalty u/s. 271(1)(c) has been levied has itself been reduced from Rs.4,61,500/- to Rs.1,27,500/- we are of the view that the present penalty cannot survive. However, since the addition of Rs.1,27,500/- u/s. 68 has been sustained, we are of the view that issue of penalty on the addition be restored back to the file of A.O. for deciding it afresh. We thus remit back the matter to the file of A.O. with direction to him to decide the levying of penalty afresh as per law. 10. In the result, appeal is allowed for statistical purpose. I.T.A. No.340/AHD/2010 - A.Y. 2003-04. 11. The only effective ground is regarding the confirming of penalty levied u/s. 271(1) (c) of Rs.59,913/-. 12. For the assessment year 2003-04 assessee filed return of income on 31-3-2004 showing total income of Rs.2,20,200/-.The case was selected for scrutiny and the assessment was finalized u/s. 143(3) on 30-1-2006 determining the total income at Rs.4,10,200/- thereby making addition of Rs.1,90,000/- to the returned income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made by the closerelatives and therefore the element of natural love and affection could not be ruled out. The assessee has filed an explanation in this behalf and the same could not be said to be not bona fide. Merely because the assessee could not prove the credit worthiness of the donors, it does not justify the imposition of the penalty under Section 271(1)(c ) of the Act. The facts of the may justify the additions of the gift amounts for taxation purpose in the assessment of the assessee, but are not sufficient to justify the imposition of the penalty under section 271(1)(c ) of the Act. We are unable to sustain the observations of the CIT (A) that the levy of penalty was mandatory and no discretion is left with the competent authority. In these facts of the case, we hold that it is not a fir case for imposition of penalty under section 271(1)(c ) of the Act, which is accordingly cancelled and the grounds of the appeals of the assessee are allowed." 15. Co-ordinate Bench in ITA No.1172 & 1173/Ahd/2009 had deleted the penalty by holding as under :- "7. We have heard the learned D.R. and have perused the orders of the A.O. and the CIT (A). We find that the assessee has cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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