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TMI Blog2015 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is found covered by clause (a) of Explanation 2 to section 271(1)(c) of the Act because the assessee furnished a plausible explanation during the quantum proceedings which was also filed before the AO during penalty proceedings. Hence, we reach to a logical conclusion that the AO imposed penalty on the basis of wrong premises and erroneous interpretation of the provisions of the Act and the same was wrongly upheld by the CIT(A). Accordingly, we are inclined to hold that penalty is not leviable on the assessee in the present case. - Decided in favour of assessee. - ITA No. 5143/DEL/2013 - - - Dated:- 22-12-2014 - Shri R. S. Syal And Shri Chandramohan Garg,JJ. For the Appellant : Shri Inderjit Ahuna, Adv. For the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 39,90,498/- on sale of Bhiwadi Land, Building and Plant Machinery at the time of framing assessment u/s 143(3) vide order dated 26.12.2011 and again during the course of penalty proceedings was not found supported with corroborative evidences. Thus, the default, in question, is patent on the part of the assessee and the assessee is liable to levy of penalty u/s 271(1)(c) of the Act on the amount concealed of ₹ 39,90,498/-. I, therefore, impose a penalty of ₹ 8,22,041/- u/s 271(1)(c) read with Explanation-1 thereto, which is equivalent to 100% of tax sought to be evaded. 4. Being aggrieved by the above penalty order, the assessee preferred an appeal before the CIT(A) which was also dismissed by passing the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty was being imposed. It was also emphasized by the Tribunal that the assessee had made it clear while surrendering that there was no admission of concealment and that the offer was made in a spirit of settlement. On appeal by the Department to the High Court, HELD reversing the Tribunal: When the AO called upon the assessee to produce evidence as to the nature and source of the amount received as share capital, the creditworthiness of the applicants and the genuineness of the transactions the assessee simply folded up and surrendered the sum of ₹ 40.74 lakhs by merely stating that it wanted to buy peace . In the absence of any explanation in respect of the surrendered income, the first part of clause (A) of Explanation 1 to s. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the factory of the seller and deal could not materialise and agreement of sale was cancelled and the seller returned the payment of ₹ 40 lakh through various cheques issued by Axis Bank Ltd. The assessee further explained that due to these circumstances, the assessee could not avail exemption u/s 54 of the Act, therefore, the assessee surrendered LTCG to be taxed and also submitted challans for tax deposited by him of ₹ 8,20,000. 6. From the penalty order, we observe that the assessee also reiterated its explanation during the penalty proceedings but the AO held that the act of the assessee found covered by clause (a) to Explanation (1) to section 271(1) of the Act. The CIT(A) upheld the penalty by following the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and returned the advance of ₹ 40 lakh through cheques of Axis Bank to the assessee. The assessee further explained that unfortunately the deal of purchase of flat could not materialise, therefore, he offered the amount of long term capital gain for taxation and also deposited tax of ₹ 8.20 lakh to the exchequer and the assessee also submitted copies of the challan tax deposited along with explanation dated 26.12.11 which shows sincerity and truthfulness of the assessee during the quantum proceedings and in this situation, it can safely be presumed that the assessee offered an explanation during quantum and penalty proceedings which was quite sustainable and hence, the AO was wrong in holding that the assessee did not fur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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