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TMI Blog2015 (10) TMI 2476X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. with clear directions to examine on merit the evidences and supporting documents to be submitted by assessee before him for proving the identity, creditworthiness and genuineness of the cash credit taken from its sister concern M/s Poonam Dyeing & Printing Mills Pvt. Ltd. and accordingly, should decide the issue of imposing penalty u/s.271(1)(c) of the Act. - Decided in favour of assessee for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... rder on 21.03.2011 imposing the penalty of ₹ 4,03,920/-. During course of penalty proceeding, assessee submitted complete details to explain the cash credit of ₹ 12,00,000/- which was loan taken by account payee cheque from assessee's sister concern M/s Poonam Dyeing & Printing Mills Pvt. Ltd., but A.O. did not give cognizance to the submissions, explanations and supporting documents filed by the assessee. 4. Aggrieved assessee went in appeal before the CIT(A) against the penalty imposed by the A.O. at ₹ 4,03,920/- and again filed all the relevant details before the CIT(A), but was unable to convince CIT(A) who confirmed the penalty imposed by the A.O. who observed in his order as under: "3.3 I have considered the submission made by the appellant and the observation of the A.O. Neither during the assessment proceedings nor during the appellate proceedings, the appellant has filed confirmation from M/s. Poonam Dyeing & Printing Mills Pvt. Ltd. The appellant has not given documentary evidence that the above amount came through Bank of M/s. Poonam Dyeing & Printing Mills Pvt. Ltd. The appellant has, therefore, failed to discharge its onus to prove the identity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Income-tax Act, 1961, permitting the Assessing Officer to treat unexplained cash credits as income are enabling provisions for making certain additions where there is failure by the assessee to give an explanation or where the explanation is not to the satisfaction of the Assessing Officer. However, the addition made on this count would not automatically justify imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961, by recourse only to Explanation 1 below section 271(1)(c). In order to justify the levy of penalty, two factors must co-exist, (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee's income. It is not enough for the purpose of penalty that the amount has been assessed as income, and (ii) the circumstances must show that there was animus, i.e. conscious concealment or act of furnishing of inaccurate particulars on the part of the assessee. Explanation 1 to section 271(1)(c) has no bearing on factor No.1 but has a bearing only on factor No.2. The explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the imposition of penalty was not justified." In the case of CIT vs. Jalaram Oil Mills (supra), Hon'ble Jurisdictional High Court has held as under :- "The Explanation to section 271(1)(c) of the Income-tax Act, 1961, provides that in case there is a difference, as statutorily provided, between the total income returned by any person and the income assessed, such person shall have to prove that the failure to return the correct income was not due to any fraud or any gross or willful neglect on his part. In the absence of such burden being discharged by the person concerned it will be deemed that particulars of income have been concealed or inaccurate particulars of income have been furnished for the purpose of section 271(1)(c). The Explanation raises a rebuttable presumption and the burden which is cast on an assessee is akin to a civil burden which may be discharged on a preponderance of probabilities. Section 68 provides that where a sum is found credited in the books of an assessee maintained for any previous year, and where the explanation offered by the assessee about the nature and source of such credits is not found to be satisfactory, the sum so credited may be charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has not given cognizance to the documents available on record and decided the issue on the basis of their observations made during assessment and appellate proceedings in regard to original additions made by A.O. 6.2 We, therefore, respectfully, relying upon the decisions of Hon'ble Jurisdictional High Court in case of National Textile vs. CIT (supra) and CIT vs. Jalaram Oil Mills (supra) as well as to our discussions made above, are of the confirmed view that proceedings u/s. 271(1)(c) of the Act are separate proceedings and the observations and findings made during the original assessment proceedings, should not shadow over the proceedings u/s.271(1)(c) of the Act and the A.O. ought to have analyzed the evidences and supporting documents furnished before him during the penalty proceedings u/s.271(1)(c) and examined them in consonance to the provisions of Section 271(1)(c) and only if he is not satisfied with them, then only he should initiate the penalty against the assessee. We, therefore, remit back the issue to the file of A.O. with clear directions to examine on merit the evidences and supporting documents to be submitted by assessee before him for proving the identity, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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