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TMI Blog2009 (7) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... n about certain investments made by the assessee in Reliance Mutual Fund and Franklin Templeton Mutal Fund on 8th April, 2004 and 2nd April, 2004 respectively. The sums invested were ₹ 15 lakhs each. This was put before the assessee during the course of assessment proceedings wherein he replied as under:- In response to your query about the investment of ₹ 15,00,000 each in Reliance Vision Mutual Fund and Franklin Templeton Mutual Fund, I have to submit that these investments have been made by Mr. Charudutt Dangat from his savings bank a/c No. 9681 with Mahanagar Co-op. Bank Ltd., Fort Branch. However, while preparing the accounts this bank account remained to be considered. Even though the sum is accumulated through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed through the years) and my client is unable to furnish any documentary evidence in support thereof, therefore, to buy peace my client Mr. C.H. Dangat has offered this amount of ₹ 30,00,000 as his income for the accounting year 2004-05 relevant to asst. yr. 2005-06. My client has already paid sum of ₹ 10,00,000 on 5th Dec., 2007 and also balance demand of ₹ 4,21,279 on 4th Jan., 2008, arose as per demand notice dt. 11th Dec., 2007. The copies of the said challans have also been submitted to you. I, therefore, request Your Honour not to levy any penalty under s. 271(1)(c) against my above-said client since he has voluntarily offered the amount for taxation and also paid full tax demand. AO was of the opinion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the deposits in the said account were made during the financial year 2003-04 and this was clear from the statement of the bank account placed at paper book p. 3. Therefore, according to him, the investments in mutual funds were out of bank balances from deposits made in the earlier previous year. Thus, it was submitted that the investments which came out of accumulated balances in the bank account for an earlier year could not have been considered as unexplained income for the relevant previous year. Learned counsel for the assessee submitted that addition was agreed for purchasing peace with the Department and this was clear from his reply filed before the AO during the assessment proceedings as well as penalty proceedings. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him assessee was not able to explain the source and nature of the investment and also failed in furnishing all the facts relating to the same and material to the computation of the total income for the impugned assessment year. Therefore, he submitted that the levy of penalty was justified. 6. We have perused the orders and have heard the contentions of both the sides. There is no dispute that in the return filed by the assessee for the impugned assessment year or for the preceding assessment year, the sum of ₹ 30 lakhs which was used for the purpose of making investments in the two mutual funds was never shown by it. There is also no dispute that the assessee had accepted the amount for addition in the impugned assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, an assessee who has made investment is bound to offer explanation which, in the opinion of the AO is satisfactory regarding the nature and source thereof. A simple explanation that the amounts came out of accumulated sums of the earlier years deposited in the bank account, would not be satisfactory on the nature and source of investments made. No doubt, it is true that the investments were made out of balances standing in the credit of a bank account where deposits were made in the preceding year. But the fact remains that assessee has been unable to show how the amounts have been accumulated over the years nor has he been able to offer any plausible explanation for such huge credits which was hitherto before not disclosed in its retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court held that there was a clear condition in the submission made by the assessee before the AO, where it was stated that even if the said penalty is leviable the same shall be waived by the CIT under s. 263A of the Act . There is no such condition anywhere put by the assessee here and hence this decision will not be of any help to the assessee. Now coming to the third decision cited by the assessee which is of the Hon'ble Allahabad High Court in the case of Saran Khandsari Sugar Works (supra), assessment was completed on an estimate basis and such estimated income was agreed to by the assessee as a measure of co-operation and with a view to escape penal consequences. Here the assessment has not been made on any estimate basis, b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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