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TMI Blog2016 (9) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction and even the copy of the income tax returns and accounts of the assessee. The evidences produced on the file by the assessee have not been proved wrong or false. The Hon’ble Bombay High Court in the case of “CIT vs. Upendra V. Mithani” in ITA (L) No.1860 of 2009 decided on 05.08.2009, has observed in the matter of levy of penalty under section 271(1)(c) of the Act, that if the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee’s case is false, then no penalty can be imposed in such cases - Decided in favour of assessee Disallowance of expenses - Held that:- smallness of amounts involved and also that the assessee was not maintaining the accounts and that the disallowances relating to the claim of expenditure of ₹ 43,832/- and under statement of income of ₹ 45,081/- were not on account of inaccurate particulars of income but due to the reason that the assessee could not furnish the required evidences/reconciliation during the assessment proceedings, we do not find it to be a case for levy of penalty under section 271(1)(c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years 2004-05 2006-07 respectively. Whereas the appeals preferred by Smt. Asha Babladi are against two separate orders of Ld. CIT(A) of even date 25.09.2014 relevant to A.Y. 2001-02 and 2004-05 in relation to assessment orders passed under section 143(3) of the Act. Both the assessees are closely related being son and mother. The appeals in the case of Mr. Satish Babladi were heard on 27.07.16 whereas in the case of Smt. Asha Babladi were heard on 28.07.16. Since the facts involved in all the above captioned appeals are identical, hence the same are taken together for disposal by this common order. 2. The issue raised in all the appeals is relating to the levy of penalty under section 271(1)(c) of the Income Tax Act. First we take up the assessee Mr. Satish Babladi s appeal for A.Y. 2004-05 in ITA No.345/M/2015. ITA No.345/M/2015 for A.Y. 2004-05 3. In this case, the penalty aggregating of ₹ 2,21,443/- had been levied by the Assessing Officer (hereinafter referred to as the AO) under section 271(1)(c) of the Act on account of following disallowances/additions. a. Capital receipt of ₹ 500000/- claimed to be received as gift. b. Expenses deductib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the transaction. Merely because the AO insisted the assessee to bring more evidence and the assessee could not produce the same, as the assessee was not in possession of the same, that itself does not establish that the assessee had furnished inaccurate particulars of income or that his claim was disproved. The additions in this case have been made not because that the AO has disproved the claim of the assessee or the AO had brought any falsehood in the evidences submitted by the assessee relating to the genuineness of the transaction. The Revenue could not prove that the claim put by the assessee was wrong or bogus. Merely because the additions have been made by the AO and confirmed by the Tribunal on account of inability of the assessee to furnish more evidences as required by the authorities to prove the genuineness of the transaction that itself is not sufficient to hold that the claim of the assessee was wrong, inaccurate or that there was any concealment of income. The penalty proceedings are separate from quantum assessment proceedings. In the case of levy of penalty, it should be proved on the file that the particulars furnished by the assessee were inaccurat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee were the rough accounts not prepared by a professional; that there were certain minor discrepancies in those accounts; that there was no concealment of income or furnishing of inaccurate particulars of income. 10. In relation to the addition on account of understated income of ₹ 45,081/-, the Ld. A.R. has given somewhat identical submissions stating that this addition was on account of difference in some figures noticed as the assessee was not maintaining any regular books of accounts. Hence, during the assessment proceedings, the assessee could not reconcile each and every amount that was not a case of any concealment of income or avoidance of tax but only because of the inability of the assessee to reconcile some figures. Regarding the addition of ₹ 1,14,763/- on account of income from short term capital gains, the Ld. A.R. has explained that the said income had accrued to the assessee on account of redemption of units in mutual funds. He has explained that the assessee had invested the monies in mutual funds which were disclosed in the accounts maintained and that the source of investments was fully explained. However, as advised by the mutual f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f opinion as to whether the compensation of amount of ₹ 6 lakhs received by the assessee was exigible to capital gains tax in A.Y. 2006-07 or in A.Y. 2007-08. The Ld. A.R. of the assessee, at the outset, has brought our attention to the decision of the co-ordinate bench of the Tribunal dated 10.06.14 in the case of the mother of the assessee in ITA Nos.1733, 1734 2110/M/2010. The Ld. A.R. of the assessee has explained that the assessee along with his mother had received the above stated compensation in the same transaction. The matter relating to the levy of penalty on this issue was considered by the Tribunal and it was held by the Tribunal that this was not a case of concealment of income. It was only a case of difference of opinion as the AO had taken the view that transfer of asset was in A.Y. 2006-07 and that capital gains were also assessable in A.Y. 2006-07. Whereas, in view of the assessee, since the possession had been taken in the Financial Year 2006-07 relevant to A.Y. 2007-08, therefore amount of capital gain was assessable in A.Y. 2007-08 and the assessee had also offered the same in A.Y. 2007-08. The Tribunal, considering the facts, has held that it was a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly ordered to be deleted. 20. The second issue upon which the penalty has been levied on account of addition of ₹ 10200/- on account of undisclosed bank balance. In this respect, the Ld. A.R. of the assessee has submitted that the assessee was holding only one bank account which was fully disclosed to the Revenue Authorities. The assessee explained that it was not the case of furnishing of inaccurate particulars of income or concealment of income. It was just a simple accounting error. 21. Considering the smallness of the amount and also considering that the assessee has fully disclosed her bank account to the Revenue Authorities but due to some mistake it could not match the bank balance along with accounts, we do not think that it is a case of furnishing of inaccurate particulars of income or concealment of income. 22. In view of our above findings, this appeal of the assessee is allowed and the penalty levied under section 271(1)(c) is hereby ordered to be deleted. 23. Now coming to the appeal of the assessee Smt. Asha Babladi bearing ITA No.344/M/2015 for A.Y. 2004-05. ITA No.344/M/2015 for A.Y. 2004-05 24. In this case the penalty under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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