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TMI Blog2009 (7) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... year but are the old deposits and they were the transfer from one kind of deposits to the other kind of deposits. The position of the total deposits was explained as under as on 31st March, 2002 and 31st March, 2003 : Sl. No. Kind of deposits 31 -3-2002 31-3-2003 1. Current deposits 11,85,965 2,76,760 2. Fixed deposits 12 months 55,86,117 79,21,422 3. Fixed deposits 66 months 1,52,500 1,73,410 4. Ready payable deposits 17,32,359 86,56,941 83,71,592 Thus it was contended that the assessee has not furnished any inaccurate particulars or concealed the income. The AO did not agree with the assessee but took the view that the assessee has committed default within the meaning of s. 271(1)(c) by furnishing inaccurate particulars of income for ₹ 23,66,343 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the AO or the CIT(A) or the CIT to be false or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of cl. (c) of this sub-section be deemed to represent the income in respect of which particulars have been concealed. As per the provisions of s. 271(1)(c) the penalty under this section is leviable if the AO is satisfied in the course of any proceeding under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. The penalty proceedings and the assessment proceedings both are different. Explanation 1 to s. 271(1)(c) in respect of any fact relating to the computation of total income states that the amount added or disallowed in computing the total income of an assessee shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessee. 8. In the case of National Textiles (supra) the question before the Hon'ble Gujarat High Court was about the levy of penalty under s. 271(1)(c) in respect of the addition made under s. 68 by recourse to Expln. 1 below s. 271(1)(c). In this case the Hon'ble Gujarat High Court while holding the imposition of penalty was not justified observed : In order to justify the levy of penalty, two factors must coexist, (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 s. 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 the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt even if the assessee's claim is rejected. This is the settled law that penalty proceedings are distinct from the assessment proceedings and, therefore, if any addition is made, it does not mean that the penalty will automatically be levied. In the penalty proceedings the assessee is given an opportunity to explain his case. If he successfully explains his position and is not trapped within the parameters of s. 271(1)(c) along with the Explanations deeming the concealment of income, penalty cannot be imposed. We are of the view that the decision in the case of Dharamendra Textile Processors (supra) will not assist the Revenue. 10. We have also gone through the decision of the Tribunal, Mumbai Bench-A in the case of Asstt. CIT v. VIP Industries Ltd. (ITA No. 4524 (Mum.) of 2006 and ITA No. 4383 (Mum.) of 2006, order dated 20-3-2004) [reported at [2009] 122 TTJ (Mumbai) 289 : [2009 ] 21 DTR ( Mumbai) 153-Ed.] and we find that in that case the Tribunal has discussed the applicability of the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Processors (supra), in the following manner : 11 .. The Hon'ble Supreme Court has not held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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