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TMI Blog2017 (3) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the firm to escape the consequences in law by citing the rule - revenue cannot look into the source of the source. Further, in the facts of the instant case, the question of examining the source of the source may have been an issue in the quantum proceedings in which as has been candidly stated by Shri. Bansal, the findings recorded against the assessee have attained finality. In the instant proceedings, the penalty was imposed because the assessee did not offer any explanation to the assessing officer in the first instance and then the penalty was sustained because his explanation furnished before the CIT(Appeals) was rejected. The provision of Explanation 1 to section 271 (1) (c) having been thus invoked, no further enquiry was require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the asseess's IT Appeal No. 82 of 2006 was dismissed by this court on 03.11.2009. Occasioned by confirmation of the additions by the Tribunal, the Assessing Officer thereafter initiated penalty proceedings on 26.08.2005 under Section 271 (1) (c) of the Act. Admittedly, the assessee did not file any explanation or reply to the aforesaid notice. In such facts, the Assessing Officer invoked Explanation 1 to Section 271 (1) (c) of the Act and imposed penalty of ₹ 2,00,000/- as against minimum penalty imposable ₹ 1,69,886/-. Since it was a case of no explanation the penalty has been imposed on that basis alone. Upon, appeal the assessee did furnish explanation before the CIT (Appeals), which authority passed the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n important and relevant facts are necessary to be referred to again. Gifts were received in the accounts of the minors through their guardians who were their fathers and were transferred to the firm through account payee cheques. It has been found as a fact that the donors were totally strangers. They did not have any relationship or friendship or business connection with the assessee or the partners or with the minors. Money was deposited in cash for purchase of drafts, which were deposited in the account of minors. The unknown donors had assembled practically on the same day to connections between the alleged donors and the minors, their guardians and the firm. The Assessing Officer had found as a fact that the explanation furnished by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on record, even though the same remained uncontroverted from the side of the Revenue? 5. Whether on the facts and circumstances of the case and on a true and correct interpretation of section 271(1)(c), the penalty levied/sustained therein is maintainable? We find that the assessee firm had disclosed certain amounts in its account which it claimed to have received from minor children of the partners of the firm. On being questioned as to the source of these funds at the hands of the minors, it was explained that funds to the extent of ₹ 2,39,000/- had been received by the minors by way of gifts received from strangers. Similarly, ₹ 50,000/- was credit appearing in the account as a loan from one Vikas Kumar Poddar. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessee to furnish such explanation and to lead evidence to establish the truthfullness and correctness of the same . Inasmuch as the assessee did not furnish any explanation at the original stage and the explanation furnished by him, subsequently in appeal was disbelieved in as much as the appeal authority concluded that the factum of gift given by different persons-all strangers to the minor children of the partners that too all through cash drafts purchased from same banks, apparently to enable them to give loans to the firm in which the parents of such minors were partners, was only a device. The said line of reasoning and findings recorded by the CIT (Appeals) cannot be faulted as same is based on evidence found in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantum proceedings in which as has been candidly stated by Shri. Bansal, the findings recorded against the assessee have attained finality. In the instant proceedings, the penalty was imposed because the assessee did not offer any explanation to the assessing officer in the first instance and then the penalty was sustained because his explanation furnished before the CIT(Appeals) was rejected. The provision of Explanation 1 to section 271 (1) (c) having been thus invoked, no further enquiry was required in the facts of this case. In view of the above, questions no. 1 to 5 are answered in affirmative i.e. in favour of revenue and against the assessee. The appeal is accordingly dismissed. There is no order as to costs. - - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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