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TMI Blog2017 (8) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said explanation of the assessee had been found to be false, therefore there can be no escape from the fact that the assessee to some extent had also substantiated his aforesaid explanation (which though not being to the satisfaction of the A.O, would though justify an addition in the hands of the assessee during the course of the quantum proceedings), therefore, the case of the assessee falls beyond the scope and gamut of the Explanation 1 of Sec. 271(1)(c). We find that our aforesaid view that in respect of a transaction which is found to be unproved but not disproved, no penalty u/s. 271(1)(c) is liable to be imposed, stands fortified by the judgment of the Hon’ble High Court of Bombay in the case of CIT 8 Vs. Upendra V. Mithani ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of the search proceedings as certain gift deeds and books of accounts pertaining to the assessee were found at the premises of M/s. BSSPL, therefore, a notice u/s. 153C was issued to the assessee on 13.03.2006, calling upon him to file his return of income for A. Y. 2000-01. The assessee filed his return of income u/s. 153C declaring total income at ₹ 95,860/- on 28.03.2006. That during the course of the assessment proceedings the A.O del iberating on the gift deeds which were seized during the course of the search proceedings, therefore, in order to verify the genuineness of the gift transactions and the financial capacity of the respective donors, therein cal led upon the assessee to produce them for necessary examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducing the donors for necessary examination before him. It was thus averred by the assessee that now when the gifts had been received through bank transactions and the copies of the confirmations of the respective donors who were being assessed with the income tax department were also available on record, therefore, in case the A.O still had any doubts as regards the genuineness of the aforesaid transactions, then he could have made necessary verifications after summoning the requisite information from the said respective donors. It was thus submitted by the assessee that though the addition in respect of the gift transactions was as a matter of fact made for the reason that the assessee had failed to substantiate the genuineness and vera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer authorities and the material produced before us. We have given a thoughtful consideration to the facts of the case and are of the considered view that it is clearly a case where though material had been placed on record by the assessee to substantiate the genuineness and veracity of the gift transactions, but as the veracity of the said transactions could not be irrebutably proved in terms of the directions of the A.O, therefore the aforesaid amounts had been added to the income of the assessee. 6. We are of the considered view that as assessment and penalty proceedings are separate and distinct proceedings, therefore, merely for the reason that an amount had been added to the income of the assessee would not automatically lead t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of the gift transactions could be verified in the backdrop of the financial capacity of the respective donors, but however the assessee expressed his inability to produce the respective parties for examination, for the reason that the present whereabouts of the respective parties were not to his knowledge. 6. We though find ourselves to be in agreement with the observations of the CIT(A) that despite being afforded an opportunity during the course of the appellate proceedings, the assessee had failed to substantiate the genuineness of the gift transactions, which raises serious doubts as regards the veracity of the gift transactions. However, we cannot also shut our eyes to the very fact that certain material was available on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid amounts in the hands of the assessee in the course of quantum proceedings, but then in light of the facts as observed by us hereinabove, we are of the considered view that it can safely be concluded that as it is a case of unproved gift transactions leading to an addition of the aforesaid amounts as an income in the hands of the assessee, and not being a case of disproved gift transactions, therefore, no penalty u/s. 271(1)(c) of the Act would be liable to be imposed in the hands of the assessee. We are of the considered view that as the assessee had came forth with an explanation as regards the aforesaid amounts so received by him by way of bank transactions from the duly identified parties, and it is neither the case of the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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