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TMI Blog2010 (1) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 as in quantum appeal, Hon ble High Court of Bombay admitted the appellant s Appeal on the ground that Question of Law out of the order of the Tribunal. 2. The facts, which reveal from the record are as under. The assessee is a firm which is engaged in the trading of cloth and shares and return of income was filed by the assessee in which total loss was declared, which was selected for scrutiny and assessment was framed u/s 143(3). From the previous year relevant to assessment year 2001-02 the partners of the firm namely Smt Sofia Abdul Khalik and Salman Abdul Khalik (minor) have introduced capital of ₹ 25 lakhs and 2 lakhs respectively. The Assessing Officer sought the explanation of both the partners in respect of source of the capital introduced in the assessee firm. Smt Sofia Abdul Khalik explained that she has received the gift from Smt Aziza Abdul Latiff. and out of said gift she introduced capital in the Assessee Firm. Smt Sofia Abdul Khalik filed the details in respect of the bank account maintained by Smt Smt Aziza Abudl Latiff with bank of Baroda, Nariman Point Br., Mumbai, which was in respect of SB A/c no 2819. As per the explanation of Smt sofia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, made the addition of ₹ 25 lakhs u/s 68 of the Act and also initiated the penalty proceedings u/s 271(1)(c) of the Act. Same way, as Salaman Abdul Khalik also claimed that he received a gift from Smt. Aziza Abdul Latiff and that was the source for introduction of capital of ₹ 2 lakhs. For the reasons given in the case of Sofia A. Khalik by rejecting the explanation, the Assessing Officer also made addition of ₹ 2 lacs, thus made total addition of ₹ 27 lakhs in the hands of the Assessee firm under sec. 68 of the Act. The assessee challenged the said additions before the Learned CIT (A) and the additions were deleted. The Revenue challenged the impugned order of Learned CIT (A) dated 12.3.2004, by which the said additions were deleted, before the Tribunal and Tribunal allowed revenue s appeal being ITA 3476/Mum/2004 vide order dated 31.3.2008 and reversed the order of the Learned CIT (A) accepting the plea of the revenue and restore the order of the Assessing Officer. The Assessing Officer passed the order u/s 271(1)(c) of the IT Act on 21.10.2008 and levied the penalty of ₹ 10,58,000/- on the addition of ₹ 27 lakhs made by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment. If the issue is decided in favour of appellant then addition u/s 68 as well as penalty levied by A.O. will be cancelled/deleted automatically. But in case the Hon ble High Court decide the issue in favour of department, the fact will be confirmed that the appellant had concealed the particulars of income and also filed inaccurate particulars of such income. Therefore, in the facts and circumstances, the A.O. was correct in levying penalty of ₹ 10,58,400/- u/s 271(1)(c) of the Act. 4. Now, the assessee has challenged the impugned order of Learned CIT (A) before us. Learned Counsel for the assessee vehemently argued that as per the facts on record the capital was introduced by the two partners of the assessee firm and identity of the donor as well as source was explained. It is further argued that it is not disputed by the Assessing Officer that assessee received the amount of gift by cheque drawn on Bank of Baroda, Nariman Point Branch (S.B. A/c No. 2819), and the said bank account was in the name of Smt Aziza Abdul Latiff. The Learned Counsel took us through the assessment order and submitted that the donor Aziza Abdul Latiff is a NRI and she is always ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Page No. 47 of the Paper Book (copy of cash flow statement) in which the source of the cash deposits was duly explained. He also argued that the donor namely Smt. Aziza Abdul Latiff who is a NRI residing in UAE is known to the partners of the assessee firm since 1982 and she is closely related to the partners family. The Learned Counsel also referred to the copy of the power of attorney given by the donor to Shri D. M. Shah, Page nos. 35 to 37 of the Paper Book and argued that as per the terms of the power of attorney, Shri D. M. Shah was empowered to operate her bank account also. It is argued that nowhere it is case of the Revenue that the power of attorney is bogus. He also argued that there is divergence of opinion as per different judicial pronouncements whether addition can be made in hands of the Firm in respect of capital introduced by the Partners and this aspect can be considered while deciding present issue of penalty. He, therefore, pleaded that there is no reason so far as the facts of this case are concerned to levy the penalty upon the assessee u/s 271(1)(c). The Learned Counsel also relied on the following precedents: (i) CIT vs Balbir Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Smt. Aziza Abdul Latiff being SB A/c No.2819 of Bank of Baroda, Nariman Branch, Mumbai. The Assessing Officer made the enquires from the bank and also obtained the paying slips and copies of the cheques. The Assessing Officer issued summons to the donor Smt. Aziza Abdul Latiff and but same could not be served as she was not residing in India. There were certain cash deposits in the bank account of Smt. Aziza Abdul Latiff. In respect of cash deposits in Bank A/C. of Smt. Aziza Abdul Latif, the Assessing Officer made the enquiries with Mr D. M. Shah who was the Power of Attorney holder of Smt. Aziza Abdul Latiff. Shri D. M. Shah explained the source in respect of cash deposit in Bank A/C. of Smt. Aziza Abdul Latiff but the same was not accepted. The Assessing Officer rejected the contention of the assessee by giving the reason that the source of amount of cash deposit in the account of Smt. Aziza Abdul Latiff has not been convincingly explained. Nowhere, it is the case of the Assessing Officer that bank account was open by the assessee-firm and, therefore, said bank account is benami account of the assessee. The Assessing Officer did not make any enquiry in respect of ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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