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TMI Blog2019 (2) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... any firm basis and/or independent enquiry which failed to have been conducted by the Authorities below. Such finding culminating into the order of the imposition of penalty is bad and liable to the quashed. We, thus, allow the appeal filed by the assessee. - I.T.A. No.419/Ahd/2015 - - - Dated:- 1-1-2019 - Shri Waseem Ahmed, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri M. J. Shah, A.R. For the Respondent : Shri Jayant Jhaveri, Sr. D.R. ORDER PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the assessee is against the order dated 11.11.2014 passed by the Commissioner of Income Tax (Appeals) - Gandhinagar [Ld. CIT(A) in short] for Assessment Year (AY) 2010-11 arising out of the penalty order u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 25.09.2013 passed by the ITO, Ward-1, Gandhinagar with the following grounds: 1. On the facts and circumstances of the case, the learned CIT(A) has erred in levying penalty on addition made of unsecured loans of ₹ 1,15,500/-. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in levying penalty on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urate particular of income hence he don't fall in the category for the penalty proceedings because your attention is invited in the balance sheet of the assessee the assessee had shown a unsecured loan of ₹ 1,15,500/- and the same was already been offered for the purpose of taxation. During the course of the assessment proceedings the appellant had submitted confirmation along with the ledger account duly signed by both the party hence identity of the payee and genuineness of the payment was established by the assessee. In your assessment order para 4.1 it was stated by you that confirmation of account was not filed this statement is not correct. We had fully discharged the burden of proof to prove the genuineness of this deposit account, hence no objection material was collected by you to prove that this deposit is not genuine no summons was issued nor no information was called for u/s.133(6) of the income tax act. Further to avoid any litigation and to obtain peace of mind I agreed for the same addition. Addition of ₹ 1,50,360/- on account of sundry creditors I have to state that during this year I had purchased a building material from Gayatri Trading Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear case where the assessee has furnished inaccurate particular of income to the tune of ₹ 1,50,360/- on account of sundry creditors. The Learned AO further observed as follows: Explanation 1 to sec.271(1)( c) is clearly applicable in both the above issues in as much as assessee has failed to furnish material evidence which was necessary for computation of income and that the explanation of the assessee cannot be termed as bonafide. The assessee has not given any confirmation letter or address of depositors/Sundry Creditors. These are material evidence for the purpose of making assessment as it would have enabled the AO to carry out the enquiries. Further the assessee never proved that he is prevented by sufficient cause from furnishing details required by the AO. Therefore non furnishing of the details preventing the AO to carry out its verification would be the case squarely covered within the meaning of explanation 1 to sec.271(1)(c) as this is lack of disclosure of such particulars. The assessee has referred to some case laws in reply furnished. The facts of the case of the assessee are different to that of the case laws referred to and, are therefore, nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry conducted by the Assessing Officer in the penalty proceeding. We find that while imposing penalty the Assessing Officer pointed out the lacuna on the part of the assessee during the assessment proceeding in the manner as follows: The assessee in his reply to the penalty notice has claimed that he had file confirmation alongwith ledger account and signed by both the party, is without any supporting evidence. As it can clearly seen in order sheet entry dated 11/02/2013 duly signed by assessee's Authorized Representative that the assessee has not filed any confirmation in the above case of unsecured loan. Further the Authorized Representative vide order sheet entry dated 25/02/2013 has shown his inability to provide any details and has offered the same for taxation. From the above, it is clear that during the course of assessment proceedings the assessee has failed to satisfactorily discharge its onus of proving his bonafide regarding identity, creditworthiness and genuineness of the transaction., Even in the course of penalty proceedings no prima facie evidence or details as to the identity and/or the creditworthiness of creditors and genuineness of the transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanced the alleged temporary loans were neither disclosed with their particulars nor any supporting documents were on record. Only two entries were explained. The accountant who had arranged the loan was not produced stating that he had left the service and relations with him are strained. On this state of accounts and evidences in the quantum proceedings, the Department was justified in treating the cash credits as income of the assessee but merely on that basis by recourse to Explanation 1, penalty under section 271(1)(c) could not have been imposed without the Department making any other effort to come to a conclusion that the cash credits could in no circumstances could have been amounts received as temporary loans from various parties. The assessee in the quantum proceedings failed to produce the accountant but the Department also in penalty proceedings made no effort to summon him. Applying the test (i) discussed above, therefore it was a case where there was no circumstances to lead to a reasonable and positive inference that the assessee s case-that the cash credit were arranged as temporary loans, was false. The facts and circumstances are equally consistent with the hypot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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