Penalty for concealment can not be imposed automatically for disallowance of deduction

RELEVANT PARAGRAPH

9. Part A of the Explanation to section 271(1)(c) provides that if assessee fails to offer an explanation or offers and explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false. This explanation can therefore, be applied only where the assessee has either not offered any Explanation or where he has offered any Explanation, the same found to be false by the ITO etc. in other words, where the assessee offers some explanation, it is only the proving by the assessee officer of the explanation to be false, that part A of the Explanation may be attracted, Mere non acceptance of explanation offered by the assessee cannot form a basis for the satisfaction of ITO must have some definite evidence to refuse the assessee’s claim or evidence or explanation.

10. The essence of part B of the explanation is that the person must provide an explanation which is bona fide and he should substantiate that explanation by some evidence with him. If he fails to do so, his explanation may be treated as untenable. But when, the assessee is able to offer reasonable explanation based on some evidence, the ITO cannot invoke Part B of the explanation unless he has given finding based on some contradictory evidence to disapprove that explanation offered by the assessee which the assessee 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.

11. If we apply the above discussion to the above facts of the case under consideration we do not find that assessee has concealed any particulars of income or furnished inaccurate particulars of income. Assessee has disclosed all relevant material for the purpose of computation of total income. We also find that assessee has furnished explanation in this regard which was not found false by the Assessing Officer. It is also to state that when the assessee has filed all particulars of income, the correct assessment and calculation of total income has to be done by the Assessing Officer. If on such process the Assessing Officer finds different total income to be assessed, and the income offered by the assessee, in such case it is not automatically a case of where penalty u/s. 271(1)(c) is leviable.

NF

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