Case Law Details
Brief of the case:
In the case of M/s Blessing Construction vs. ITO The Ahmedabad Tribunal has held Merely because the Assessing Officer or the ITAT did not consider the evidences to be sufficient for the purpose of explaining the cash credit u/s 68, it will not automatically lead to levy of penalty u/s 271(1)(c). The addition can be sustained on preponderance of probabilities but where the assessee has given sufficient evidences with regard to credit in his books of accounts and such evidences or explanations have not been found to be false, merely because the same is not accepted in assessment proceedings, the levy of penalty may not be justified.
Facts about Case:
During the course of assessment proceedings in the case of the assessee, the A.O. made the addition of Rs.13,00,000/- for unexplained cash credit which was reduced to Rs.10,00,000/- by the CIT(A) and the ITAT also upheld the order of CIT(A) since the assessee could not prove the creditworthiness of the creditors. The Assessing officer initiated the Penalty proceedings on this addition sustained by ITAT and levied penalty of Rs.365925/- u/s 271(1)(c) treating the said sum of Rs.10,00,000/- as concealed income of the Assessee. On an appeal CIT(A) sustained the same. Hence the assessee filed the appeal before Hon’ble ITAT.
Contention of Revenue:
There was concealment of income and addition u/s 68 was sustained by the ITAT, hence penalty u/s 271(1)(C) is leviable.
Contention of Assessee:
However, the assessee opposed the viewpoint of lower authorities.
Decision of Tribunal:
The consideration in the assessment proceedings and the penalty proceedings are different. The addition can be sustained on preponderance of probabilities but where the assessee has given sufficient evidences with regard to credit in his books of accounts and such evidences or explanations have not been found to be false, merely because the same is not accepted in assessment proceedings, the levy of penalty may not be justified. The assessee had produced the confirmation of all the creditors. All the creditors are assessed to Income-tax and they were produced before the Assessing Officer. They also accepted before the Assessing Officer having advanced the money to the assessee. The facts in the case of all the creditors are more or less same. Merely because the Assessing Officer or the ITAT did not consider these evidences to be sufficient for the purpose of explaining the cash credit u/s 68, it will not automatically lead to levy of penalty u/s 271(1)(c). After considering the facts of the case as well as the explanation of the assessee and the evidences produced by the assessee, Hon’ble ITAT did not consider it to be a fit case for levy of penalty u/s 271(1)(c). Accordingly, the penalty levied u/s 271(1)(c) was cancelled.
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