Brief of the case
In the Case of the Dasrathbhai Narandas Patel v ITO, ITAT-Ahmedabad held that the assessment Proceedings are completely different from Penalty Proceedings and before initiating the penalty proceedings there should be some convincing and corroborative evidence.
Facts of the Case
Assessee is a teacher, who is also getting income from agriculture. Assessee filed his return of income for A.Y. 2009-10 declaring total income at Rs. 1,45,660/-. The total income was determined at Rs. 4,87,170/- interalia by disallowing the claim of deduction and other additions. According to A.O, the Assessee had concealed the income and had furnished inaccurate particulars of income and accordingly the Assessee was liable to penalty u/s. 271(1)(c) of the Act.
Order of Ld. CIT(A)
The ld. CIT(A) granted partial relief to the Assessee by directing the A.O to delete the penalty on the disallowance of deduction u/s. 80D but however confirmed the penalty on the addition of unsecured loan. Also, in this case appellant failed to offer any explanation regarding opening cash balance Rs. 204,015/- before AO during assessment and penalty proceedings and therefore, it was added.
Contention of the Assessee
The ld. Counsel for the Assessee contended that the Assessee had received loan from Shri Rajendra Patel on 3.05.2008 and the same was also repaid by cheque on 01.09.2008. He further submitted that since Rajendra Patel was at that time residing in U.S.A. , Assessee was unable to place the confirmation and to cooperate, Assessee had offered the sum to tax. With respect opening cash balance of Rs. 2,04,015/-, he submitted that the cash balance was opening cash balance which was duly reflected in the statement of cash for A.Y. 2007-08 & 2008-09 and the addition made by the A.O was accepted by the Assessee and was not challenged in appeal. He further submitted that the penalty proceedings and assessment proceedings are distinct and separate.
Contention of the Revenue
The Ld. Counsel for the Revenue supported the order of A.O and ld. CIT(A).
Judgment of the Hon’ble Tribunal
The Hon’ble Tribunal mentioned the necessary ingredients for attracting Explanation 1 to Section. 271(l)(c) which are: (i) the person fails to offer the explanation, or (ii) he offers the explanation which is found by the AO or the ld. CIT(A) or the ld. CIT to be false, or (iii) the person offers explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him and observed that in the present case the assessee had disclosed the material facts before the AO. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars thereof. Further, it was observed that it is a settled legal position that penalty proceedings are different from assessment proceedings and the findings given in the assessment though it may constitute good evidence but same is not conclusive in the penalty proceedings.
Therefore, in the present case, in the absence of complete and convincing corroborative evidence, the penalty proceedings cannot be allowed, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income.
Accordingly, the appeals of the assessee were allowed.