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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO
आदेश /O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
This is an appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-13, Chennai, (in short ‘CIT(A)’) dated 28.11.2018 for the Assessment Year 2015-16.
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The Revenue raised the following grounds of appeal: 1. The order of the learned CIT(A) is contrary to law and facts of the case.
The learned CIT(A) erred in deleting the penalty u/s.271(1)(c) of Rs.30,89,062/-.
The learned CIT(A) failed to note that the assessee has offered an explanation which he was not able to substantiate.
The learned CIT(A) failed to appreciate that the addition made in the quantum proceedings has not been appealed against by the assessee and that but for the scrutiny assessment, the assessee would have got enriched by a tax amount equal to the amount of penalty.
The learned CIT(A) ought to have noted that the assessee has failed to substantiate the explanation offered by him, in the course of penalty proceedings, and thus, has not discharged the burden cast on him, by Explanation 1 (B) to Sec.271(1)(c) of the LT. Act, 1961.
Having regard to Explanation 1 to Sec.271(1)(c) of the LT. Act, 1961, the learned CIT(A) ought to have upheld the levy of penalty u/s.271(1)(c) of the LT. Act, 1961.
For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.
The brief facts of the case are as under: The appellant is an individual engaged in the business of trading in leather. The return of income for the assessment year 2015-16 was filed on 28.09.2015 disclosing total income of Rs.94,30,000/-. Against the said return of income, the assessment was completed by
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the Assistant Commissioner of Income Tax, Circle-1, Vellore (hereinafter referred as ‘AO') vide order dated 19.12.2017 passed U/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’) at total income of Rs.2,05,89,100/- after making several additions which includes inter-alia, addition on account of unexplained cash credit in the capital account of Rs.1,08,00,000/-, rental income of Rs.3,59,100/-. It appears that the appellant had not agitated the addition before appellate forum. Further the AO also initiated the penalty proceedings U/s.271(1)(c) of the Act, by issuing show cause notice U/s.274 r.w.s.271(1)(c) of the Act dated 19.12.2017 for furnishing the inaccurate particulars of income. In response to the show cause notice, it was submitted that penalty cannot be levied for mere failure of the assessee to substantiate the claim with evidence. The AO rejected the explanation of the appellant and proceeded with levy of penalty of Rs.34,48,162/- vide order dated 29.06.2018 passed U/s.271(1)(c) of the Act for the concealment of particulars of income.
Being aggrieved on the order of penalty, an appeal was preferred before Ld.CIT(A), who vide impugned order deleted the penalty by holding that the penalty in respect of addition of
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unexplained credit of Rs.1,08,00,000/- cannot be imposed as merely because the claim made by the assessee was not accepted, placing reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products (P) Ltd reported in [2019] 189 Taxmann 322 (SC). In respect of penalty on the addition under house property, the Ld.CIT(A) sustained the penalty. Being aggrieved by the decision of Ld.CIT(A), the Revenue is in appeal before us in the present appeal.
It is submitted by the Ld. Senior DR that the Ld.CIT(A) ought not have deleted the penalty in as much as the appellant had concealed the particulars of income. On the other hand, the Ld.AR submitted that the show cause notice for levy of penalty was issued for furnishing inaccurate particulars whereas the penalty was imposed for the concealment of particulars of income which is not permissible under law and he placed reliance on the decision of the Third Member of the Tribunal in the case of HPCL Mittal Energy Ltd., vs. ACIT reported in 97 taxmann.com 3 and in the decision of the Hon’ble High Court of Bombay in the case of CIT vs. Samson Perinchery reported in 88 taxmann.com 413. Further, he submitted
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that mere non-acceptance of the explanation of the assessee, does not tantamount to furnishing of inaccurate particulars of income.
We heard the rival submissions and perused the material on record. The sole issue involved in the present appeal is whether the Ld.CIT(A) was justified in deleting the penalty levied U/s.271(1)(c) of the Act, in respect of addition made on account of unexplained cash credits. From the perusal of the assessment order as well as penalty order passed U/s.271(1)(c) of the Act, it is clear that the addition was made by the AO on the mere inability to substantiate cash credits received. There is no finding by the AO that any particulars filed by the assessee are found to be false. The Hon’ble Supreme Court in the case of Reliance Petro Products (P) Ltd held that mere disallowance of the claim does not amount to furnishing of inaccurate particulars of income and therefore levy of penalty is not warranted. The Ld.CIT(A) also followed the ratio of the decision laid down by the Hon’ble Supreme Court in the case of Reliance Petro Products (P) Ltd., cited supra. Hence, we do not find any fallacy in the reasoning of the Ld.CIT(A) while dealing with the penalty in respect of addition
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of unexplained cash credit. Accordingly, we do not find any merit in the appeal filed by the Revenue.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the court on 14th August, 2019 at Chennai.
Sd/- Sd/- (एन.आर.एस. गणेशन) (इंटूर� रामा राव) (N.R.S. Ganesan) (Inturi Rama Rao) �या�यक सद�य/Judicial Member लेखा सद�य /Accountant Member
चे�ई/Chennai, �दनांक/Dated, the 14th August, 2019. RSR आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF