SHRI VASANT PARSHOTTAMBHAI PATEL,UNJHA vs. THE INCOME TAX OFFICER, WARD-2, PATAN

In the first appeal, the CIT(A) also confirmed the action of the AO in imposing the penalty under s.271(1)(c) of the Act.

Aggrieved, the assessee is in appeal before the ITAT.

The Ld.AR for the assessee Mr.S.N. Divatia at the outset submitte4d that all the primary evidences and documents in connection with the impugned cash credits received from (i) Parshottambhai Bechardas Patel – Rs.3,57,500/-, (ii) Raiben Parshottambhai Patel – Rs.2,40,000/- and (iii) Manjulaben Vasantbhai Patel - Rs. 40,000/- were duly produced before the lower authorities in quantum. In fact, all the Shri Vasant Parshottambhai Patel vs. ITO transactions have been admittedly carried out through banking channels. The lenders have also claimed that the loan amount belongs to them. However, the addition was carried out expressing doubts on the creditworthiness of all these parties. The Ld.AR submitted that while the inadequacy in the documents towards creditworthiness may result in invocation of section 68 of the Act, however, such addition by itself cannot translate into imposition of penalty.

The Ld.DR, on the other hand, relied upon the order of the AO and CIT(A).

We have considered the rival submissions with. The limited issue for adjudication in the present case is correctness of imposition of penalty under s.271(1)(c) of the Act on the assessee in the given set of facts and circumstances exceeding in the case. At the outset, we note that all the primary documents have been furnished including the bank statement and loan confirmation, etc. The creditworthiness of the lenders however, could not be established to the satisfaction of the revenue authorities. When the fact are seen holistically, one cannot come to a definite conclusion that onus placed under Explanation-1 to section 271(1)(c) of the Act has not been discharged by the assessee. The loans have been taken from the relatives of the assessee. The amount involved are small in nature. The assessee has offered an Explanation-1 which has been Shri Vasant Parshottambhai Patel vs. ITO substantiated to a great deal. The relevant facts concerning the cash credits have been brought on record. The lenders have categorically submitted that the amount lent belongs to them. Thus, a reasonable explanation is available on record which is not found to be disproved while remaining somewhat unproved. There is nothing on record which indicates culpability of any sort against the assessee. In these circumstances, we find some merit in the plea raised by the assessee for deletion of onerous penalty. The penalty imposed under s.271(1)(c) of the Act therefore deserves to be deleted. We direct the AO to do so accordingly.

In the result, appeal of the assessee is allowed.

""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त(अपील) / The CIT(A)-Gandhinagar "वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त ////