Ghisa Ram Tara Chand vs Income-Tax Officer.
1997 Latest Caselaw 730 Del

ORDER

B. M. KOTHARI, A.M. :

This appeal by the assessee is directed against the order of the CIT(A) confirming the penalty of Rs. 8,150 levied under s. 271(1)(c) for asst. yr. 1988-89.

2. None was present on behalf of the assessee.

3. The learned Departmental Representative relied upon the reasons mentioned in the penalty order as well as in the order of the CIT(A).

4. We have considered the submissions made by the learned representatives of the parties and have perused the orders of the learned Departmental authorities.

5. The AO has levied penalty under s. 271(1)(c) in respect of the following additions :

Rs.

A. Unexplained credit in the name of Shri Gulshan Kumar. (Total credit in this account was of Rs. 7,000)

3,000

B. Cash credit in the name of Shri Mahender Kumar.

9,000

C. Addition on account of "Inaam Bartan Scheme"

4,290

It was submitted on behalf of assessee before the Departmental authorities that the affidavits of both the creditors were duly furnished. The Department has failed to establish that the amount of cash credit added by the AO, in fact, represents the real income or concealed income of the assessee. The assessee had also submitted the complete details of the said expenditure of Rs. 4,290. The mere fact that the AO has disallowed the same by itself would not justify the levy of penalty.

6. On a careful consideration of the entire relevant facts, we are of the view that the disputed additions referred to above cannot be treated as concealment of income by the assessee. The assessee has discharged the burden of proving that the amount of cash credits added in their hand does not represent real income of the assessee by producing the affidavits of both the creditors. The disallowance of expenses made by the AO is also based on s. 40A(3). The reality and genuineness of the expenditure has not been disputed by the Departmental authorities. We are, therefore, of the considered opinion that penalty levied in the case of the assessee under s. 271(1)(c) should be cancelled.

7. In the result, the appeal is allowed.