Penalty 271(1)(c)-Explanation need not proved completely. As long as the explanation is reasonable and bonafide penalty need not be imposed-ITAT
ABCAUS Case Law Citation:
ABCAUS 1116 (2017) (02) ITAT
Assessment Year : 2008-09
Date of Pronouncement: 30-01-2017
Brief Facts of the Case:
During the assessment, an addition was made in respect of peak balance in the bank account of the assessee. The assessee explained that he had earned only commission income @ 1% in respect of transactions through this bank account. However the explanation was rejected for want of evidence and the entire peak credit was added to the income of the assessee.
The Assessing Officer also imposed a penalty u/s 271(1)(c) holding that the assessee had furnished inaccurate particulars of income and has concealed income. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success.
The assessee was in appeal before the Tribunal challenging the order of the CIT(A) and the AO.
Observations made by the ITAT:
The Tribunal observed that though the assessee had accepted the addition and did not carry the matter in further appeal, the assessee had offered a reasonable explanation which was rejected only for want of conclusive evidence.
The Tribunal stated that so far as penalty proceedings are concerned, the settled legal position is that it is not even necessary that the explanation is proved fully. As long as the explanation is reasonable and bonafide, the penalty under section 271(1)(c) need not be imposed.
Held that it was not a fit case for penalty and accordingly the penalty was deleted.