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1.3 As mentioned earlier, penalty proceedings were initiated u/s 271(1)(c) in the course of original assessment order. These proceedings were concluded on 30.03.2010 by levying minimum penalty of Rs. 6,76,300/-. It has inter-alia mentioned that the assessee firm has introduced unaccounted cash in the books to cover negative cash balance by explaining it as advance for job work. However, the assessee failed to adduce any evidence regarding receipt of such advance or the job work actually done. The assessee had also been having negative cash balance of Rs. 8,79,204/- on 29.03.2005 for which there is no satisfactory explanation. He took into account the fact that total addition now stands at Rs. 18,48,039/-, and assessed income at Rs.16,62,540/- against returned loss of Rs. 1,85,499/-. In view of the provision contained in Explanation 4 to the aforesaid section, the base for levy of penalty was taken at Rs. 18,48,039/- and penalty of Rs. 6,76,300/- was levied. 1.4 Aggrieved by this order, appeal was filed before the CIT(Appeals), Muzaffarnagar, who disposed if off on 10.05.2011. Relying on the decision in the case of Union of India Vs. Dharmendra Textile Processors, (2008) 306 ITR 277 (SC), it has been held that the liability involves an element of strict liability, it is a civil liability, it is to provide remedy for loss of revenue and mens rea is not an essential ingredient for the levy. In regard to the facts, it has been mentioned that the burden is on the assessee to prove that particulars of income furnished by it were not inaccurate. Such explanation should be bona fide. Although in the quantum proceedings, two amounts were clubbed and addition of Rs. 18,48,039/- was sustained, both the additions are of the same nature. This amount represents unaccounted income and, therefore, it can be said that inaccurate particulars of income were furnished in respect thereof. Accordingly, the appeal has been dismissed.

3.5 In regard to ground nos. 6, 7 and 8, it is submitted that the AO had issued notices to the assessee to which no reply was furnished. Therefore, he proceeded with various explanations furnished by the assessee in the course of assessment and appellate proceedings. At the same time, the ld. CIT(Appeals) has considered all the submissions of the assessee. In view of the decision in the case of Dharmendra Textile Processors & Others (supra), the penalty is to be decided on the basis of the explanation furnished by the assessee and there is no need to prove mens rea as the proceedings are civil in nature. The instant case is clearly one of fabrication of account books done with a view to utilize unaccounted income in the course of business. Therefore, there is not only the rebuttal of the explanation but the facts contain positive element about secreted concealed income sought to be utilized by the assessee without payment of tax. Therefore, the penalty has been rightly levied and confirmed. 3.6 Reverting to the provision contained in Explanation 4, it is submitted that it is in the nature of the definition of the expression "the amount of tax sought to be evaded" but the substantive default is under clause (iii) of sub-section (1) of section 271.

6.1 In the case of Gem Granite (Karnataka) Vs. Deputy CIT (2009) 120 TTJ (Chennai) 992, it has been held that the burden to prove that there is concealment of income with a view to evade tax is on the department. Although the levy may be civil in nature, it cannot be equated with the payment of tax. On facts, it was found that different rates for sale in respect of flats in different floors were recorded, but the Tribunal came to the conclusion that when the document was taken as a whole, it supported the contention of the assessee that there could be a mistake in recording the rate. In the first place, the facts are distinguishable. It is not a case of estimate the rate of sale of the flats but a case where expenses were incurred for which no money was available in the books and, thus, undisclosed money available with the assessee was utilized. Secondly, the ratio of this decision at variance with the view of the decision of Hon'ble Supreme Court in the case of Dharmendra Taxtile Processors & Others, in which it has been held that the levy is a civil levy. It is charged to compensate the revenue for concealment of income etc. Therefore, the proceedings u/s 271(1)(c) have to be decided on the basis of provision contained in the statute including Explanation 1, which casts initial onus on the assessee to furnish explanation and thereafter the AO has to judge whether the explanation is substantiated or it is bone fide or not. Further, in the case of Gujarat Credit Corporation Ltd. (supra), the import of Explanation 1 has been explained. The charge against the assessee was that it claimed as business loss what in fact was capital loss. The claim of business loss was accepted by the CIT(Appeals). However, he again disallowed it by holding it to be speculative loss. In the facts, it was held that the claim of business loss has been vindicated and, therefore, the basis on which the penalty was initiated stands demolished. In such a situation, the penalty cannot be levied because the very basis does not survive. The facts of this case are also distinguishable. It is a case where penalty has been initiated because the assessee was found in possession of substantial unaccounted money which was introduced in the books of account from time to time and, thus, it is a case of fabrication of account books. In the case of Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 26 (SC), the question was regarding levy of penalty under the Sales-tax Act in a situation where the assessee held bona fide belief that it was not a dealer in goods. It has been held that levy of penalty is in the discretion of the authority which should be exercised judicially on consideration of all relevant circumstances. Even in a case where minimum penalty is prescribed, the authority may not levy the penalty when there is only a venial or technical breach of the provisions of the Act or where such a breach is on account of bona fide belief that the offender is not liable to act in the manner prescribed by the statute. The facts of this case are also distinguishable. In the first instance, it is not a case of technical or venial breach of the provisions of law. It is rather a case of manipulating account books while utilizing unaccounted income for the business purpose. As explained in the case of Dharmendra Textile Processors & Others, it is for the assessee to initially offer explanation. The explanation that money was received from two partners and that advances were received for job work charges could not be substantiated. It is a case where deficiency occurred on a number of occasions, the peak of which is Rs. 18,48,039/-. Further, no evidence exists in respect of receipt of advances for job work, the entries in respect of which have also been altered with a view to avoid applicability of sections 269SS and 269T. Therefore, the ratio of this case are also not applicable. 6.2 In the case of CIT Vs. Lakhdhir Lalji (1972) 85 ITR 77 (Guj.), the facts are that the AO came to the conclusion that the assessee firm, which deals in garlic, had not shown 1383 bags of garlic in the stock at the end of the year. Therefore, it was concluded that these stocks were sold and the sale proceeds were not disclosed. An addition of Rs. 58,000/- was made. The AAC came to the conclusion that the bags were not sold but were shown in the stocks, which was under-valued. On this basis, he confirmed the addition of Rs. 34,000/-. The Tribunal held it to be a case of under-valuation of stock but reduced the addition to Rs. 20,213/-. The AO also levied the penalty. The Hon'ble Court mentioned that the findings of the AAC were there before the AO which showed that there was no suppression of sale. However, the AAC did not chose to initiate penalty for furnishing inaccurate particulars of income. In such circumstances, there was no jurisdiction to levy the penalty u/s 271(1)(c). The facts of this case are also distinguishable because the CIT(Appeals) came to the conclusion that the two types of discrepancies described by the AO were of the same nature.