2014 (3) TMI 1007 - AT - Income Tax

Penalty u/s 271 (1) (c) - Held that - In case before us also the surrender was not made voluntarily and the documents were found in this Assessment year still the assessee had not bothered to file any return. Even in Assessment year 2004- 05 and 2005-06 only part of income was declared therefore the assessee has clearly concealed the particular of his income which would attract penal consequences. In view of the above discussion, we are of the opinion that this is a fit case for levy of penalty and accordingly we confirm the action of the Ld. CIT(A) and confirm the levy of penalty. - Decided against assessee.

Summary

Issues Involved:
1. Confirmation of levy of penalty under Section 271(1)(c) of the Income Tax Act.
2. Whether the income was estimated and if penalty can be levied on such estimated income.
3. Whether the assessee concealed particulars of income or furnished inaccurate particulars.
4. Impact of the assessee's failure to file returns for several years.
5. Legality of penalty proceedings when the assessment order is not challenged in appeal.

Detailed Analysis:

Issue 1: Confirmation of Levy of Penalty under Section 271(1)(c)
The assessee, a Chartered Accountant, was found during a survey to be engaged in providing accommodation/book entries for capital gains, gifts, and loans by charging a commission. Despite admitting to issuing cheques for bogus entries, the assessee did not file returns from the assessment years 1996-97 to 2004-05. The Assessing Officer (AO) issued a notice under Section 148 for the assessment year 2002-03, and upon investigation, added an estimated income based on the assessee's undisclosed activities. Penalty proceedings were initiated under Section 271(1)(c) for concealment of income.

Issue 2: Estimation of Income and Penalty
The AO estimated the assessee's income based on the turnover from bogus entries and investments in shares. The assessee argued that income was estimated and, therefore, no penalty should be levied. The Tribunal noted that penalty proceedings are independent of assessment proceedings and upheld the penalty, emphasizing that the assessee had not disclosed the income voluntarily and had concealed particulars of income.

Issue 3: Concealment of Income or Furnishing Inaccurate Particulars
The Tribunal found that the assessee had systematically concealed income by not disclosing the business of providing accommodation entries. The assessee's failure to file returns and the discovery of various documents during the survey, including blank cheque books used for bogus entries, supported the finding of concealment. The Tribunal noted that the burden of proof shifted to the assessee to show that there was no concealment, which the assessee failed to do.

Issue 4: Failure to File Returns
The Tribunal emphasized that the assessee had not filed returns for several years, which indicated deliberate concealment of income. This non-compliance with statutory requirements further justified the imposition of penalty.

Issue 5: Legality of Penalty Proceedings
The Tribunal referred to the decision of the Madhya Pradesh High Court in S.S. Ratanchand Bholanath vs. CIT, which held that issues settled in assessment proceedings cannot be re-agitated during penalty proceedings. The Tribunal concluded that the assessee could not challenge the legality of the assessment during penalty proceedings and upheld the penalty.

Conclusion:
The Tribunal upheld the imposition of penalty under Section 271(1)(c) for the assessment years 2002-03, 2004-05, and 2005-06, finding that the assessee had concealed particulars of income and furnished inaccurate particulars. The Tribunal dismissed the appeals, confirming the orders of the CIT(A) and the AO. The decision emphasized that penalty can be levied even on estimated income if it is based on concrete evidence of concealment and that the burden of proof lies on the assessee to show that there was no concealment.