2009 (5) TMI 924 - AT - Income Tax

Summary

Issues Involved:
1. Justification of CIT(Appeals) in canceling the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. Whether the penalty order was barred by limitation.
3. Whether the charge of concealment of income or furnishing inaccurate particulars of income was raised against the assessee.

Summary:

Issue 1: Justification of CIT(Appeals) in canceling the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961

The main grievance of the revenue was whether the CIT(Appeals) was justified in canceling the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961. The assessee had declared gifts aggregating to Rs. 19.02 lakh from six persons, which the AO added to the income due to unsatisfactory evidence. The Tribunal had reversed the CIT(Appeals) order and restored the addition. The AO initiated penalty proceedings and levied a penalty of Rs. 6,67,602/- for furnishing inaccurate particulars of income. The CIT(Appeals) allowed the appeal of the assessee, which led to the revenue's appeal before the Tribunal.

Issue 2: Whether the penalty order was barred by limitation

The assessee argued that the penalty order was barred by limitation u/s 275(1)(a), which requires the penalty order to be passed within one year from the end of the financial year in which the order of the CIT(Appeals) was received by the Commissioner. The Tribunal held that the order was passed within the time prescribed by the statute u/s 275(1)(a), as the time limit is six months from the end of the month in which the order of the Tribunal is received by the Commissioner.

Issue 3: Whether the charge of concealment of income or furnishing inaccurate particulars of income was raised against the assessee

The Tribunal found that the AO had initiated penalty proceedings u/s 271(1)(c) and mentioned the applicability of Explanation-1, which covers both concealment of income and furnishing inaccurate particulars. The Tribunal concluded that the assessee failed to substantiate the explanation regarding the gifts, and the evidence provided was not credible. The Tribunal upheld the AO's penalty order, stating that the CIT(Appeals) erred in deleting the penalty.

Conclusion:

The Tribunal allowed the revenue's appeal, set aside the order of the CIT(Appeals), and restored the AO's order imposing the penalty. The order was pronounced in the open court on 29.05.2009.