2015 (8) TMI 1263 - AT - Income Tax

Penalty under section 271(1)(c) - natire of satisfaction - Held that - The AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the AO is not required to record his satisfaction in a particular manner or reduce it into writing The scope of Section 27l(l)(c) has also been elaborately discussed in Union of India vs. Dharmendra Textile Processors (2008 (9) TMI 52 - SUPREME COURT) and CIT vs. Atul Mohan Bindal (2009 (8) TMI 44 - SUPREME COURT). The principle laid down in our view, has been correctly followed by the Revenue and we find no illegality in the department initiating penalty proceedings in the instant case. - Decided against assessee

Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. Genuineness of the gift received by the assessee.
3. Onus of proving the genuineness and creditworthiness of the donor.
4. Opportunity to cross-examine the donor.
5. Voluntary surrender of income and its implications on penalty.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty under Section 271(1)(c) of the Income Tax Act, 1961:
The primary issue in both appeals was whether the penalty levied under section 271(1)(c) of the Income Tax Act, 1961, was justified. The assessee argued that the surrender of the amount was made in good faith to avoid litigation and buy peace, and hence, no penalty should be imposed. However, the Tribunal held that the surrender was not voluntary but made after detection of concealment by the Revenue. The Tribunal referenced the Hon'ble Supreme Court's decision in Mak Data P. Ltd. Vs. CIT, which stated that voluntary disclosure does not absolve the assessee from penalty. The Tribunal concluded that the assessee had willfully concealed the particulars of income and furnished inaccurate particulars, justifying the penalty.

2. Genuineness of the Gift Received by the Assessee:
The assessee claimed to have received a gift of Rs. 10 lacs from Shri Avinashi Lal Bajaj. However, during inquiries, Shri Avinashi Lal Bajaj denied making any gift and stated that the pay order was issued in lieu of cash received from the assessee. The Tribunal noted that the assessee failed to prove the genuineness of the gift and the creditworthiness of the donor, as required under section 68 of the Act. The Tribunal upheld the findings of the Assessing Officer and CIT (Appeals) that the gift was not genuine and was, in fact, the assessee's undisclosed income.

3. Onus of Proving the Genuineness and Creditworthiness of the Donor:
The Tribunal emphasized that the onus was on the assessee to prove the genuineness of the gift and the creditworthiness of the donor. Despite ample opportunities, the assessee failed to discharge this onus. The Tribunal referenced the case of Jaspal Singh Vs. CIT, where it was held that mere identification of the donor and movement of gift amount through banking channels is not enough; the assessee must establish the donor's means and the genuineness of the gift. The Tribunal concluded that the assessee failed to meet these requirements.

4. Opportunity to Cross-examine the Donor:
The assessee contended that he was not given the opportunity to cross-examine the donor, Shri Avinashi Lal Bajaj. However, the Tribunal found that the assessee was confronted with the donor's statement during the assessment proceedings, and the donor's non-cooperation was noted. The Tribunal held that the onus was on the assessee to produce the donor for cross-examination, which he failed to do. Therefore, the lack of cross-examination opportunity did not invalidate the penalty proceedings.

5. Voluntary Surrender of Income and Its Implications on Penalty:
The assessee argued that the surrender of Rs. 10 lacs was made voluntarily to avoid litigation and should not attract penalty. The Tribunal, however, found that the surrender was made only after the Revenue's detailed investigations and detection of concealment. Citing the Hon'ble Supreme Court's decision in Mak Data P. Ltd. Vs. CIT, the Tribunal held that voluntary surrender does not release the assessee from penalty proceedings. The Tribunal concluded that the surrender was not voluntary but a result of detection, and thus, the penalty under section 271(1)(c) was justified.

Separate Judgments Delivered:
The Tribunal delivered a common judgment for both appeals, dismissing them and confirming the penalties levied by the Assessing Officer and upheld by the CIT (Appeals). The Tribunal found that the assessee had willfully concealed income and furnished inaccurate particulars, justifying the penalties under section 271(1)(c) of the Act.

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