2008 (4) TMI 749 - AT - Income Tax

Summary

Issues involved: Appeal against penalty u/s 271(1)(c) for furnishing inaccurate particulars of income.

Summary:

Issue 1: Background and facts of the case
The appeal by Revenue for asst. yr. 1999-2000 arises from the order under s. 271(1)(c) by the learned ITO-2(4), Agra. The assessee filed return of income under s. 139(1) but later a notice u/s 148 was issued based on information about alleged bogus entries of share transactions and undisclosed cash. The assessee claimed to have received a gift of Rs. 2,00,000 which was surrendered as undisclosed income during assessment proceedings. The penalty was imposed under s. 271(1)(c) by the AO, but deleted by CIT(A) citing lack of evidence to prove concealment of income.

Issue 2: Arguments of the Revenue and the Assessee
The Revenue contended that the assessee failed to prove the alleged gift and that additional evidence admitted by CIT(A) was in violation of IT Rules. The assessee argued that there was no deliberate concealment of income and the alleged long-term capital gain was never disclosed to the Revenue.

Issue 3: Decision and Reasoning
After reviewing the case records, it was found that the assessee did not disclose the alleged long-term capital gains in the original return or in response to the notice u/s 148. The AO's observations did not conclusively prove deliberate concealment or furnishing of inaccurate particulars of income. The Supreme Court has clarified that imposition of penalty is not automatic and requires a finding of guilty intent. In this case, the Revenue failed to establish concealment of taxable income or furnishing of inaccurate particulars. The surrender of the gift amount by the assessee, due to inability to prove it as desired by the AO, did not amount to concealment. The absence of proof of bogus long-term capital gains and lack of evidence led to the confirmation of the deletion of penalty by CIT(A).

Conclusion
The appeal against the penalty u/s 271(1)(c) was dismissed, upholding the decision to delete the penalty imposed on the assessee.