2013 (7) TMI 1020 - AT - Income Tax

Summary

Issues Involved:
1. Penalty levied u/s 271(1)(c) of the Income Tax Act.
2. Confirmation of the penalty by the CIT(A).
3. Alleged concealment of income and furnishing of inaccurate particulars by the assessee.
4. Assessment of the existence of liabilities u/s 41(1) of the Act.

Summary:

1. Penalty levied u/s 271(1)(c) of the Income Tax Act:
The primary issue in the appeal was the penalty levied by the Assessing Officer (AO) u/s 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income and concealing income. The AO had added Rs. 1,05,79,672 to the total income of the assessee, treating the liabilities shown as ceased to exist u/s 41(1) of the Act. The AO observed that the assessee failed to provide confirmations from creditors, and the enquiry letters sent to the creditors returned unserved.

2. Confirmation of the penalty by the CIT(A):
The CIT(A) confirmed the penalty, holding that the assessee had intentionally concealed income and furnished inaccurate particulars. The CIT(A) noted that the assessee failed to discharge the burden of proving the existence of liabilities as required under the Explanation to section 271(1)(c) of the Act. The CIT(A) concluded that the claim made in the return of income was incorrect or false, resulting in concealment of income.

3. Alleged concealment of income and furnishing of inaccurate particulars by the assessee:
The Tribunal observed that the assessee did not file any supporting evidence regarding the liabilities and failed to provide current addresses of the creditors. The Tribunal noted that the liabilities were not genuine and had ceased to exist. The Tribunal upheld the addition made by the AO and rejected the assessee's alternate plea that the addition should be made in the earlier year.

4. Assessment of the existence of liabilities u/s 41(1) of the Act:
The Tribunal held that the assessee failed to prove the existence of liabilities, and the AO's investigation revealed that the liabilities were non-existent. The Tribunal emphasized that the burden of proving the genuineness of liabilities lies with the assessee. The Tribunal concluded that the assessee had filed inaccurate particulars of income, justifying the penalty u/s 271(1)(c) of the Act.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the penalty levied by the AO and confirmed by the CIT(A). The Tribunal held that the assessee had made a non-bona fide claim and failed to substantiate the existence of liabilities, thereby furnishing inaccurate particulars of income and concealing income.