2012 (4) TMI 686 - AT - Income Tax

Summary

Issues involved:
The case involves a penalty levied u/s 271(1)(c) of the Income-tax Act, 1961 for Assessment Year 2000-01 based on the claim of receiving gifts amounting to Rs. 1,55,000 from various donors.

Assessment Proceedings and Penalty Imposition:
The assessee filed the return of income for AY 2000-01 showing total income of Rs. 1,46,860. Subsequently, it was found that the assessee had received gifts totaling Rs. 1,55,000 from different donors. The Assessing Officer issued a notice u/s 142 to explain the gifts, questioning their genuineness based on previous findings of gifts being treated as bogus in AY 2002-03. The assessee's explanations were considered, but the AO disallowed the gifts, adding the amount to the total income and levying a penalty u/s 271(1)(c) for inaccurate particulars of income.

Confirmation of Penalty by CIT(A) and Tribunal's Decision:
The CIT(A) confirmed the penalty, leading the assessee to appeal before the ITAT. The ITAT referred to a previous case where a similar penalty was deleted based on the gifts being from close relatives and the lack of creditworthiness not justifying penalty imposition. Relying on this precedent, the ITAT deleted the penalty in the current case as well, stating that the gifts, though taxable, did not warrant a penalty u/s 271(1)(c).

Conclusion:
Following the precedent set in a previous case, the ITAT allowed the appeal and deleted the penalty imposed u/s 271(1)(c) for the inaccurate particulars of income related to the gifts received by the assessee.