2010 (8) TMI 1059 - AT - Income Tax

Summary

Issues involved: Appeals against penalties imposed under S.271(1)(c) of the Income-tax Act, 1961 for assessment years 1998-99 to 2005-06.

Assessee's Appeals:
The assessee contested penalties imposed under S.271(1)(c) based on undisclosed income from pay-in-slips found during a search operation. The Tribunal estimated income at 15% of total deposits in the bank account, reducing additions made. The CIT(A) upheld penalties but directed reduction to 100% of tax evaded. The Tribunal found insufficient evidence to prove the undisclosed income belonged to the assessee, canceling penalties for all assessment years.

Revenue's Appeals:
The Revenue challenged the CIT(A)'s decision to restrict penalties based on the Tribunal's order in the assessee's quantum appeals. The Department disputed the Tribunal's findings on undisclosed income from pay-in-slips. The Tribunal rejected the Revenue's appeals, citing the earlier decision in the assessee's favor and directing penalty reduction to tax evaded amounts. The Tribunal upheld its decision, dismissing the Revenue's appeals.

In conclusion, the Tribunal canceled penalties imposed on the assessee for all assessment years, citing lack of evidence linking the undisclosed income to the assessee. The Revenue's appeals were dismissed, affirming the penalty reduction to tax evaded amounts as directed by the CIT(A) in line with the Tribunal's quantum appeals decision.