2016 (7) TMI 1312 - AT - Income Tax

Levy of penalty under section 271(1)(c) - agricultural income - income from other sources - Held that - Land belongs to assessee s father-in-law and this agricultural income was earned from agricultural operations from the said land and it cannot be treated as income from other sources. Going by the above facts of the case we are of the opinion that the assessee had given a bona fide explanation and the Department has not brought any material to show that the explanation was bogus or false. Regarding addition u/s.68 which was confirmed by the Tribunal because of unsatisfactory explanation given by the assessee in support of such credit but it is not a good case for imposition of penalty since it relates to lack of tendering explanation to the satisfaction of the ld. Assessing Officer and not disproving the contention of the assessee with regard to the genuineness of the receipts. In the present case the explanation given by the assessee not disproved by the ld. Assessing Officer as such there is no conclusive evidence to show that assessee has concealed particulars of income or furnished inaccurate particulars of income. Further regarding agricultural income the assessee made an honest plea that assessee does not own any agricultural land. It has earned from the agricultural land owned by assessee s father-in-law. There is no material brought on record to show that it is bogus or false. Being so we find no reason to levy of penalty u/s.271(1)(c) of the Act even on this discrepancy. We are inclined to delete the penalty in this case. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act for assessment year 2006-07.

Analysis:
The appeal was against the penalty imposed under section 271(1)(c) of the Income Tax Act amounting to ?2,13,792. The assessment year in question was 2006-07. The appellant, an individual engaged in executing civil contract works, initially filed a return showing a total income of ?1,97,415. Subsequently, after assessment under section 143(3) of the Act, the total income was computed at ?33,21,420. The Assessing Officer made various additions during the assessment, including disallowances and excess claims. The Commissioner of Income-tax (Appeals) partly granted relief, but certain additions were sustained. The penalty proceedings under section 271(1)(c) were initiated based on the sustained additions. The CIT(A) confirmed the penalty, leading to the appeal before the ITAT Chennai.

The CIT(A) confirmed the additions made during assessment, including amounts related to sundry creditors, loan creditors, and agricultural income. The CIT(A) observed discrepancies in responses to summons and lack of satisfactory explanations from the parties involved. However, the ITAT Chennai noted that the appellant provided reasonable explanations for the discrepancies, and the Department failed to prove the explanations as false or bogus. The Tribunal emphasized the distinction between "facts not proved" and "facts disproved" as per legal precedents. It was concluded that the explanations provided by the appellant were not disproved by the Assessing Officer, indicating no conclusive evidence of concealing or furnishing inaccurate particulars of income.

Regarding the agricultural income discrepancy, where the appellant claimed not to own any agricultural land, but the income was from the father-in-law's land, the ITAT Chennai found no evidence to deem the explanation false or bogus. Therefore, the Tribunal decided to delete the penalty imposed under section 271(1)(c) of the Act due to the lack of conclusive evidence supporting the charge. The appeal of the assessee was allowed, and the penalty was revoked.

In conclusion, the ITAT Chennai ruled in favor of the assessee, emphasizing the importance of disproving explanations rather than merely lacking proof. The Tribunal found the appellant's explanations reasonable and honest, leading to the deletion of the penalty under section 271(1)(c) for the assessment year 2006-07.