2011 (2) TMI 168 - HC - Income Tax

Penalty - assessee claimed that he did not receive any income on the advance deposit - explanation has not been accepted by the Department - provisions of Section 271 (1) (c) of the Act are not attracted - Merely because the assessee has claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that itself would not attract the penalty under Section 271 (1) (c) of the Act - no penalty under the aforesaid Section could be levied on the assessee Appeal allowed

Summary

Issues Involved:
1. Appeal regarding additions towards interest on deposit made by the assessee with M/s. United Tractors for the assessment year 1992-93.
2. Appeal against penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 1994-95.

Analysis:

Issue 1: Appeal regarding additions towards interest on deposit made by the assessee with M/s. United Tractors for the assessment year 1992-93:
- The assessee, a minor, filed income tax returns through his father for the relevant assessment year.
- The Assessing Officer made additions towards interest on the deposit with M/s. United Tractors, which the assessee claimed was not received by him.
- The Tribunal confirmed the additions, leading to the appeal based on substantial questions of law.
- The burden was on the assessee to explain why interest was not received during the relevant assessment year, which the assessee failed to discharge.
- The counsel for the assessee cited a Division Bench judgment, but it was noted that the facts in the cited case differed from the present case.
- The Tribunal's finding that the assessee failed to prove non-receipt of interest during the relevant year was upheld, and the appeal was dismissed.

Issue 2: Appeal against penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 1994-95:
- The penalty was levied on deemed interest income on the deposit made by the assessee with M/s. United Tractors.
- The assessee contended that no interest was paid or accrued to him, invoking a recent judgment of the Apex Court to support the argument that penal provisions were not applicable.
- The court considered the submission and found merit in the argument that strict liability under Section 271(1)(c) is not attracted if the assessee has furnished accurate details in the return.
- As the assessee claimed no income on the deposit with M/s. United Tractors, and this explanation was not accepted by the Department, the court held that the penalty provision was not applicable.
- Consequently, the appeal succeeded, and it was held that no penalty under Section 271(1)(c) could be levied on the assessee.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved, the arguments presented, and the court's reasoning leading to the final decisions on both appeals.