2011 (2) TMI 604 - HC - Income Tax

Penalty u/s 271(1)(c) - Whether the Tribunal was justified in deleting the penalty levied against the assessee - The gift amounting to Rs. 1,75,000/- said to have been received by the assessee was held to be bogus. Once that is so, the only conclusion is that the assessee had furnished inaccurate particulars of his income and the order of the Tribunal deleting the penalty is unsustainable in law - Held that the assessee had concealed the particulars of income and, thus, penalty was liable to be levied against him under Section 271(1)(c) of the Act. Further, the issue regarding recording of satisfaction for initiation of penalty proceedings in the course of assessment proceedings stands concluded against the assessee in the judgment of this Court reported in Commissioner of Income Tax v. Pearey Lal & Sons (EP) Ltd. (2008 -TMI - 32381 - PUNJAB AND HARYANA HIGH COURT) - Hence, the substantial question of law is answered in favour of the Revenue and the appeal is allowed accordingly.

Summary

Issues:
Appeal under Section 260A of the Income-Tax Act, 1961 against order deleting penalty under Section 271(1)(c) - Whether Tribunal justified in deleting penalty?

Analysis:
The appeal in this case was filed by the Revenue against the order of the Income Tax Appellate Tribunal relating to the assessment year 1993-94. The substantial question of law raised was whether the Tribunal was right in law in confirming the order of CIT (A) in canceling the penalty levied under Section 271(1)(c). The facts revealed that the assessee had received a gift of Rs. 1,75,000 on payment of an equal amount in cash, along with a premium. The assessing officer added the gift amount and the premium to the income of the assessee. The CIT(A) confirmed the order, but the Tribunal deleted the penalty imposed under Section 271(1)(c). The Tribunal observed that since the assessing officer had not recorded his satisfaction before initiating the penalty proceedings, the penalty could not be sustained.

The High Court considered whether the Tribunal was justified in deleting the penalty. It was noted that the gift received by the assessee was held to be bogus, indicating inaccurate particulars of income. The High Court held that the assessee had concealed the particulars of income, making the deletion of penalty unsustainable. The Court referred to a previous judgment to support the conclusion. The Court emphasized that the issue of recording satisfaction for initiating penalty proceedings had been settled against the assessee in a prior case. Consequently, the substantial question of law was answered in favor of the Revenue, and the appeal was allowed.

In conclusion, the High Court upheld the imposition of the penalty under Section 271(1)(c) against the assessee, ruling that the deletion of the penalty by the Tribunal was not justified. The Court's decision was based on the finding that the gift received was bogus, leading to inaccurate particulars of income and justifying the penalty under the Income-Tax Act.