2012 (9) TMI 39 - AT - Income Tax

Penalty u/s 271(1)(c ) assessment framed u/s 153A addition made in respect of long term capital gains and income from bank interest AY 04-05 - Held that - Although the assessee could not produce any documentary evidence to support and substantiate his claim of cost of acquisition of shares during the course of assessment proceedings u/s.143(3) r.w.s. 153A which were taken-up after a gap of nine years, we find that there is nothing found either during the course of search or brought on record even during the course of assessment proceedings by the A.O. to show that the cost of acquisition of shares claimed by the assessee was on the higher side and the same was actually lower than what was claimed. Therefore, it was not a case of concealment as envisaged u/s.271(1)(c). Similarly, addition made on account of income from bank interest was based on assumption and surmises and in the absence of anything brought on record to show that such interest income was actually received in A.Y. 2005-06, same cannot be treated as concealed income. Penalty u/s.271(1)(c) is not sustainable AY 07-08 cash and jewelry found during search Held that - Circular No.1916 permits possession of 1450 grams of jewellery whereas the total jewellery found during the course of search was to the extent of 1,442.56 grams. Thus, the same should have been treated as explained on the basis of the said Circular. Further, assessee had surrendered the undisclosed cash found during search. Therefore although both the additions made by the A.O. have been accepted by the assessee, the same could not be treated as concealed income of the assessee as envisaged in sec.271(1)(c) Decided in favor of assessee.

Summary

Issues:
1. Imposition of penalty u/s.271(1)(c) for A.Y. 2004-05
2. Imposition of penalty u/s.271(1)(c) for A.Y. 2007-08

Analysis:
1. Imposition of penalty u/s.271(1)(c) for A.Y. 2004-05:
- The appellant challenged the penalty imposed by the A.O. u/s.271(1)(c) for A.Y. 2004-05.
- The A.O. made additions to the total income of the assessee, leading to penalty proceedings.
- The Ld. CIT (A) confirmed the penalty imposed by the A.O., prompting the appeal before the Tribunal.
- The appellant argued that the additions made were not sustainable, especially regarding the cost of acquisition of shares and bank interest.
- The A.O. adopted the cost of acquisition of shares at Rs.2 per share without proper basis.
- The appellant contended that the addition on account of bank interest was unjustified as no actual income was received.
- The Tribunal found that the additions lacked proper basis and were made without concrete evidence, leading to the conclusion that it was not a case of concealment under sec.271(1)(c).
- Consequently, the penalty imposed for A.Y. 2004-05 was deemed unsustainable and was canceled by the Tribunal.

2. Imposition of penalty u/s.271(1)(c) for A.Y. 2007-08:
- The appellant contested the penalty imposed by the A.O. u/s.271(1)(c) for A.Y. 2007-08.
- The A.O. made additions to the total income of the assessee based on undisclosed income from cash and jewellery found during a search.
- The Ld. CIT (A) confirmed the penalty, leading to the appeal before the Tribunal.
- The appellant clarified that only a specific amount was declared as undisclosed income, while the A.O. misconstrued the declaration.
- The jewellery found during the search was treated as unexplained, contrary to the Board Circular's guidelines.
- The Tribunal noted that the additions made by the A.O. were accepted by the assessee but did not qualify as concealed income under sec.271(1)(c).
- Consequently, the penalty imposed for A.Y. 2007-08 was deemed unjustified and was canceled by the Tribunal.

In both cases, the Tribunal found that the penalties imposed by the A.O. and confirmed by the Ld. CIT (A) were unsustainable due to lack of concrete evidence supporting the additions made to the total income of the assessee. The Tribunal ruled in favor of the appellant, canceling the penalties for both A.Y. 2004-05 and A.Y. 2007-08.