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2012 (9) TMI 442 - AT - Income TaxPenalty u/s. 271(1)(c) - surrender of income of Rs.5,00,000/- by assessee - orders of penalty enhancement - Held that - The AO initiated the penalty for filing inaccurate particulars of income, but in the assessment order, the AO failed to point out any specific instance of inaccurate particulars of income or instance of concealing the particulars of income, for which assessee made surrender of income. - It would mean that the AO was not sure which particulars of income was inaccurate - it is not a fit case for levy of penalty u/s. 271(1)(c) on the surrender of additional income - Since the substantial penalty has been cancelled the issue of enhancement of penalty would not arise - in favour of assessee. Penalty u/s. 271(1)(c) - unsecured loan - Held that - As the assessee failed to file any explanation regarding bogus liability shown in the books of account, the levy of penalty is justified against the assessee - against assessee.
Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act on the addition of Rs.5,00,000/- 2. Levy of penalty under Section 271(1)(c) of the Income Tax Act on the addition of Rs.75,912/- Detailed Analysis: 1. Levy of Penalty on the Addition of Rs.5,00,000/- The assessee, a civil contractor, filed a return of income at Rs.5,02,190/-. During the assessment proceedings, the assessee surrendered Rs.5,00,000/- as additional income to cover possible revenue leakage. The AO made an addition of Rs.5,00,000/- and initiated penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars of income. The penalty of Rs.61,970/- was imposed, and the CIT(A) confirmed the penalty in the absence of representation from the assessee. The assessee challenged the penalty, arguing that no specific details were brought on record to justify the addition and that the proper course would have been to apply Section 145(3) read with Section 144 for computing business income. The AO did not follow this procedure and made an adhoc addition without citing specific instances of inaccurate particulars of income. The Tribunal noted that the AO failed to point out any specific instance of inaccurate particulars or concealed income. The addition was made based on the assessee's surrender without any basis or material on record. The Tribunal held that merely because the assessee surrendered Rs.5,00,000/- without assigning any reason does not constitute furnishing inaccurate particulars of income. The Tribunal set aside the orders of the authorities below for the levy of penalty on the addition of Rs.5,00,000/-. 2. Levy of Penalty on the Addition of Rs.75,912/- The AO noted that a sum of Rs.75,912/- was shown as an unsecured loan from Shree Ram Investments, for which no explanation or evidence was furnished. This amount was treated as a bogus liability, and the penalty was levied under Section 271(1)(c). The assessee failed to provide any explanation at the penalty stage before the AO and the CIT(A). The Tribunal upheld the penalty, noting that the assessee failed to rebut the finding of fact recorded by the authorities and did not offer any explanation. The Tribunal cited the decision of the Allahabad High Court in the case of Mirzapur Construction Co., where it was held that the onus was on the assessee to discharge the explanation, and failure to do so justified the penalty. The Tribunal confirmed the orders of the authorities below for the levy of penalty on the addition of Rs.75,912/- and directed the AO to levy the minimum penalty. Conclusion: The appeal was partly allowed. The Tribunal set aside the penalty on the addition of Rs.5,00,000/- due to the absence of specific findings of inaccurate particulars of income. However, the Tribunal confirmed the penalty on the addition of Rs.75,912/- due to the assessee's failure to provide any explanation or evidence for the unsecured loan, treating it as a bogus liability.
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