2013 (7) TMI 139 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee alleged for furnishing of inaccurate particulars of Income - whether a mere fact of not going in appeal to buy peace against addition made by AO in his order u/s 153A can lead to inference that there has been a concealment of income - Held that - Assessee filed details pertaining to the proceed received on sale of agricultural land situation at village Raja Sansi, District Amritsar and appended the detail to the return of income in the assessment year under consideration. Notes no. 2 and 3 mentioned in the statement of taxable income clearly shows that the assessee has furnished particulars of receipts from sale of agricultural land and also claimed exemption thereon u/s 2(14)(iii). Coming to the issue of late deposit of the amount to the bank, AO has not controverted the statement of the assessee that this amount was deposited to the bank account of the assessee Shri Gurpal Singh after a lapse of time during the year under consideration and this fact came to the knowledge of the assessee when he checked the bank pass book and accounts submitted by his power of attorney S. Gurpal Singh. It is not in dispute that the amount so received from proceed of sale of agricultural land was exempted and AO also accepted the claim of the assessee for exemption u/s 2(14)(iii). In this situation unable to accept this contention of the authorities that the assessee has either furnished inaccurate particulars of his income or has concealed particulars of his income. See Harsh Talwar (2011 (5) TMI 593 - Delhi High Court), Commissioner of Income Tax vs S.L.N. Traders (2011 (7) TMI 525 - Karnataka High Court) and Careers Education & Infotech Pvt. Ltd.(2011 (3) TMI 602 - PUNJAB AND HARYANA HIGH COURT) - In favour of assessee.

Summary

Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act for alleged furnishing of inaccurate particulars of income.
2. Validity of the explanation provided by the assessee regarding the cash deposit.
3. Distinction between assessment proceedings and penalty proceedings.
4. Applicability of legal precedents in the context of penalty under Section 271(1)(c).

Issue-Wise Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c):
The primary issue revolves around the penalty of Rs. 99,000 imposed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act for allegedly furnishing inaccurate particulars of income. The AO observed a cash deposit of Rs. 3,00,000 in the assessee's bank account and deemed it as income from undisclosed sources due to lack of documentary evidence. The assessee did not appeal the assessment order, leading to its finality.

2. Validity of the Explanation Provided by the Assessee:
The assessee explained that the cash deposit was from the sale proceeds of agricultural land, delayed due to the illness and subsequent death of the power of attorney holder, Shri Jasbir Singh. The assessee argued that this delay was reasonable and did not constitute concealment of income. The Tribunal noted that the assessee had declared the sale proceeds and claimed exemption under Section 2(14)(iii) of the Act. The Tribunal found that the AO did not dispute the sale proceeds or the exemption claim, indicating no intention to conceal income.

3. Distinction Between Assessment and Penalty Proceedings:
The assessee contended that assessment proceedings are distinct from penalty proceedings, which are quasi-criminal in nature. The Tribunal agreed, stating that findings in the assessment order alone do not justify penalty imposition. The Tribunal emphasized that for a penalty under Section 271(1)(c), the AO must prove that the assessee concealed income or furnished inaccurate particulars, which was not established in this case.

4. Applicability of Legal Precedents:
The Tribunal considered various legal precedents, including the Supreme Court's judgment in Reliance Petroproducts Pvt. Ltd. vs. Commissioner of Income Tax, which held that mere disallowance of a claim does not automatically lead to penalty. The Tribunal also referred to judgments from the Delhi High Court, Punjab & Haryana High Court, and Karnataka High Court, which supported the view that penalty under Section 271(1)(c) requires clear evidence of concealment or furnishing of inaccurate particulars.

Conclusion:
The Tribunal concluded that the assessee had not concealed income or furnished inaccurate particulars, as the sale proceeds were declared, and the delay in deposit was reasonably explained. The Tribunal found the penalty imposed by the AO and confirmed by the Commissioner of Income Tax (Appeals) to be unsustainable. The Tribunal set aside the penalty order, allowing the assessee's appeal.

Order:
The appeal of the assessee is allowed, and the penalty of Rs. 99,000 imposed under Section 271(1)(c) is cancelled. The order was pronounced in the open court on 30.4.2013.