2013 (10) TMI 869 - AT - Income Tax

Penalty u/s 271(1)(c) of the Income Tax Act - Held that - As regards, partner s capital and cash credits of Rs.32,37,280/- and Rs.18,05,000/-, the learned CIT(A) in quantum has allowed the relief to the assessee and the ITAT D Bench Ahmedabad, Revenue appeal is dismissed - Therefore, when the basis of the addition does not exist, then no penalty can subsist - As regards, the penalty on the cash credit of Rs.1,50,000/- regarding to Mr. Mathew no details have been furnished by the assessee before any of the authorities - In the facts and circumstances of the case, the assessee has concealed the income and furnished inaccurate particulars of income AO is right in levying the penalty with regard to the cash credit of Rs.1,50,000/- relating to Mr. Mathew and the same is hereby confirmed.

Summary

Issues:
1. Appeal by Revenue challenging deletion of penalty by CIT(A) and seeking restoration of AO's order.
2. Cross Objection by Assessee challenging levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Issue 1: Appeal by Revenue
The Revenue appealed against the CIT(A)'s decision to restrict the penalty to Rs.21,43,600 instead of the Rs.42,60,153 imposed by the AO for the assessment year 2005-06. The AO had initiated the penalty under section 271(1)(c) of the Act due to the Assessee's failure to provide adequate evidence regarding outstanding credits and unexplained transactions. The CIT(A) reduced the penalty based on the quantum appellate order, limiting it to specific amounts related to unexplained cash credit and creditors. The Assessee's counsel argued for penalty cancellation based on previous ITAT decisions in the Assessee's favor regarding certain additions. The ITAT concurred, cancelling the penalty for partner's capital and cash credits where no basis for the additions existed, and set aside other matters for fresh adjudication by the AO. The ITAT upheld the penalty only for a specific cash credit amount where the Assessee failed to provide necessary details, confirming the CIT(A)'s decision to levy the penalty.

Issue 2: Cross Objection by Assessee
The Assessee raised objections to the penalty imposed under section 271(1)(c) for various additions made during the assessment, including unexplained cash credits, balance differences, and unverified creditors. The Assessee contended that the penalty should be deleted entirely, emphasizing inaccuracies in the AO's findings and lack of evidence provided by the Assessee. The ITAT considered the Assessee's arguments and previous decisions in the Assessee's favor, ultimately allowing the Cross Objection in part by canceling penalties related to partner's capital, cash credits, advances from customers, and non-verifiable credit balances, except for a specific cash credit amount where the Assessee's lack of evidence indicated concealment of income. The ITAT dismissed the Revenue's appeal and partially allowed the Assessee's Cross Objection, highlighting the importance of providing accurate particulars of income to avoid penalties under the Income Tax Act.

This detailed analysis of the judgment highlights the issues, arguments presented, and the ITAT's decision regarding the appeal by the Revenue and the Cross Objection by the Assessee in the context of penalty imposition under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2005-06.