2013 (11) TMI 1375 - HC - Income Tax

Cash found during search Penalty u/s 271(1)(c) - Held that - Following Union of India and Ors vs. Dharmendra Textiles Processors & Ors., 2008 (9) TMI 52 - SUPREME COURT 2008 306 ITR 277 There has to be concealment of the particulars of the income of the assessee and the assessee must have furnished inaccurate particulars of his income - Mere making of a claim, which is not sustainable in law, by itself, would not amount to furnishing of inaccurate particulars regarding the income of the assessee. There was a mistake in the entries regarding the sale of flats to J.B. Exports and the assesee also filed copies of the entry register in respect of two flats and also in respect of other similar flats sold to other parties - Even purchaser (J.B.Exports) produced the documents before the AO - On examining the documents it was found that no on-money was paid to the assessee - Following Mak Data P. Ltd., vs. Commissioner of Income Tax-II 2013 (11) TMI 14 - SUPREME COURT - When a difference is noticed by the Assessing Officer between the reported and assessed income - The burden is then on the assessee to show otherwise, by cogent and reliable evidence and when the initial onus placed by the explanation, has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted their income and not otherwise In the present case the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation - If the department did not agree with the explanation, then the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income - Such onus which shifted on the department has not been discharged Decided against Revenue.

Issues:
1. Assessment of income for the year 1996-97 based on "on-money" transactions.
2. Initiation of penalty proceedings under Section 271(1)(c) of the Income Tax Act.
3. Appeal against the penalty order by the assessee.
4. Tribunal's decision to cancel the penalty under Section 271(1)(c).
5. Justification of the penalty order by the Revenue.
6. Interpretation of Section 271(1)(c) and the requirement for penalty imposition.

1. Assessment of Income:
The case involves the assessment of the respondent/assessee's income for the year 1996-97, which was completed under Section 143(3) of the Income Tax Act. A search revealed "on-money" transactions in real estate dealings, leading to the inclusion of this component by the Assessing Officer. The assessee claimed no income was offered due to the 'completed contract method.' The Tribunal found the explanation credible, emphasizing the need for proper evidence and examination by the department.

2. Penalty Proceedings:
Penalty proceedings were initiated under Section 271(1)(c) based on the concealment of income. The first Appellate Authority upheld the penalty, citing evidence of "on-money" receipts. The Tribunal, however, reversed this decision, highlighting the department's onus to prove deliberate concealment. The Tribunal noted discrepancies in flat sale rates and the possibility of recording errors, leading to the cancellation of the penalty.

3. Appeal Against Penalty:
The assessee contended that the department failed to prove deliberate concealment and shifted the burden of proof. The Revenue relied on the Supreme Court's decision regarding penalty provisions as a civil liability, arguing for penalty imposition. The Tribunal considered the factual details and the absence of conclusive evidence of concealment, ultimately allowing the appeal.

4. Tribunal's Decision:
The Tribunal's decision to cancel the penalty was based on the lack of concrete evidence proving intentional concealment by the assessee. It emphasized the need for the department to discharge the burden of proof regarding concealment, citing discrepancies in recorded rates as a possible error rather than intentional misreporting.

5. Justification of Penalty Order:
The Revenue justified the penalty order based on the finality of the quantum appeal and the Supreme Court's stance on penalty provisions. However, the Tribunal's analysis focused on the absence of concrete proof of deliberate concealment, leading to the reversal of the penalty.

6. Interpretation of Section 271(1)(c):
The judgment delves into the interpretation of Section 271(1)(c) of the Income Tax Act, emphasizing the necessity of proving deliberate concealment and furnishing inaccurate particulars. The Supreme Court's decisions highlighted the importance of bonafide explanations by the assessee and the burden of proof on the department to establish concealment conclusively.

In conclusion, the Tribunal's decision to cancel the penalty under Section 271(1)(c) was upheld based on the lack of concrete evidence of deliberate concealment. The judgment emphasizes the importance of proper evidence, burden of proof, and bonafide explanations in penalty proceedings under the Income Tax Act.

← Previous Next →