2013 (12) TMI 405 - AT - Income Tax

Penalty u/s 271(1)(c) The assessee has received Rs. 22.75 lakhs from his father time to time in the form of cash deposit in his bank account - Held that - The dates and amount of deposits made by the assessee in his bank account and withdrawals made by his father from his bank account coincide The receipt forms the ground of addition of income but does not attract penalty u/s 271(1)(c) - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(c) for Assessment Year 2006-07 based on alleged concealment of income.

Analysis:
The case involved the assessment of an assessee, a Civil Contractor, selected for scrutiny due to significant cash deposits in bank accounts. The assessee claimed these deposits as gifts from the father, supported by a gift deed and the father's financial records. The Assessing Officer accepted a portion of the gift as genuine but disallowed the rest, leading to an addition of Rs. 8 lakhs to the assessee's income. The assessee did not appeal this addition. Subsequently, penalty proceedings under section 271(1)(c) were initiated. The assessee reiterated the gift explanation, but the Assessing Officer imposed a penalty of Rs. 2,70,954 for alleged concealment of income, citing lack of evidence provided during penalty proceedings.

During the appeal, the CIT(A) upheld the penalty. However, the ITAT Pune, after considering arguments, orders, and case details, found that while the quantum addition was justified due to lack of specific evidence, it did not warrant penalty under section 271(1)(c). The tribunal noted that the deposits and withdrawals between the assessee and his father aligned, suggesting a genuine transaction despite the absence of specific entries in their accounts. Consequently, the ITAT Pune allowed the assessee's appeal, setting aside the penalty and directing the Assessing Officer to cancel it.

This judgment highlights the distinction between quantum additions and penalty levies, emphasizing the need for concrete evidence to support penalty charges under section 271(1)(c). The tribunal's decision focused on the factual alignment of transactions rather than formal entries in accounts, demonstrating a nuanced approach to determining tax liabilities and penalties in cases of alleged income concealment.