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2014 (3) TMI 175 - AT - Income TaxLevy of penalty u/s. 271(1)(c) of the Act - Profit earned from undisclosed business - Held that - The decision in Jyoti Laxman Konkar vs. CIT 2006 (7) TMI 165 - BOMBAY High Court and CIT vs. Rakesh Suri 2010 (5) TMI 576 - Allahabad High Court followed - It is clear case of concealment of income because the assessee has concealed the bank account maintained with ICICI Bank Ltd. from the Revenue department - The assessee admittedly accepted the order of the AO in maintaining the addition because no appeal was preferred before any authority against the addition - The assessee had admitted that he has earned unaccounted income from undisclosed business - in the penalty proceedings, finding of fact recorded by the AO which have reached finality cannot be disturbed. The AO in the quantum order has specifically mentioned that he was satisfied that the assessee has concealed the particulars of his income - The AO also held that Explanation 1(A) of section 271(1)(c) is also squarely applicable in the case of assessee and in fact the explanation offered by the assessee was found to be false - The ld. CIT(A) also found that the assessee has not filed any satisfactory explanation before him - Therefore, the AO is correct in holding that the assessee has willfully concealed the particulars of his income by not disclosing the fact of maintaining bank account with ICICI Bank - The concept of reasonable cause or exception as contended by the assessee has no applicability to the penalty proceedings u/s. 271(1)(c) of the IT Act - The assessee was maintaining unaccounted bank account and made huge cash deposits in the bank account and when the details were called for from the bank, the assessee had to make surrender of such income Decided against Assessee. Quantum of penalty Held that - It may not be a case of levy of maximum penalty or at least 200% penalty - The interest of justice requires that minimum penalty at the rate of 100% may be levied thus, the quantum of penalty is modified and the AO is directed to levy minimum penalty at the rate of 100% - Decided partly in favour of Assessee.
Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act. 2. Concealment of income and particulars by the assessee. 3. Justification for the imposition of 200% penalty. 4. Applicability of Explanation 1(A) to Section 271(1)(c). 5. Arguments regarding reliance on the accountant or tax experts. 6. Consideration for leniency in penalty imposition. Issue-wise Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c) of the Income Tax Act: The appeal by the assessee challenges the order of the CIT(A)-II, Agra, confirming the levy of 200% penalty under Section 271(1)(c) of the IT Act for the assessment year 2008-09. The penalty was imposed on an undisclosed income of Rs. 7,53,703, which included undisclosed investment in business and undisclosed income from business. 2. Concealment of Income and Particulars by the Assessee: The facts reveal that the assessee deliberately avoided disclosing a bank account with ICICI Bank Ltd., Agra, where a sum of Rs. 30,65,735 was deposited during the year under consideration. The assessee initially claimed to have maintained only one bank account with the Bank of Bikaner & Jaipur. The details of the ICICI Bank account were obtained by the AO from the bank itself. The assessee admitted to depositing cash in the ICICI Bank account only after being confronted by the AO. 3. Justification for the Imposition of 200% Penalty: The AO concluded that the assessee willfully evaded disclosing income by concealing the bank account and imposed a 200% penalty amounting to Rs. 4,64,116. The CIT(A) upheld this decision, noting that the assessee failed to provide any satisfactory explanation for the source of the deposits or the reason for concealing the bank account. 4. Applicability of Explanation 1(A) to Section 271(1)(c): The AO and CIT(A) both found that the assessee had concealed particulars of income, making Explanation 1(A) to Section 271(1)(c) applicable. This explanation applies to cases where the assessee's explanation is found to be false or where the assessee fails to substantiate the explanation provided. 5. Arguments Regarding Reliance on the Accountant or Tax Experts: The assessee argued that the non-disclosure of the bank account was due to reliance on the performance of the accountant or tax experts. However, the tribunal rejected this argument, stating that the concept of "reasonable cause" does not apply to penalty proceedings under Section 271(1)(c). 6. Consideration for Leniency in Penalty Imposition: The assessee requested a lenient view, arguing that taxes were paid and the account was disclosed in the subsequent year. The tribunal considered this and noted that the AO had imposed a 200% penalty without providing reasons for not opting for the minimum penalty. The tribunal decided that the interest of justice would be served by reducing the penalty to the minimum rate of 100%, amounting to Rs. 2,32,058. Conclusion: The tribunal dismissed the appeal on merits but modified the penalty to the minimum rate of 100%. The appeal of the assessee was partly allowed, reducing the penalty from Rs. 4,64,116 to Rs. 2,32,058. The order was pronounced in the open court.
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