2014 (4) TMI 746 - AT - Income Tax

Penalty u/s 271(1)(c) of the Act Genuineness of the transaction - Held that - Even though assessee has filed the PAN Number, but the confirmation of the respective creditors could not be filed - By not filing the loan confirmation, the assessee was unable to discharge his primary onus to prove the identity, genuineness and creditworthiness of the loan creditors thus, there was no infirmity in the order of the AO for levy of penalty for addition of such loan creditors Decided against Assessee. Disallowance of charity and donation Held that - Neither actual payment nor genuineness of the charity and donation was in dispute, mere failure of assessee to add back the same while computing the total income and make a separate claim u/s 80G, is not sufficient for levy of penalty u/s 271(1)(c) - the assessee has made full disclosure of amount given for charity and donation in the P&L account, there is no failure on the part of the assessee to disclose fully the particulars of income - the AO was not justified in levying penalty with respect to the disallowance of charity and donations Decided in favour of Assessee.

Issues:
- Appeal against imposition of penalty under Section 271(1)(c) of the I.T. Act for the assessment year 2007-08.
- Condonation of delay in filing the appeal.
- Addition of loan creditors and charity/donations to income and subsequent penalty imposition.
- Dispute regarding the genuineness and disclosure of loan creditors and charity/donations.
- Justification of penalty imposition by the Assessing Officer (AO).

Condonation of Delay:
The appeal filed by the assessee against the order of CIT(A) for the assessment year 2007-08 was delayed by three days. An affidavit was submitted citing the illness of the Director of the company as the reason for the delay. The delay was condoned by the Tribunal, allowing the appeal to be heard on merit.

Addition of Loan Creditors and Charity/Donations:
The Assessing Officer (AO) added amounts related to loan creditors and charity/donations to the income of the assessee, subsequently levying a penalty under Section 271(1)(c) of the I.T. Act. The assessee contended that despite providing PAN numbers and addresses of the loan creditors, their confirmation could not be filed due to non-cooperation. The assessee argued that no income was concealed or inaccurate particulars filed. On the other hand, the Departmental Representative (DR) argued that by not filing confirmations, the initial onus was not discharged, justifying the penalty imposition.

Dispute Resolution:
The Tribunal found that although the assessee provided PAN numbers and addresses of the loan creditors, the confirmation was not filed, leading to the inability to prove the identity, genuineness, and creditworthiness of the creditors. Thus, the penalty for the addition of loan creditors was upheld. However, concerning charity and donations, the Tribunal noted that the amounts were disclosed in the Profit & Loss account, and there was no dispute regarding their genuineness. The failure to add back the amounts while computing income for Section 80G claim was not sufficient for penalty imposition.

Final Decision:
The Tribunal allowed the appeal in part, upholding the penalty imposition for loan creditors due to non-filing of confirmations but rejecting the penalty for charity and donations disallowance. The Tribunal concluded that the assessee had made full disclosure in the P&L account, indicating no failure to disclose income particulars fully.

This judgment involved the condonation of delay in filing an appeal, the addition of amounts to income, and subsequent penalty imposition under Section 271(1)(c) of the I.T. Act. The Tribunal analyzed the genuineness and disclosure of loan creditors and charity/donations, ultimately upholding the penalty for loan creditors due to non-filing of confirmations but rejecting the penalty for charity and donations disallowance.

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