2015 (9) TMI 1287 - AT - Income Tax

Penalty u/s 271(1)(b) - Held that - Making additions and partly confirming them we find that both authorities have not passed speaking orders and moreover the necessary clarifications stated by assessee were not properly examined. Assessing Officer has also completed assessment u/s 144 of the Act. Therefore in view of the substantial justice we are of the view that appeals confirming the assessment and confirming the penalties needs to be looked after again by AO. The AO will provide sufficient opportunity to the assessee of being heard. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
- Assessment completed by AO u/s 144 of the Income Tax Act
- Penalty imposed by AO u/s 271(1)(b) of the Income Tax Act
- Penalty imposed by AO u/s 271(1)(c) of the Income Tax Act

Assessment completed by AO u/s 144 of the Income Tax Act:
The appeals were filed against the orders of Ld. CIT(A) confirming the assessment completed by the AO u/s 144 of the Income Tax Act. The AO had made various additions to the income of the assessee, including discrepancies in sales, capital utilization, net profit, expenses, creditors, and deduction claims. The Ld. CIT(A) partly confirmed these additions, noting the shifting stance of the assessee regarding the source of income and lack of evidence to support claims. The Ld. CIT(A) found the conduct of the assessee deliberate, with contradictory and false claims made to avoid tax and penalties. The Ld. CIT(A) confirmed most additions made by the AO, except for an ad hoc investment addition of Rs. 1,00,000 which was deleted due to lack of evidence. The Ld. CIT(A) upheld additions related to net profit, disallowed expenses, and outstanding creditors, as the assessee failed to provide proper explanations or evidence to counter the AO's observations.

Penalty imposed by AO u/s 271(1)(b) of the Income Tax Act:
The penalty imposed by the AO u/s 271(1)(b) of the Income Tax Act was confirmed by the Ld. CIT(A) due to the deliberate conduct of the assessee in shifting claims to avoid tax and penalties. The Ld. CIT(A) noted that the assessee failed to provide evidence or comply with requests for information, indicating an attempt to evade tax and penal liability. The Ld. CIT(A) found that the AO had given sufficient opportunities for compliance, but the assessee did not avail them and changed income claims after detailed queries. The penalty under this section was confirmed by the Ld. CIT(A) except for the ad hoc investment addition, which was deleted.

Penalty imposed by AO u/s 271(1)(c) of the Income Tax Act:
The penalty imposed by the AO u/s 271(1)(c) of the Income Tax Act was also confirmed by the Ld. CIT(A) based on the deliberate conduct of the assessee in making contradictory and false claims to avoid tax and penalties. The Ld. CIT(A) found that the assessee's actions were intentional, not inadvertent, and aimed at preventing the truth from emerging. The Ld. CIT(A) confirmed most additions made by the AO, except for the ad hoc investment addition, which was deleted due to lack of evidence. The penalty under this section was upheld by the Ld. CIT(A) due to the deliberate conduct and shifting claims of the assessee.

In conclusion, the Appellate Tribunal allowed the appeals filed by the assessee for statistical purposes, directing the AO to re-examine the assessment and penalties, providing sufficient opportunity for the assessee to be heard. The decision was pronounced in open court on 2nd September 2015.