2015 (10) TMI 999 - AT - Income Tax

Penalty under section 271(1)(c) - AO assessing the LTCG and gift receipts as income - reopening of assessment - Held that - The tax authorities have not considered the materials and explanations furnished by the assessee. We find that the decision rendered in the case of Madhulika R. Oswal (2013 (7) TMI 921 - ITAT MUMBAI) is in accordance with the ratio of the decision rendered by Hon ble Supreme Court in the case of MAK Data P Ltd (2013 (11) TMI 14 - SUPREME COURT ). Accordingly, consistent with the view taken by the Co-ordinate Bench of the Tribunal in the case of Madhulika R Oswal (supra), we set aside the orders of ld.CIT(A) under consideration and restore all the matters to his file with a direction to re-adjudicate them on merits in accordance with law and after hearing the parties. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act, 1961 upheld by the ld. CIT(A) - Assessees challenging penalty orders - Failure to examine materials and explanations by tax authorities - Legal position on penalty proceedings and concealment of income.

Analysis:
The appeals were against the penalty under section 271(1)(c) of the Income Tax Act, 1961, confirmed by the ld. CIT(A) based on assessments reopened for assessees after a survey operation. The assessees declared Long Term Capital Gains (LTCG) and gifts receipts as income following a sworn statement. The penalty was levied without considering materials and explanations furnished by the assessees. The ld. Counsel argued that penalty proceedings are independent and require separate examination of evidence. Reference was made to a Tribunal case for re-adjudication on merits. The ld. D.R countered with another Tribunal case confirming penalties in similar situations.

The Tribunal considered the arguments and legal precedents. It acknowledged the separate nature of penalty proceedings and the need for independent examination of evidence. Referring to a previous case, the Tribunal emphasized that findings in quantum proceedings are not conclusive for penalty levy. The burden of proof lies on the assessee, and penalty is not automatic, requiring a valid explanation for discrepancies. The Tribunal set aside the orders of ld. CIT(A) for re-adjudication based on relevant legal principles and the Supreme Court's stance on concealment of income.

The Tribunal differentiated its decision from other cases where the Madhulika R. Oswal case was not considered. It highlighted the importance of assessing materials and explanations provided by the assessee. Citing the Supreme Court's position on concealment of income, the Tribunal directed a re-adjudication on merits in accordance with law and after hearing all parties involved. Consequently, the appeals of the assessees were treated as allowed for statistical purposes, with the judgment pronounced on 3rd September 2015.