2015 (12) TMI 1414 - AT - Income Tax

Penalty u/s.271(1)(c) - Held that - As decided in assessee s own case for the assessment year 2004-05 case for levy of penalty for concealment of income has to be evaluated in terms of provisions of Explanation 1 to Section. 271(1)(c), as per which if in relation to any addition in the assessment, the assessee offers no explanation or offers explanation which is found to be false or is not able to substantiate the explanation and is also not able to prove that the explanation is bonafide, the addition made would amount to concealment of particulars of income. It is a settled legal position that penalty proceedings are different from assessment proceedings and the findings given in the assessment though it may constitute good evidence but same is not conclusive in the penalty proceedings Further, merely because additions have been confirmed in appeal it cannot be the sole ground for coming to the conclusion that the assessee had concealed any income. We are of the view that in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income. Further the decision relied upon by Revenue is distinguishable on facts and therefore cannot be applied to the facts of the present case. In view of the aforesaid facts we are of the view that in the present case no penalty is leviable u/s 271(1)(c) and therefore direct its deletion - Decided in favour of assessee

Summary

Issues:
Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 by CIT(A).

Analysis:
1. The appellant filed an appeal against the order of CIT(A)-IV, Baroda, which confirmed the penalty of Rs. 5,26,121 under section 271(1)(c) of the Income Tax Act, 1961. The grounds of appeal included contentions regarding the alleged unaccounted and unrecorded income, incongruence with a decision of the Gujarat High Court, incorrect income, and lack of concealment or inaccurate particulars of income.

2. The common issue in all grounds of appeal was the confirmation of the penalty amount by the CIT(A) under section 271(1)(c) of the Act.

3. The case involved a business engaged in construction where a survey action under section 133A revealed unrecorded cash entries spanning over two financial years. The appellant reconciled discrepancies in the unrecorded entries, leading to revised returns. The Assessing Officer (A.O.) made various disallowances and additions, including on account of unrecorded and unaccounted income. The CIT(A) confirmed these additions and imposed a penalty for alleged concealment of income.

4. The CIT(A) upheld the penalty, considering the non-disclosure of surrendered income during the survey as concealment of income, leading to the dismissal of the appellant's appeal.

5. The appellant argued that a similar penalty imposed for the succeeding assessment year was deleted by the tribunal, emphasizing the reconciliation of unrecorded cash entries and the absence of concealment. The Departmental Representative did not object to these arguments.

6. The tribunal noted that the facts regarding unrecorded cash entries were similar for both years, and while the additions were confirmed, the penalty for the subsequent year was deleted by the tribunal. Citing a previous tribunal order, it emphasized the burden on the Revenue to prove concealment of income in penalty proceedings, distinct from assessment proceedings.

7. Following the tribunal's decision in the appellant's own case for the succeeding year, the penalty under section 271(1)(c) was deleted, as the Revenue failed to establish concealment of income or inaccurate particulars.

8. Consequently, the tribunal allowed the appeal of the assessee, deleting the penalty levied under section 271(1)(c) of the Income Tax Act.

This detailed analysis highlights the grounds of appeal, the factual background of the case, arguments presented by the parties, and the tribunal's decision based on legal principles and precedents.