2005 (2) TMI 891 - AT - Income Tax

Summary

Issues:
- Appeal against CIT(A) order for assessment year 1989-90.
- Justification of penalty under section 271(1)(c) for cash credit of Rs. 89,000.
- Explanation of income concealment by using brother's name.
- CIT(A) and Assessing Officer findings on penalty imposition.
- Assessee's argument on explanation and difference of opinion.
- Applicability of legal judgments on penalty imposition.

Detailed Analysis:

1. Appeal Against CIT(A) Order:
The appeal was filed against the order of the CIT(A), Bhatinda, for the assessment year 1989-90. The primary issue raised in this appeal was the cancellation of the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 concerning a cash credit of Rs. 89,000 in the name of the assessee's brother, Sh. Sudershan Kumar.

2. Justification of Penalty Imposition:
The Assessing Officer added Rs. 89,000 as income from an undisclosed source due to the inability of the assessee to prove the creditworthiness of the creditor and the genuineness of the transactions. Subsequently, penalty proceedings were initiated under section 271(1)(c) for concealing income particulars related to this addition and other undisclosed credits.

3. Explanation of Income Concealment:
The assessee contended that the credit was supported by a confirmation from the creditor, Sh. Sudershan Kumar, and the source of the credit was explained. However, the Assessing Officer alleged that the assessee concealed income by using his brother's name for introducing unaccounted income. The CIT(A) and Tribunal upheld this view, leading to the imposition of a penalty of Rs. 49,100.

4. CIT(A) and Assessing Officer Findings:
The CIT(A) upheld the Assessing Officer's findings, emphasizing the concealment of income and the misuse of the brother's identity for financial transactions. The assessee challenged this decision, leading to the current appeal before the Bench.

5. Assessee's Argument and Legal Judgments:
The assessee argued that the addition was based on a difference of opinion, citing the judgments of various High Courts and ITAT cases to support the contention that penalty imposition requires evidence of dishonest or contumacious conduct. The assessee maintained that the explanation provided for the credit was plausible, despite the addition being sustained initially.

6. Conclusion and Judgment:
After considering the submissions and evidence, the Bench concluded that the penalty imposed under section 271(1)(c) was not justified. Citing legal precedents and the plausibility of the assessee's explanation, the Bench set aside the CIT(A) order and canceled the penalty. Consequently, the appeal filed by the assessee was allowed.