2016 (9) TMI 1648 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - unexplained cash deposits - CIT(Appeals) not admitting additional evidences as submitted before him - AO concluded that assessee failed to prove identity, credit worthiness and genuineness of the transaction and held that assessee has willfully concealed the particulars of income - HELD THAT - CIT(Appeals) did not accept additional evidences which are in the shape of confirmations with their addresses, copies of bills and PAN etc. Merely because additional evidences were not admitted in quantum proceedings, is no ground to reject request of the assessee for admission of additional evidence in penalty proceedings which are independent and different proceedings. Since the additional evidences are relevant and required to be looked into in the penalty proceedings, therefore, ld. CIT(Appeals) should have admitted the additional evidences for the purpose of hearing. See Jorawar Singh case 2016 (7) TMI 1672 - ITAT CHANDIGARH We set aside the order of ld. CIT(Appeals) in refusing to admit additional evidences. These additional evidences being relevant, shall have to be looked into in order to decide whether assessee is liable for penalty - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Challenge against levy of penalty under section 271(1)(c) of the Income Tax Act on unexplained cash deposits and refusal to admit additional evidences.

Analysis:
1. The appellant contested the penalty imposed for unexplained cash deposits and the refusal to admit additional evidences. The Assessing Officer made the addition based on unexplained cash deposits in the bank account, as the appellant failed to prove the identity, creditworthiness, and genuineness of the transactions. Penalty proceedings were initiated, and the appellant provided details of some depositors but was unable to substantiate the claims adequately. Consequently, the penalty was levied under section 271(1)(c) of the Act.

2. The appellant argued before the ld. CIT(Appeals) that necessary details were provided during assessment proceedings, including names, addresses, and PAN numbers of depositors, proving the genuineness of transactions. The appellant also submitted additional evidences, such as confirmations from depositors and bills, to support their case. However, the ld. CIT(Appeals) rejected the additional evidences, citing that they were not admitted in quantum proceedings.

3. The appellant further contended that the additional evidences were crucial to establish the legitimacy of transactions and requested their admission for a fair hearing. The appellant referenced a similar case where additional evidences were admitted by ITAT, emphasizing the relevance of the evidence in penalty proceedings. The ld. CIT(Appeals) was urged to reconsider the decision and admit the additional evidences for proper evaluation.

4. In a related case, the ITAT 'SMC' Bench Chandigarh admitted additional evidences that were deemed relevant for deciding the penalty issue. The Tribunal emphasized the distinction between quantum and penalty proceedings, highlighting the need for a separate evaluation of evidence for penalty imposition. The Tribunal directed the matter to be reconsidered by the Assessing Officer based on the newly admitted evidence.

5. Following the principles established in the aforementioned case, the ITAT Chandigarh in the present case set aside the decision of the ld. CIT(Appeals) and directed the Assessing Officer to re-examine the penalty issue in light of the additional evidences provided by the appellant. The appellant was instructed to present the evidences for reconsideration, ensuring a fair opportunity for explanation.

6. Ultimately, the appeal of the appellant was allowed for statistical purposes, emphasizing the importance of admitting relevant additional evidences in penalty proceedings to ensure a fair and thorough assessment of the case.

This detailed analysis showcases the appellant's challenge against the penalty imposed for unexplained cash deposits and the significance of admitting additional evidences for a comprehensive evaluation in penalty proceedings.