2016 (3) TMI 250 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - The assessee has shown cash creditor of ₹ 4 lacs in the name of Smt. Veena Khatri, Indore. The assessee had not furnished confirmation before the Assessing Officer, at the time of quantum addition as well as at the time of imposing penalty. The payment received and repaid through banking channel does not make the transaction sacrosanct. The assessee also had not furnished copy of PAN, copy of return to prove the identity, genuineness and creditworthiness of the creditor. As held by the Hon ble Supreme Court that penalty U/s 271(1)(c) is a civil liability, therefore, intention/mens rea need not to be required to prove by the Assessing Officer. The case laws relied by the assessee are not squarely applicable on the facts of the assessee s case. Therefore, we uphold the order of the ld CIT(A). - Decided against assessee

Summary

Issues:
1. Confirmation of penalty under Section 271(1)(c) of the Income Tax Act for A.Y. 2004-05 based on alleged concealment of income.
2. Assessment of penalty by the Assessing Officer and confirmation by the ld CIT(A) regarding the addition on account of bogus cash creditor.
3. Submission of details by the assessee during assessment proceedings, including loan receipt and repayment proofs, but failure to produce confirmation from the cash creditor.
4. Arguments by the assessee against penalty imposition, citing absence of concealment and reliance on judicial precedents.
5. Adjudication of the case by the Appellate Tribunal ITAT Jaipur, upholding the penalty based on lack of confirmation and supporting evidence for the cash creditor transaction.

Analysis by Issue:

1. The appeal pertains to the confirmation of a penalty of Rs. 1,23,600 under Section 271(1)(c) of the Income Tax Act for A.Y. 2004-05. The primary contention revolves around the alleged concealment of income by the assessee, leading to the penalty imposition.

2. The Assessing Officer initiated penalty proceedings based on an addition of Rs. 14,50,000 on account of a bogus cash creditor, specifically concerning a transaction with Smt. Veena Khatri. The inability of the assessee to substantiate the genuineness, identity, and creditworthiness of the creditor formed the basis for penalty imposition.

3. Despite the assessee providing details during assessment proceedings, including proofs of loan receipt and repayment, the absence of confirmation from the cash creditor raised concerns. The Assessing Officer and ld CIT(A) found the explanation unreliable, emphasizing the need for concrete evidence to establish the legitimacy of the transaction.

4. The assessee argued against the penalty, asserting the absence of concealment in the income declaration. Citing judicial decisions, the assessee contended that all income particulars were duly disclosed, and the transaction with Smt. Veena Khatri was genuine, albeit hindered by factors beyond their control.

5. The Appellate Tribunal upheld the penalty, emphasizing the importance of concrete evidence and confirmation in such cases. The tribunal highlighted that mere banking transactions were insufficient to establish the authenticity of the creditor relationship, underscoring the civil liability aspect of penalty under Section 271(1)(c).

This detailed analysis showcases the progression of the case, the arguments presented by both parties, and the final decision rendered by the Appellate Tribunal ITAT Jaipur regarding the penalty confirmation based on the alleged concealment of income.