2016 (6) TMI 164 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - undisclosed income by the assessee from sale of shops - Held that - Findings of the Tribunal in the quantum appeal speaks for itself in as much as the additions based on the statements were discarded following the ratio laid down in the case of S. Khader Khan 2007 (7) TMI 182 - MADRAS HIGH COURT . Further, we do not find any evidence on record which could suggest that the assessee has actually received ₹ 4.75 lacs instead of ₹ 1.80 lacs though the difference may have been sustained by the Tribunal in quantum appeal but in our considered opinion, the same cannot be a justifiable reason for the levy of penalty u/s. 271(1)(c) of the Act. We accordingly set aside the findings of the ld. CIT(A) and direct the A.O to delete the impugned penalty. - Decided in favour of assessee.

Summary

Issues:
Penalty levied under section 271(1)(c) of the Income Tax Act for concealment of income.

Analysis:
1. The appeal was filed by the assessee against the order of the Ld. CIT(A), Valsad, pertaining to A.Y. 2005-06, challenging the penalty of ?11,86,400 imposed under section 271(1)(c) of the Act.
2. The penalty was based on the assessment order made under section 143(3) of the Act, where discrepancies were found in the statements recorded during survey proceedings related to a shop transaction.
3. The Assessing Officer concluded that ?32,70,000 had not been shown in the books of accounts by the assessee, treating it as undisclosed income from the sale of shops, leading to the initiation of penalty proceedings.
4. The assessee contended that all facts were disclosed during assessment proceedings and no concealment or inaccurate particulars were found, requesting the penalty to be dropped.
5. The Tribunal, while deciding the quantum appeal, held that statements recorded during survey proceedings have no evidentiary value unless corroborated by independent material, and the additions made solely based on such statements were not justified.
6. The Tribunal found no concrete evidence to support the undisclosed income claim, as discrepancies in the recorded statements were not substantiated by independent findings or material.
7. The Tribunal emphasized that the mere reduction of the quantum addition in the appeal did not justify the penalty under section 271(1)(c) of the Act.
8. Consequently, the Tribunal set aside the penalty imposed by the revenue authorities, directing the Assessing Officer to delete the penalty amount of ?11,86,400.
9. The Tribunal's decision was based on the lack of substantial evidence supporting the undisclosed income claim and the insufficiency of the recorded statements to justify the penalty under section 271(1)(c) of the Act.

This detailed analysis of the judgment highlights the key issues involved in the penalty levied under section 271(1)(c) of the Income Tax Act and the Tribunal's decision to set aside the penalty based on the lack of concrete evidence and reliance on statements without independent corroboration.