2016 (7) TMI 807 - AT - Income Tax

Penalty order u/s 271(1)(c) - cash paid by the assessee for acquisition of shops out of undisclosed sources - Held that - From the order of he ld.CIT(A) it is seen that factual findings have been recorded that element of cash was involved in the transaction of acquisition of shops. The Assessing Officer has given a finding after verifying the evidences that cash component of payments aggregating to 3, 44, 02, 000 was involved in the transaction. Amount-wise break up and details was also given by ld.CIT(A) on page 6 of his order wherein under the name of the assessee specific amounts have been mentioned. Nothing has been brought before us to rebut these factual findings. Under these circumstances we find the ld.CIT(A) has rightly confirmed the penalty levied by the Assessing Officer. In view of the same no interference is called for in the order of the ld.CIT(A) and the same is confirmed. - Decided against assessee.

Summary

Issues:
Penalty under section 271(1)(c) for cash payments made for acquisition of shops out of undisclosed sources.

Analysis:
The appeal was filed against the penalty order under section 271(1)(c) challenging the levy of penalty amounting to ?41,71,188. The appellant did not attend the hearing despite notices being duly served. The key issue raised in the appeal was the penalty imposed by the Assessing Officer on cash payments made for acquiring shops out of undisclosed sources.

The lower authorities found that the appellant had made cash payments totaling ?3,44,02,000 for shop acquisition, which were not recorded in the books of account. The Assessing Officer attributed a portion of this amount to the appellant based on the profit-sharing ratio. The penalty was initiated under section 271(1)(c) as the explanations provided by the appellant were not accepted by the authorities.

The appellant contended that the seized papers were related to a proposed project for acquiring additional premises and the figures noted were estimations. However, the authorities found discrepancies in the explanations provided by the appellant regarding the cash component of the transactions. The ld.CIT(A) upheld the penalty, stating that the appellant failed to substantiate the explanations given and that circumstantial evidence supported the penalty imposition.

The appellate tribunal noted that factual findings confirmed the involvement of a cash component in the shop acquisition transactions. The ld.CIT(A) had detailed the amounts involved under the appellant's name. As the appellant failed to rebut these findings, the tribunal upheld the penalty imposed by the Assessing Officer. Consequently, the appeal was dismissed, and the penalty of ?41,71,188 was upheld.