2016 (9) TMI 996 - AT - Income Tax

Unexplained investment u/s 69 - Assessee failed to produce her documentary evidence in support of investment made in RBI bond amounting to ₹ 8 lakh - Held that - From the submission of Ld. AR we find that assessee has received a sum of ₹ 8.50 lakh in an account maintained jointly with her husband. The bank statement and salary details of assessee s husband have been duly furnished. In our considered view the source of investment has been duly explained by submitting the documents in the form of paper book. Considering the details of the facts of the present case, we find that source of investment has been duly explained by assessee at the appellate stage and in rebuttal Ld. DR also failed to bring anything contrary to the argument of Ld. AR. Hence, we are inclined to reverse the order of Authorities Below - Decided in favour of assessee Penalty u/s 271(1)(b) - Held that - From a plain reading of the above Sec. 273B of the Act, we find that no penalty shall be levied upon assessee if it is proved that there was a reasonable cause for the noncompliance of notice. In the facts of case, as assessee, a female was on the advanced stage of pregnancy and at that time came to Kolkata, in her parental house from Bangalore for the purpose of giving birth to her second issue. Considering the totality of the fact, we find that there was sufficient reasonable cause which prevented assessee to compliance said notice and in this view of the matter, we quash the penalty imposed by AO - Decided in favour of assessee

Summary

Issues involved:
1. Assessment order in violation of natural justice and addition of ?8,00,000 upheld.
2. Penalty under section 271(1)(b) confirmed for non-compliance with notice.
3. Assessment order in violation of natural justice, penalty under section 271(1)(c) upheld, and penalty order barred by limitation and without jurisdiction.

Analysis:

Issue 1: Assessment order in violation of natural justice and addition of ?8,00,000 upheld.
- The appellant challenged the addition of ?8,00,000 as unexplained investment under section 69 of the Income Tax Act.
- The Assessing Officer (AO) based the addition on information from the Annual Information Report (AIR) as the investment in RBI bonds was not disclosed in the return.
- The appellant claimed the investment was from funds received from her husband working in the USA, supported by bank statements and documents.
- The Commissioner of Income Tax (Appeals) upheld the addition, stating the appellant failed to satisfactorily explain the source of investment.
- The appellant, in the second appeal, presented additional evidence including bank statements, salary details of her husband, and documents related to the investment.
- The Appellate Tribunal found the appellant adequately explained the source of investment, reversing the lower authorities' decision and allowing the appeal.

Issue 2: Penalty under section 271(1)(b) confirmed for non-compliance with notice.
- The appellant failed to comply with a notice issued by the AO due to her advanced pregnancy and relocation to her parental house.
- The Appellate Tribunal quashed the penalty imposed under section 271(1)(b) citing reasonable cause for non-compliance as per section 273B of the Act, given the appellant's circumstances.
- The penalty was waived considering the appellant's situation during pregnancy and relocation, leading to the appeal being allowed.

Issue 3: Assessment order in violation of natural justice, penalty under section 271(1)(c) upheld, and penalty order barred by limitation and without jurisdiction.
- The quantum addition related to undisclosed investment was deleted by the Appellate Tribunal, rendering the grounds raised by the appellant in this issue infructuous.
- Consequently, the appeal related to this issue was dismissed as infructuous.
- The combined result saw the appeals in ITA No.2654 and 2655 allowed, while the appeal in ITA No.2656 was dismissed as infructuous.

In conclusion, the Appellate Tribunal reversed the addition of unexplained investment and penalties imposed, considering the appellant's explanations and reasonable causes for non-compliance. The Tribunal emphasized the importance of providing sufficient evidence and justifications in tax proceedings to support claims and avoid penalties.