2016 (10) TMI 838 - AT - Income Tax

Penalty levied u/s 271(1)(c) - unexplained jewellery - Held that - Except for raising the grounds pleading for cancellation of penalty levied under section 271(1)(c) of the Act in respect of seized diamonds no material evidence has been furnished before us to controvert the findings of the authorities below that the diamonds seized in search action under section 132 of the Act were unexplained. We have respectfully perused the judicial pronouncements cited by the assessee and humbly concur with the averments of the learned D.R. for Revenue that these judgements are clearly distinguishable on facts from the case on hand and pertain to issues of either (a) rejection of assessee s claim of whether expenditure was capital or revenue in nature (cited case at S. No. (1)) or (b) were cases where estimation of income was made and for both of which the Hon ble courts had held that penalty under section 271(1)(c) was not leviable. In our view, the case on hand stands on a different footing from the cited cases (supra), as there is neither rejection of the assessee claim of revenue expenditure as being capital in nature nor estimation of income in some cases after rejection of books of account; and therefore, would not come to the rescue of the assessee. In this factual and legal matrix of the case, as discussed above, we uphold the impugned order of the learned CIT(A) in confirming that penalty under section 271(1)(c) of the Act for concealment of income is to be levied in respect of the unexplained diamonds - Decided against assessee

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act, 1961 for A.Y. 2009-10 in respect of unexplained jewellery seized during search action.

Analysis:
The appeal was against the order of the CIT(A)-37, Mumbai dated 31.05.2012, which partly sustained the penalty levied under section 271(1)(c) of the Act for A.Y. 2009-10. The assessee was found in possession of jewellery valued at ?24,38,172/- during a search action, out of which ?16,84,686/- was unexplained. The assessment determined the total income at ?22,55,650/- due to the addition of unexplained jewellery. The penalty of ?5,20,568/- was levied by the AO, which was partially cancelled by the CIT(A). The appeal raised grounds seeking cancellation of the penalty levied on the unexplained jewellery.

The assessee contended that since the addition was based on estimation, the penalty under section 271(1)(c) was not sustainable, citing various judicial pronouncements. The Revenue, however, argued that the penalty was justified as the unexplained jewellery was found and seized during the search action. The CIT(A) had upheld the penalty on the unexplained diamonds valued at ?1,93,424/- out of the total unexplained jewellery.

The Tribunal carefully considered the arguments and evidence presented. It noted that no material evidence was provided to refute the findings that the seized diamonds were unexplained. The judicial pronouncements cited by the assessee were found to be distinguishable as they did not apply to the specific circumstances of the case. The Tribunal upheld the CIT(A)'s decision to confirm the penalty under section 271(1)(c) for the unexplained diamonds valued at ?1,93,424/-. Consequently, the appeal was dismissed, and the penalty was upheld.

In conclusion, the Tribunal found that the penalty under section 271(1)(c) was justified for the unexplained diamonds seized during the search action. The decision was based on the specific facts of the case and the lack of evidence to challenge the findings of the authorities. The appeal was dismissed, and the penalty was upheld as per the CIT(A)'s order.