2016 (12) TMI 39 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - additions on unexplained cash credits - Held that - In the instant case the assessee has not been able to establish the identity of the creditors itself. The confirmations furnished by the assessee in the form of so called affidavits are nothing but self created documents and thus cannot be relied upon. Penalty confirmed - Decided against assessee

Summary

Issues:
Levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income.

Detailed Analysis:

1. Background and Assessment Proceedings:
The appeal was against the penalty imposed under section 271(1)(c) for the assessment year 2000-01. The assessee, a Hindu Undivided Family (HUF), was a partner in various firms. A search and seizure action under section 132(1) was conducted, leading to additions in the assessment, including low household expenses, unexplained investment in land, and unexplained cash credits. The Commissioner of Income Tax (Appeals) partially upheld these additions, leading to the initiation of penalty proceedings.

2. Assessee's Contentions:
The assessee contended that loans received were genuine, supported by confirmations and affidavits from creditors. The assessee argued that the onus to prove genuineness was discharged, especially since the loan amounts were relatively small. The assessee also highlighted the inability to obtain confirmations from some creditors due to assessment proceedings.

3. Revenue's Arguments:
The revenue representative opposed the assessee's claims, arguing that the affidavits were self-serving and lacked essential details. They contended that the documents appeared fabricated, as they were not notarized or attested properly. The revenue emphasized the absence of any creditor produced before the authorities.

4. Tribunal's Findings and Decision:
The Tribunal observed that the affidavits were deficient, lacking essential information and proper execution. It noted the absence of witnesses, uniform wording, and lack of creditor identification. The Tribunal agreed with the Commissioner of Income Tax (Appeals) that the cash credits were not genuine, leading to the confirmation of the penalty. The Tribunal dismissed the appeal, upholding the penalty based on the inadequacy of evidence provided by the assessee.

5. Precedent Comparison and Conclusion:
The Tribunal compared a previous case cited by the assessee, emphasizing the differences in circumstances. Unlike the cited case where work details were provided, in this instance, the assessee failed to establish creditor identities convincingly. The Tribunal concluded that the affidavits were unreliable and self-created, further supporting the penalty imposition.

In conclusion, the Tribunal upheld the penalty under section 271(1)(c) due to the inadequacy of evidence and credibility of the documents presented by the assessee, leading to the dismissal of the appeal.