2017 (2) TMI 995 - AT - Income Tax

Penalty order u/s 271(1)(c) - unexplained expenditure under Section 69C addition - non striking off of inaccurate particular or concealed income in the notice - Held that - No explanation was offered by assessee for not reflecting such expenditure in books of accounts. Thus, it is a clear case of concealment of income. It was not a case that any legal claim of expanses was made and the same was disallowed during the assessment proceedings. The material was seized during the survey under section 133A, despite the evidence in possession of revenue the assessee has not shown the cash expanses in its books of account. In the explanation the assessee contended that there was no intention to hide or suppress anything. In our considered opinion the explanation offered by assessee is not satisfactory. The issuance of notice is an administrative device for informing the assessee about the proposal of levy of penalty in order to enable him to explain why it should not be levied against him. If it is taken for the sake of argument that mere mistake in the language in the notice for non-striking off of inaccurate particular or marking on concealment of income portion cannot by itself invalidate the notice. Entire facts and backgrounds thereof are to be kept in mind. Every concealment of fact may ultimately result in filing of or furnishing inaccurate particular. As decided in CIT Vs Smt. Kaushalya (1995 (1) TMI 25 - BOMBAY High Court) while considering similar contention with regards to not striking off of inaccurate particular or concealed income in the notice, held, that mere not striking off specific limb cannot by itself invalidate notice issued under section 274 of the Act - Decided against assessee

Summary

Issues Involved:
Appeals against penalty order u/s 271(1)(c) for AY 2006-07 and AY 2007-08.

Detailed Analysis:

Issue 1: Penalty Initiation Clarity
- The AO initiated penalty under Section 271(1)(c) for concealment of income.
- Assessee argued that the penalty initiation lacked clarity on the specific grounds.
- Ld. AR cited a Gujarat High Court decision for support.
- Ld. DR contended that the penalty was clearly initiated for concealment of income.
- The Tribunal found that the AO clearly mentioned the penalty initiation for concealment of income.
- The contention regarding lack of clarity in penalty initiation was dismissed.

Issue 2: Concealment of Income
- Survey under section 133A revealed unaccounted cash expenditure by the assessee.
- Addition of ?47,000 made by AO for unexplained expenditure not reflected in books.
- Assessee failed to provide a satisfactory explanation during assessment.
- AO and CIT(A) held that the assessee concealed income by not disclosing the expenditure.
- Assessee contended no intention to hide income, but the explanation was deemed unsatisfactory.
- Tribunal found the explanation inadequate and upheld the penalty for concealment of income.

Issue 3: Legal Precedents
- Assessee cited a Gujarat High Court decision regarding penalty deletion for unclear grounds.
- Tribunal noted a jurisdictional High Court decision emphasizing the importance of show cause opportunity.
- The Tribunal found the Gujarat High Court decision not applicable due to clear recording of concealment by the AO.
- The Tribunal upheld the jurisdictional High Court's decision as a binding precedent.

Conclusion:
- Appeals for both AYs were dismissed due to the concealment of income and the clarity in penalty initiation for the specified grounds.
- The Tribunal upheld the penalty under Section 271(1)(c) for both AYs based on the findings of the AO and CIT(A).
- Legal precedents were considered, and the Tribunal followed the binding decision of the jurisdictional High Court.
- The appeals were dismissed, and no costs were awarded to the assessee.