2017 (3) TMI 974 - AT - Income Tax

Penalty u/s 271(1)(c) - addition as agriculture income - Held that - It is pertinent to keep in mind that a person has been claiming agriculture income in the past and in subsequent years and having agriculture land, then the addition to his income for not showing exact details of agriculture income can be justified, but it cannot be said that claim made was false. It could be appreciated that a particular quantity of land can generate an income from agriculture activity. Such income could be estimated if land holding is there. The AO failed to bring any evidence on record which can exhibit that this claim was false and the assessee has furnished inaccurate particulars with regard to this claim. Addition on difference of date mentioned in the vouchers and entered into computer a negative cash balance has occurred. This was result of a wrong date mentioned at the time of entry in the software. Otherwise, this addition itself should not have been made in the income of the assessee. The AO again did not prove that a false assertion was made by the assessee. Assessee has purchased capital assets in which he has made certain improvement. Cost of this improvement was not allowed to the assessee while computing the capital gain. The AO has alleged that the assessee has furnished inaccurate particulars for visiting the assessee with penalty. But he failed to demonstrate which particular was inaccurate. It is a claim made by the assessee, which cannot be substantiated with documentary evidence, therefore, it was disallowed. But how the claim was inaccurate, is not discernible. Thus, no penalty is imposable on this count also. Salary income addition - as per the assessee, he has disclosed the income as per Form no.16. The assessee was of the opinion that the expenditure i.e. constituency allowance, office expenditure are exempt being Member of Parliament. He harboured a belief that his salary income is also exempt - Held that - To our mind the assessee failed to give any plausible explanation for non-inclusion of his salary as Member of Parliament. There cannot be any reason to habour such a belief, more so, it was not brought our notice that this was the first year of receipt of salary as an Member of Parliament. Therefore, the ld.AO was justified in visiting the assessee with penalty qua the addition of salary income amount - Appeal decided partly in favour of assessee

Summary

Issues Involved:
Assessee appealing against penalty under section 271(1)(c) of the Income Tax Act, 1961 imposed by the AO based on various additions made to the total income.

Detailed Analysis:

1. Penalty under Section 271(1)(c):
- The Assessee contested the penalty imposed by the AO under section 271(1)(c) of the Act, claiming that the ld.CIT(A) erred in confirming the penalty of &8377; 2,59,214.
- The AO initiated penalty proceedings under section 271(1)(c) and issued a show cause notice to the Assessee.
- The Assessee provided explanations for each addition made by the AO, contending that there was no concealment or inaccurate particulars furnished.
- The Assessee argued that penalties should be waived based on the explanations provided.
- The ld.DR relied on the orders of the Revenue authorities below.
- The Tribunal considered the contentions of both parties and analyzed the provisions of section 271(1)(c) of the Income Tax Act, which deals with concealment of income or furnishing inaccurate particulars.

2. Provisions of Section 271(1)(c):
- Section 271(1)(c) allows for a penalty if the Assessee is found to have concealed income or furnished inaccurate particulars.
- The penalty imposed can range from 100% to 300% of the tax sought to be evaded due to concealment or furnishing inaccurate particulars.
- The section includes deeming provisions regarding concealment of income, where failure to offer explanations or substantiate them can lead to penalties.
- The Tribunal highlighted the importance of these deeming provisions in determining penalties under section 271(1)(c).

3. Analysis of Additions Made:
- The Tribunal examined each addition made by the AO to the Assessee's total income.
- For the addition related to agriculture income, the Tribunal noted that while evidence was lacking, the claim was not proven false, and the AO failed to demonstrate inaccurate particulars.
- Similarly, for other additions such as cash difference and cost of improvements, the Tribunal found that the AO did not establish the falsity of the Assessee's claims, thus no penalty was warranted.
- However, in the case of salary income, where the Assessee failed to include income as a Member of Parliament, the Tribunal upheld the penalty as the Assessee's explanation was deemed inadequate.

4. Final Decision:
- The Tribunal partly allowed the Assessee's appeal, confirming the penalty under section 271(1)(c) only for the salary income addition.
- The Tribunal emphasized the need for clear evidence of concealment or inaccurate particulars to justify penalties under the Income Tax Act.
- The order was pronounced on 21st March 2017 in Ahmedabad, with the Assessee's appeal partially allowed.