2017 (5) TMI 214 - AT - Income Tax

Penalty u/s 271(1)(c) - Undisclosed investment in mutual funds - deduction u/s 80C and 80G denied - Held that - As assessee failed to substantiate her claim before the AO by producing cogent and convincing evidence. So also even before the Ld. CIT (A) no such exercise was undertaken. Observing that there is no material in support of the claim of the assessee, the authorities below concluded that the assessee is not entitled to the benefits claim. However, since such material is produced now which according to the Counsel on either side requires verification at the end of the AO to reach a just conclusion, we find it just and proper to set aside the matter to the file of the AO for consideration of the matter afresh in the light of the documents now produced or that will be produced before the AO. Since, we are setting aside the matter relating to the quantum additions to the file of the AO, the penalty proceedings do not survive and they shall follow a fresh consideration of the matter by the AO

Summary

Issues:
Assessment and penalty proceedings for AY 2011-12

Analysis:
The case involved assessment and penalty proceedings for the assessment year 2011-12. The assessee, a salaried employee, filed her return of income declaring total income and claimed deductions under sections 80C and 80G of the Income Tax Act. The Assessing Officer (AO) added back an amount as undisclosed investment in mutual funds, failed to give credit for tax deducted at source, and disallowed certain deductions claimed by the assessee. The AO also imposed a penalty. Appeals against the assessment and penalty orders were dismissed by the CIT (A). The assessee then challenged the additions and penalty in separate appeals before the ITAT, along with stay petitions.

The CIT (A) upheld the additions made by the AO, stating that the assessee failed to provide material in support of her claims. During the ITAT proceedings, the assessee's counsel presented additional evidence, including mutual fund statements and Form 16, to support the claim that certain investments were reinvestments and not fresh investments. The counsel also provided evidence regarding tax deducted at source and deductions claimed under sections 80C and 80G.

The ITAT noted that the assessee failed to substantiate her claims with convincing evidence before the AO and the CIT (A). However, considering the new evidence presented during the ITAT proceedings, the ITAT decided to set aside the matter to the AO for fresh consideration. The ITAT directed the AO to verify the documents produced and provide the assessee with an opportunity to be heard. Consequently, the penalty proceedings were also set aside for fresh consideration along with the assessment matters.

The ITAT dismissed the stay petitions and allowed the appeals for statistical purposes, indicating that the matters would be reconsidered by the AO in light of the new evidence presented during the ITAT proceedings. The decision was pronounced in open court on a specified date.