2019 (1) TMI 153 - HC - Income Tax

Penalty imposed u/s 158-BFA(2) - deposits undisclosed by the Assessee from the villagers of Rasipuram as income of the Assessee - disclosures made by assessee on condition that penalty and prosecution should not be initiated - Tribunal delted the addition same as CIT-A - that - Tribunal held that the order passed by the CIT(A) was right, since the additions were offered on condition that penalty and prosecution should not be initiated and the offer was made to avoid protracted litigation as a matter of good gesture to keep up the Assessee among the people of his own village. Further, the Tribunal noted that there was no assessed material found, as a result of search to the fact that the deposits were undisclosed by the Assessee and this was assessed only on the basis of disclosure made by the Assessee. Furthermore, the Tribunal noted that it is not on the basis of any evidence and investigation conducted by the Department and it was not unearthed by the act of the Department. Therefore, the Tribunal held that there was no justification to interfere with the order passed by the CIT(A). The entire dispute revolves on the factual matrix, which was considered by the CIT(A) and decided in favour of the Assessee and once again re-appreciated by the Tribunal and concluded in favour of the Assessee and in this appeal, we are not expected to re-appreciate the factual position for arriving at a different conclusion. Thus, no substantial question of law arises.

Summary

Issues:
1. Appeal against order under Section 206-A of the Income Tax Act, 1961.
2. Deletion of penalty under Section 158-BFA(2) of the Income-Tax Act.

Analysis:
1. The appeal was filed against the order passed by the Income Tax Appellate Tribunal regarding the penalty imposed for the Block Period 01.04.1989 to 25.11.1999. The substantial question of law was whether the Tribunal was right in deleting the penalty of ?95,52,609. The main issue was whether the Commissioner of Income Tax Appeal was justified in deleting the penalty levied on the Assessee and if the Tribunal was correct in confirming this decision.

2. The Commissioner of Income Tax Appeal deleted the penalty based on the Assessee's offer to disclose deposits from villagers as income, with the condition that no penalty or prosecution should be initiated. The Assessee offered this to avoid legal issues and as a gesture to the villagers. The Commissioner noted that the Assessee paid tax on the disclosed income and had the basis to estimate the income. The Tribunal agreed with the Commissioner, stating that the additions were based on the Assessee's disclosure and not on any evidence found by the Department. Therefore, the Tribunal upheld the decision to delete the penalty.

3. The High Court reviewed the orders of the Commissioner and the Tribunal, emphasizing that the dispute centered on factual considerations. The Commissioner and the Tribunal both ruled in favor of the Assessee based on the disclosed income and the absence of concrete evidence from the Department. The High Court concluded that there was no substantial question of law to consider in the appeal, as the factual position was already established in favor of the Assessee. Consequently, the appeal was dismissed, and no costs were awarded.