2019 (5) TMI 345 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Addition u/s 68 - case was selected for scrutiny - Surrender of income - assessee s disclosure was not voluntary but under compulsion when cornered by the A.O. at the assessment stage - HELD THAT - It is an admitted fact that the case was selected for scrutiny and A.O. raised questionnaire to the assessee and called for the explanation of assessee on all the above four issues. The assessee instead of explaining any of the above issues or to file any documentary evidences in support of the same, surrendered the amounts in question for taxation. Therefore, clearly show that assessee made the surrender of the above amounts in question only when A.O. has confronted the assessee with above issues and cornered the assessee at the assessment stage. Thus, the assessee did not make any voluntary surrender of the amounts in question. Assessee had concealed the material facts and given incorrect statement of fact in the return of income. The assessee provided incorrect facts which were marshaled by the A.O. It would show that assessee s disclosure was not voluntary but under compulsion when cornered by the A.O. at the assessment stage. The assessee did not offer any explanation on any of the above issues either at the assessment stage or at the penalty proceedings. Explanation-1 to Section 271(1)(c) is clearly attracted. Had the case would not have been selected for scrutiny assessment, the assessee would not have surrendered the amount in question for the purpose of taxation. The assessee, therefore, had guilty mind and show that assessee concealed the particulars of income from the Revenue Department which invited penalty proceedings under section 271(1)(c) of the I.T. Act, 1961. - Decided against assessee.

Summary

Issues:
Challenge to levy of penalty under section 271(1)(c) of the I.T. Act, 1961 for the A.Y. 2013-2014.

Analysis:
1. The Assessee failed to deduct TDS on professional charges, leading to disallowance under section 40(a)(ia) of the I.T. Act, 1961. The AO made an addition accordingly.
2. Cash deposits in the Assessee's bank account lacked proper explanations and confirmations, resulting in an addition under section 68 of the I.T. Act, 1961.
3. Unsecured loans lacked proper documentation, leading to an addition under section 68 of the I.T. Act, 1961.
4. Sundry creditors' details were not provided, resulting in an addition under section 68 of the I.T. Act, 1961.
5. The AO initiated penalty proceedings under section 271(1)(c) due to income concealment. The Assessee's explanation of surrendering amounts to avoid litigation was not accepted.
6. The CIT(A) upheld the penalty, citing the Assessee's failure to justify claims and the applicability of Explanation-1 to Section 271(1)(c) of the Act.
7. Various legal judgments were cited by both parties to support their arguments regarding penalty imposition.
8. The final decision upheld the penalty, emphasizing that the Assessee's surrender of amounts was not voluntary but due to being cornered by the AO during scrutiny. The Assessee failed to provide explanations or evidence, leading to the penalty under section 271(1)(c) of the I.T. Act, 1961.

This detailed analysis of the legal judgment highlights the issues involved, the sequence of events leading to the penalty imposition, and the reasoning provided by the authorities in upholding the penalty under section 271(1)(c) of the I.T. Act, 1961.