2019 (7) TMI 435 - AT - Income Tax

Levy of penalty u/s. 271 (1) (c) - cash deposits in the bank accounts - ex-parte order - no explanation - HELD THAT - CIT(A) has given valid reasons for sustaining the penalty levied by the AO u/s. 271 (1) (c). Assessee had not given any proper explanation either before the AO or before the CIT(A) for such huge cash deposits in the bank accounts. There is nothing on record to controvert the penalty sustained by the CIT(A). Under these circumstances the order of the CIT(A) is in accordance with law therefore, uphold the same and grounds raised by the assessee are dismissed.

Summary

Issues:
Levy of penalty under section 271(1)(c) upheld by CIT(A) based on non-cooperation of the assessee.

Analysis:
The appeal was against the penalty of ?3,88,549 imposed by the Assessing Officer under section 271(1)(c), which was upheld by the CIT(A). The assessee did not appear during the hearing, and the notice sent to the assessee was returned as "No such person." The appeal was disposed of based on available records and the arguments presented by the Departmental Representative (DR).

The facts of the case revealed that the Assessing Officer added ?14,54,230 as profit on cash deposits in bank accounts, and other additions were also made. The penalty proceedings were initiated under section 271(1)(c) due to the lack of proper explanation from the assessee's side. The penalty was levied at ?3,88,549, representing 100% of the tax sought to be evaded.

The CIT(A) upheld the penalty by emphasizing the non-cooperative behavior of the appellant throughout the proceedings. The CIT(A) noted that the appellant failed to attend the proceedings, submit any explanations, or offer submissions. The CIT(A) invoked Explanation-1 of section 271(1)(c) of the Act, creating a legal fiction against the assessee for concealing income or furnishing inaccurate particulars.

The CIT(A) cited judicial precedents to support the penalty imposition, emphasizing that the appellant's failure to offer any explanation during assessment or penalty proceedings justified the conclusion of income concealment. The appellant's conduct and failure to disclose bank accounts and transactions further supported the penalty imposition.

The appellant's argument that income was surrendered during assessment proceedings was deemed misplaced, as the revised income disclosure was seen as not voluntary but a reaction to being cornered by the Assessing Officer. The Tribunal upheld the CIT(A)'s decision, finding valid reasons for sustaining the penalty under section 271(1)(c) due to the lack of proper explanation from the assessee regarding the significant cash deposits in bank accounts.

In conclusion, the Tribunal upheld the penalty imposed by the Assessing Officer and sustained by the CIT(A), dismissing the grounds raised by the appellant. The order pronounced on 08.07.2019 resulted in the dismissal of the appeal filed by the assessee.