2022 (5) TMI 679 - AT - Income Tax

Levy of penalty under section 271(1)(c) - unexplained cash credit under section 68 - HELD THAT - After giving an opportunity to substantiate the claims and evidence filed during the course of remand proceedings and examining the facts and the documents relied upon by the assessee, the Assessing Officer came to conclusion that the evidence submitted by the assessee was not correct. On perusal of the order passed by the ld. CIT(A), we find that the ld. CIT(A) has not at all narrated anything available in the remand report and what was incorrect found by the Assessing Officer in the documents furnished by the assessee during the course of remand proceedings. The ld. DR also could not able to explain in detail on the observations of the Assessing Officer on the documents furnished by the assessee during the course of remand proceedings. Under the above facts and circumstances, the penalty levied under section 271(1)(c) of the Act is deleted. - Decided in favour of assessee.

Summary

Issues:
Challenge to penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:

1. Background of the Case:
The appeal was filed against the order confirming the penalty under section 271(1)(c) of the Income Tax Act, 1961. The assessee, a doctor, and spouse ran a fertility center and were intercepted at the airport carrying a significant amount of cash. Subsequently, a search was conducted, and discrepancies in cash credits were found in the books of accounts.

2. Levy of Penalty:
The Assessing Officer added the unexplained cash credit as income, and penalty proceedings under section 271(1)(c) were initiated. The penalty was imposed as the assessee did not declare the true income, based on incriminating evidence. The Commissioner of Income Tax (Appeals) upheld the penalty citing relevant case law.

3. Appeal to the Tribunal:
The assessee appealed to the Tribunal against the confirmed penalty. The counsel argued that the submissions were not fully considered, and the penalty should be deleted. The Departmental Representative supported the lower authorities' orders.

4. Tribunal's Decision:
After reviewing the records and submissions, the Tribunal noted discrepancies in the evidence submitted by the assessee during remand proceedings. The Commissioner of Income Tax (Appeals) failed to address these discrepancies adequately. As a result, the penalty under section 271(1)(c) was deleted due to insufficient explanation and lack of detailed examination by the authorities.

5. Conclusion:
The Tribunal allowed the appeal, deleting the penalty under section 271(1)(c) of the Income Tax Act, 1961. The decision was pronounced in Chennai on 5th May 2022.

This comprehensive analysis outlines the case background, the imposition of the penalty, the arguments presented in the appeal, the Tribunal's assessment of the evidence, and the final decision to delete the penalty based on insufficient examination and explanation of discrepancies.