2022 (7) TMI 1222 - AT - Income Tax

Penalty u/s 271(1)(c) - As argued AO has not specified specific limb in the show cause notice - HELD THAT - We find that the assessee has not raised any specific ground of appeal on the merits of the penalty. The assessee has raised limited ground of appeal that the assessing officer has not specified specific limb in the show cause notice. No evidence regarding such plea is placed on record despite the facts that this appeal is pending from 2019. Neither the assessee has filed any evidence, nor came forward to explain the fact in his favour. Thus, in absence of any such supporting evidence we have no other option except to uphold the order of ld CIT(A) is sustain the order of penalty. In the result, the sole ground of appeal raised by these is dismissed.

Summary

Issues:
1. Validity of penalty order under section 271(1)(c) of the Income Tax Act.
2. Adequacy of notice issued by the Assessing Officer for penalty proceedings.
3. Assessment of unaccounted income and subsequent penalty imposition.

Analysis:

Issue 1: Validity of penalty order under section 271(1)(c) of the Income Tax Act
The appeal by the assessee was directed against the penalty levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act for the assessment year 2010-11. The Assessing Officer added unaccounted income as investment under section 69 of the Act, leading to the initiation of penalty proceedings. The penalty was levied at 100% of the tax sought to be evaded on the addition of Rs. 16,53,600/-. Despite the assessee's submissions challenging the penalty imposition, both the Assessing Officer and the Ld. CIT(A) upheld the penalty, emphasizing the agreement for the addition made during assessment and dismissing the voluntary disclosure as a defense against penalty proceedings.

Issue 2: Adequacy of notice issued by the Assessing Officer for penalty proceedings
The assessing officer issued a show cause notice under section 274/271 before levying the penalty, highlighting the addition of unaccounted income to the total income of the assessee. The assessee contended that the notice did not explicitly mention the grounds for initiating penalty proceedings, specifically regarding inaccurate particulars or concealing income details. Despite the assessee's argument that the notice lacked specificity, the Ld. CIT(A) dismissed the appeal, emphasizing the assessee's agreement to the addition during assessment as a basis for upholding the penalty.

Issue 3: Assessment of unaccounted income and subsequent penalty imposition
The assessing officer's decision to add unaccounted income to the assessee's total income was based on the information received regarding cash deposits in the bank account that were not disclosed in the income tax return. The addition of unaccounted income was initially based on peak credit amounts but was later enhanced to the entire credit in the bank account during the relevant period. The quantum assessment appeal further confirmed the enhanced addition. Despite the assessee's failure to respond to notices and absence during the appeal proceedings, the Tribunal upheld the penalty, citing the lack of specific grounds raised by the assessee against the penalty order.

In conclusion, the Tribunal dismissed the appeal of the assessee, upholding the penalty imposed under section 271(1)(c) of the Income Tax Act. The decision was based on the lack of specific grounds raised by the assessee against the penalty and the absence of supporting evidence to challenge the penalty imposition.