2023 (4) TMI 949 - AT - Income Tax

Penalty u/s 271(1)(c) - furnishing inaccurate particulars of income for unexplained unsecured loan - assessee is seeking for adjournment on the ground that the rectification application made is pending with the CIT(A) in respect of the quantum appeal decided by him while passing his order requesting him to give decision on the ground of appeal remained to be decided - HELD THAT - CIT(A) was of the opinion that the impugned addition with respect to which penalty has been levied has attained finality by virtue of the order passed by the Tribunal and therefore, the application u/s 154 against the CIT(A) s order contending that some grounds have not been decided by the CIT(A) lacks merit. The same has no relevance to the appeal proceeding against the penalty order based on addition sustained by the Tribunal. Such contention made by the assessee, therefore, has been rejected by the FAA in the order impugned before us. The decision on the issue out of which the penalty proceeding has been initiated has already attained finality by virtue of order passed by the ITAT 2012 (10) TMI 1119 - ITAT RAJKOT which is reflecting at paragraph 6 of the order passed by the ITO in imposing penalty. Therefore, asking for adjournment on the plea of rectification application pending before the Ld. CIT(A) seems to be frivolous and misleading, thus, rejected. Assessee s appeal is dismissed. Genuineness of cash credit has been disproved even during the appellate proceeding - Taking into consideration the entire aspect of the matter, the confirmation of the order of penalty passed by the Ld. CIT(A), on the fact of addition u/s 68 of the Act by invoking Section 271(1)(c) by the CIT(A), in our considered opinion, is, therefore, found to be just and proper so as to warrant interference. Assessee s appeal is dismissed.

Summary

Issues involved:
The judgment involves penalty under Section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income related to an unexplained unsecured loan.

Summary:

1. Background and Initiation of Penalty Proceeding:
The appeal was against the penalty order passed by the Commissioner of Income Tax (Appeals) arising from the assessment for the year 2007-08. The penalty was imposed for furnishing inaccurate particulars of income regarding an unexplained unsecured loan of Rs. 24,90,000.

2. Facts Leading to Penalty Proceeding:
The assessee, engaged in civil construction business, filed a return declaring total income. During assessment proceedings, it was found that the unsecured loan amount was not adequately supported with documentation. Despite various requests and notices, the assessee failed to provide sufficient evidence regarding the source and creditworthiness of the depositors.

3. Appeals and Tribunal Decision:
An appeal was filed challenging the addition of the unsecured loan amount, which was initially deleted but later reinstated by the Tribunal. The penalty proceedings were initiated separately and the penalty was imposed by the Assessing Officer, which was upheld by the First Appellate Authority.

4. Adjournments and Finality of Orders:
The assessee sought adjournments on various grounds, including a pending rectification application. However, the Tribunal noted that the rectification application had already been disposed of and the issues related to the penalty had attained finality through the Tribunal's order. The Tribunal rejected the plea for adjournment based on the rectification application.

5. Decision on Penalty:
The Tribunal found that the genuineness of the cash credit was not proven even during the appellate proceedings. Considering all aspects, the Tribunal upheld the penalty imposed under Section 271(1)(c) for furnishing inaccurate particulars of income. The appeal filed by the assessee was dismissed for lack of merit.

In conclusion, the Tribunal upheld the penalty imposed on the assessee for furnishing inaccurate particulars of income related to an unexplained unsecured loan, based on the finality of the Tribunal's order and the lack of merit in the assessee's contentions.