1986 (12) TMI 71 - AT - Income Tax

Summary

Issues:
Penalty under section 271(1)(c) for unexplained investment in gifts received by the assessee during the assessment year 1979-80.

Detailed Analysis:

1. The assessee, an individual, filed a return for the assessment year 1979-80 declaring income of Rs. 2,440, later revised to show interest income of Rs. 5,045. The Income Tax Officer (ITO) added Rs. 63,276 as unexplained investment based on gifts received by the assessee, which included cash gifts and various items of silver utensils. The ld. AAC accepted the cash gifts but upheld the addition of Rs. 26,000 for silver utensils. Subsequently, penalty proceedings under section 271(1)(c) were initiated by the ITO, leading to a penalty of Rs. 8,000 being levied on the assessee.

2. The learned AAC, in appeal, noted that the addition of Rs. 26,000 for silver utensils had been upheld by the Tribunal in a separate appeal. Relying on the Tribunal's observations, the ld. AAC concluded that the case fell under clause (b) of Explanation to section 271(1)(c) for the relevant assessment year, thereby confirming the penalty.

3. The assessee contended that the explanation provided was partially accepted and that the partial acceptance did not amount to concealment of income. The counsel for the assessee argued that the explanation was bona fide, supported by factors such as detailed footnotes in the return, non-applicability of section 69 due to no investments made, absence of a column for declaring deemed income, and the addition being based on estimates.

4. Various legal decisions were cited in support of the assessee's contention, highlighting the bona fide nature of the explanation provided. On the other hand, the Departmental Representative relied on the orders of the Income Tax authorities and previous Tribunal decisions to support the penalty imposition.

5. The Appellate Tribunal emphasized that while findings in assessment proceedings are relevant, they are not conclusive for penalty imposition under section 271(1)(c). The Tribunal reviewed the details of gifts received by the assessee, her family background, and the lack of positive evidence for the gifts of silver utensils. It was noted that there was no evidence of the claim being false or bogus, and the failure to produce evidence for silver utensils did not indicate lack of bona fide explanation, especially considering the status of the assessee's family and in-laws.

6. Ultimately, the Tribunal held that there was no concealment of income or particulars thereof under section 271(1)(c) for the assessment year 1979-80. The appeal was allowed in favor of the assessee, overturning the penalty imposed by the ITO.