2000 (7) TMI 219 - AT - Income Tax

Summary

Issues:
1. Penalty under section 271(1)(a) for delay in filing the return for assessment year 1987-88.
2. Penalty under section 271(1)(c) for unexplained cash credits in the assessment for the same year.

Issue 1: Penalty under section 271(1)(a) for filing delay:
The assessee filed an appeal against the penalty imposed under section 271(1)(a) for delay in filing the return for assessment year 1987-88. The Assessing Officer (AO) initiated penalty proceedings due to the delayed filing of the return. The assessee claimed mental tension as the reason for the delay, but the AO and CIT(A) found the explanation unsatisfactory. The burden was on the assessee to prove a reasonable cause for the delay, as held in a Rajasthan High Court case. The CIT(A) upheld the penalty, stating that the assessee failed to discharge the burden of proof. The Tribunal dismissed the appeal, agreeing with the CIT(A) that there was no basis for deleting the penalty.

Issue 2: Penalty under section 271(1)(c) for unexplained cash credits:
The second appeal was against the penalty imposed under section 271(1)(c) for unexplained cash credits in the assessment for the same year. The AO added Rs. 50,000 each as unexplained cash credits in the names of two individuals. The assessee failed to prove the genuineness of the transaction related to one of the cash credits, leading to the penalty imposition. The assessee cited various legal precedents to argue against the penalty, emphasizing that surrender alone should not warrant a penalty without additional evidence of willful concealment. The CIT(A) upheld a reduced penalty, considering the concealment of income proven. However, the Tribunal allowed the appeal, canceling the penalty under section 271(1)(c) as the Department failed to provide sufficient evidence of willful concealment.

In conclusion, the Tribunal dismissed the appeal against the penalty for filing delay under section 271(1)(a) but allowed the appeal against the penalty for unexplained cash credits under section 271(1)(c). The judgments emphasized the importance of proving a reasonable cause for delay and the necessity of additional evidence beyond surrender to justify a penalty for concealment of income.