2007 (10) TMI 326 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of penalty imposed u/s 271(1)(c) for assessment year 1997-98.

Summary:
The Revenue appealed against the deletion of penalty imposed u/s 271(1)(c) for the assessment year 1997-98. The AO had made additions to the total income based on estimated figures and disallowed expenses, treating loans as income u/s 68. The CIT(A) deleted the penalty, citing lack of proper opportunities given by the AO and lack of examination of evidence. The CIT(A) noted that the loans were confirmed by creditors and were of small amounts, except for one significant loan from a close relative of the assessee who was regularly assessed to tax. The CIT(A) found no justification for the concealment penalty and deleted it. The Revenue challenged this decision, arguing that the AO had recorded satisfaction for concealment and relied on legal precedents. The ITAT upheld the CIT(A)'s decision, stating that penalty proceedings require clear evidence of concealment, which was lacking in this case. The ITAT also noted the absence of clear satisfaction of concealment in the assessment order, as required by law. The ITAT found no infirmity in the CIT(A)'s order and upheld the deletion of the penalty.

In conclusion, the ITAT dismissed the Revenue's appeal, affirming the deletion of the penalty imposed u/s 271(1)(c) for the assessment year 1997-98.