2024 (4) TMI 1055 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - purchase of agricultural land - assessee could not explain the source of this investment and agreed for an addition - HELD THAT - This is not a fit case of levy of penalty. The assessee has shown contractual receipts and had also produced copy of cash book which showed that the assessee was having sufficient cash balance for the purpose of purchasing the aforesaid property. Further the above agricultural land was also shown by the assessee in the books of accounts as well as in the Audit Report. Penalty under Section 271(1)(c) of the Act cannot be levied simply on the basis that the assessee has agreed to additions / not contested additions made in quantum proceedings. Accordingly just because the assessee as agreed to the aforesaid addition in quantum proceedings would itself not justify imposition / levy of penalty. Ground No. 1 of the assessee s appeal is allowed. Levy of penalty in respect of addition on account of contractual receipts - mismatch between the Revenue recognized by the assessee and the amount reflecting in Form 26AS - HELD THAT - As the explanation given by the assessee on account of the possible cause of mismatch between the Revenue recognized by the assessee and the amount reflecting in Form 26AS looking into the fact that the mismatch was only of a meagre amount of Rs. 1, 05, 827/- against the total contractual receipts of Rs. 2, 14, 08, 976/- shown by the assessee as his contractual receipts we are of the considered view that this is not a fit case for levy of penalty u/s 271(1)(c) of the Act Apparently the assessee has no mala fide intention to conceal the Revenue or furnish inaccurate particulars of his Revenue. In the result levy of penalty with respect to addition on account of contractual receipts is hereby directed to be deleted. Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the assessment order u/s 271(1)(c) and the penalty levied for concealment of particulars of income.
2. Legality of the assessment order u/s 143(3) and the additions made by the Assessing Officer (A.O.).

Summary:

Issue 1: Legality of the assessment order u/s 271(1)(c) and the penalty levied for concealment of particulars of income

Levy of penalty on account of purchase of agricultural land:

The A.O. observed that the assessee purchased agricultural land worth Rs. 2,00,500/- but failed to explain the source of this investment, leading to the addition of Rs. 2,00,500/- to the income and initiation of penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars of income. The Ld. CIT(A) confirmed the addition and penalty, noting the assessee's failure to substantiate the claim of having sufficient cash balance during both assessment and penalty proceedings. The Tribunal, however, found that the assessee had shown sufficient contractual receipts and cash balance in the books of accounts and Audit Report, and thus, this was not a fit case for levy of penalty. The appeal on this ground was allowed.

Levy of penalty in respect of addition of Rs. 1,05,827/- on account of contractual receipts:

The A.O. added Rs. 1,05,827/- to the income due to a discrepancy between the income shown in the books and Form 26AS, and imposed a penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. The Ld. CIT(A) confirmed the penalty, stating the assessee failed to provide evidence for the difference. The Tribunal, however, accepted the assessee's explanation that the difference was due to accounting practices and timing of revenue recognition, and given the meagre amount relative to the total receipts, ruled that there was no mala fide intention to conceal income. The penalty was directed to be deleted, and the appeal on this ground was allowed.

Issue 2: Legality of the assessment order u/s 143(3) and the additions made by the A.O.

The assessee did not contest the quantum additions before the Tribunal for peace of mind. Consequently, the appeal regarding quantum additions (ITA No. 84/Rjt/2018) was dismissed as not pressed.

Conclusion:

In the combined result, the appeal filed by the assessee in ITA No. 62/Rjt/2019 for A.Y. 2008-09 is allowed, and the appeal filed by the assessee in ITA No. 84/Rjt/2018 for A.Y. 2008-09 is dismissed as not pressed.

This Order pronounced in Open Court on 24/04/2024