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Issues involved: Confirmation of penalty u/s 271(1)(c) of the IT Act, 1961 for undisclosed income from investments in mutual funds.
Summary: 1. The appeal was filed against the penalty of Rs. 9,80,628 levied u/s 271(1)(c) of the IT Act. The assessee had undisclosed income from investments in Reliance Mutual Fund and Franklin Templeton Mutual Fund, which was brought to light during assessment proceedings. 2. The AO added Rs. 30,00,000 as income from undisclosed sources and initiated penalty proceedings. The assessee claimed the investments were made from accumulated bank balances. However, the CIT(A) upheld the penalty, stating lack of evidence for the source of funds used for investments. 3. The counsel argued that the investments were made from existing bank balances and the addition was agreed upon for peace with the Department. The Departmental Representative contended that the assessee's disclosure was not voluntary and the penalty was justified under s. 69 of the Act. 4. The Tribunal found that the assessee did not disclose the income until prompted by AIR information. The explanation provided was deemed unsatisfactory, leading to the confirmation of the penalty. The Tribunal rejected the assessee's arguments based on relevant case laws and upheld the penalty levy. 5. The Tribunal concluded that the assessee failed to substantiate the source of funds for investments, leading to the justified levy of penalty u/s 271(1)(c). The appeal of the assessee was dismissed.
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