2013 (10) TMI 465 - AT - Income Tax

Penalty u/s 271(1)(c) - property dealer - addition on account of cash retained - assessee is a school teacher and also carrying on Dalali in land transactions on a small scale Held that - considering the entire factual matrix of the case, it is quite possible that the assessee for his service rendered in the matter of sale of land on behalf of the owners of the plots of land, may have retained or have intention to retain a part of the cash components received by him for sale of plot of land, as the commission for the services rendered after spending towards various heads of expenses on behalf of the land owners, but there is no evidence or material on record to prove conclusively that the assessee has in fact retained certain part of the cash components as his income. The facts of the case may justify the addition in the quantum case, but the parameters to sustain the penalty imposed under section 271(1)(c) of the Act are different, and the assessee is entitled to benefit of doubt in the absence of any concrete evidence to the contrary, and accordingly, facts of the case do not justify the imposition of penalty under section 271(1)(c) of the Act on the assessee Decided against the Revenue.

Summary

Issues: Validity of penalty imposed under section 271(1)(c) of the Act for assessment years 2005-2006 and 2006-2007.

Analysis:
1. The Revenue contended that the penalty was rightly imposed as the assessee revised the return post a survey, admitting undisclosed income. The Revenue argued that the disclosure was voluntary, justifying the penalty under section 271(1)(c) of the Act.

2. The assessee, a school teacher, explained that he acted as a power of attorney holder for illiterate landowners, facilitating land sales. The assessee claimed the cash retained was for expenses, not income, and revised the return voluntarily before any departmental notice. The CIT(A) supported the assessee's case, emphasizing the absence of evidence proving the cash retained was income.

3. The Tribunal found the facts identical for both years and analyzed the case comprehensively. It noted the absence of concrete evidence proving the assessee retained cash as income, granting the benefit of doubt. While the quantum case might justify additions, the penalty under section 271(1)(c) required different parameters, leading to the cancellation of the penalty.

4. The Tribunal upheld the CIT(A)'s decision, confirming the cancellation of the penalty. It emphasized the importance of considering the overall context of the assessee's actions and the lack of substantial evidence to support the imposition of the penalty. The appeals of the Revenue were consequently dismissed.

Conclusion: The Tribunal dismissed the Revenue's appeals, confirming the cancellation of the penalty under section 271(1)(c) for both assessment years 2005-2006 and 2006-2007.