2014 (8) TMI 729 - HC - Income Tax

Penalty u/s 271(1)(c) - credit worthiness and genuineness of the transaction - Gifts by family friends Identity of donee proved or not Held that - The Tribunal rightly upheld the levy of penalty and concluded that the assessee had failed to substantiate that the gift received was genuine - The plea of the assessee that the gift was received due to his financial difficulty was also negated on appreciation of material on record - The gifts were held to be bogus and explanation of the assessee was held to be false - huge bank balance in the Saving Bank Account in the Financial Year 2002- 03 clearly show that the assessee was not in any financial difficulty and therefore, it is clear that these are bogus gifts the explanation given by the assessee is totally false and accordingly explanation (1) to Section 271(1)(c) would not be attracted thus, no substantial question of law arise for consideration - Decided against Assessee.

Summary

Issues:
1. Justification of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for gifts received by the assessee.
2. Validity of the Tribunal's order and alleged perversity.

Analysis:
1. The appeal was filed against the order of the Income Tax Appellate Tribunal confirming the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 for gifts received by the assessee. The gifts were received through proper banking channels from NRIs but were treated as income from other sources by the Assessing Officer. The Tribunal upheld the penalty, stating that the assessee failed to prove the genuineness of the gifts. The Tribunal found the gifts to be bogus based on the assessee's explanations and bank statements, concluding that the assessee had concealed the furnishing of current particulars of income. The Tribunal's decision was based on the evidence presented and the financial status of the assessee, leading to the confirmation of the penalty.

2. The appellant argued that there was no concealment as the gifts were shown in the books of account and received through banking channels with supporting affidavits. However, the Court found no merit in this argument. The Tribunal's decision was deemed valid as it concluded that the gifts were not genuine and the explanation provided by the assessee was false. The Court distinguished this case from a previous judgment cited by the appellant, emphasizing that each case is determined based on its individual facts. Therefore, the Court dismissed the appeal, stating that no substantial question of law arose in this case, and upheld the Tribunal's decision to impose the penalty for concealment of income.

This detailed analysis highlights the key legal aspects and reasoning behind the judgment, including the assessment of evidence, the application of relevant legal provisions, and the dismissal of the appeal based on the findings of concealment of income by the assessee.