2015 (6) TMI 273 - AT - Income Tax

Penalty u/s 158BFA(2) - unexplained investment in house property and unexplained marriage expenditure - CIT(A) deleted penalty levy - Held that - DVO has estimated the investment in the property near about the same amount as declared by the assessee in the account books. The CIT(A) in the quantum proceedings estimated the value of investment at ₹ 30 lakhs as against ₹ 40 lakhs made by the Assessing Officer. Under these circumstances, in our view, the CIT(A) has correctly appreciated the facts and circumstances of the case and held that the impugned addition on account of unexplained investment in house property of ₹ 11,71,687/- was on estimation basis and not on the basis of any concrete evidence found in the course of search towards incurrence of unaccounted expenditure qua the impugned property. Therefore, having regard to the facts and circumstances of the present case, we affirm the action of the CIT(A) in deleting the penalty with respect to the addition of ₹ 11,71,687/- on account of unexplained investment in house property. On account of unexplained marriage expenditure CIT(A) has thoroughly examined it and his inference that addition is based on estimate basis is a reasoned one. Before us, no cogent material or reasoning has been advanced by the Ld. Departmental Representative to say that any document or evidence was found in the course of search which would indicate clinchingly incurrence of unaccounted expenditure on marriage of assessee s daughters. Merely because, assessee s explanation with respect to the loose papers was rejected in the quantum proceedings and the marriage expenses estimated cannot be a ground to levy penalty u/s 158BFA(2) of the Act in the context of the facts and circumstances of the present case - Decided in favour of assesse.

Summary

Issues:
Appeal against deletion of penalty on unexplained investment in house property and marriage expenditure.

Analysis:
1. Unexplained Investment in House Property:
- The appeal concerned the deletion of penalty by CIT(A) on additions made by Assessing Officer for unexplained investment in house property.
- The undisclosed income was assessed at Rs. 1,62,93,506 for the block period 1990-91 to 2000-01.
- CIT(A) deleted the penalty based on the grounds that the additions were made on estimation without concrete evidence.
- Ld. Departmental Representative argued that the additions were based on seized material and not solely on estimation.
- The Tribunal considered legal precedents stating penalty under section 158BFA(2) is not mandatory for estimated additions.
- CIT(A) had noted discrepancies in valuation and estimated investment, ultimately deleting the penalty.
- Loose papers found during search indicated expenditure, but the connection to the property was not established.
- The Tribunal affirmed CIT(A)'s decision to delete the penalty due to the estimation basis of the addition.

2. Unexplained Marriage Expenditure:
- The appeal also addressed the deletion of penalty on unexplained marriage expenditure.
- Assessing Officer estimated marriage expenses based on loose papers found during search.
- CIT(A) reduced the estimated expenditure and deleted the penalty, as it was based on estimation.
- Ld. Departmental Representative failed to provide evidence linking the expenditure to unaccounted funds.
- CIT(A)'s decision was upheld as the addition was made on an estimated basis without concrete proof.
- The Tribunal affirmed the CIT(A)'s order, stating lack of evidence justifying the penalty.

3. Conclusion:
- The Tribunal dismissed the Revenue's appeal, affirming CIT(A)'s decision to delete the penalties on unexplained investment in house property and marriage expenditure.
- The judgment highlighted the importance of concrete evidence in penalty imposition and upheld the principle that penalties for estimated additions are discretionary under section 158BFA(2) of the Income-tax Act, 1961.