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2016 (9) TMI 248 - AT - Income TaxPenalty u/s 271()(C) - ungenuineness of gift - Held that - Merely because the additions have been made by the AO and confirmed by the Tribunal on account of inability of the assessee to furnish more evidences as required by the authorities to prove the genuineness of the transaction that itself is not sufficient to hold that the claim of the assessee was wrong, inaccurate or that there was any concealment of income. The penalty proceedings are separate from quantum assessment proceedings. In the case of levy of penalty, it should be proved on the file that the particulars furnished by the assessee were inaccurate particulars of income or that there was concealment of income. Every case of confirmation of addition or disallowance cannot be regarded as a case of furnishing of inaccurate particulars of income or concealment of income. Even it cannot be said that this case of the assessee was a case of no evidence at all. The assessee had already submitted evidences in the shape of gift deed, PAN number of the donor, the bank statement reflecting the transaction and even the copy of the income tax returns and accounts of the assessee. The evidences produced on the file by the assessee have not been proved wrong or false. The Hon ble Bombay High Court in the case of CIT vs. Upendra V. Mithani in ITA (L) No.1860 of 2009 decided on 05.08.2009, has observed in the matter of levy of penalty under section 271(1)(c) of the Act, that if the assessee gives an explanation which is unproved but not disproved i.e. it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee s case is false, then no penalty can be imposed in such cases - Decided in favour of assessee Disallowance of expenses - Held that - smallness of amounts involved and also that the assessee was not maintaining the accounts and that the disallowances relating to the claim of expenditure of ₹ 43,832/- and under statement of income of ₹ 45,081/- were not on account of inaccurate particulars of income but due to the reason that the assessee could not furnish the required evidences/reconciliation during the assessment proceedings, we do not find it to be a case for levy of penalty under section 271(1)(c) of the Act.- Decided in favour of assessee Non offering of the income from short term capital gains - Held that - The assessee has explained that he was under bonafide belief that the said gain was not attracted to tax. The explanation given by the assessee in respect to the disallowance of expenditure understatement of income and addition on account of short term capital gain seems to be plausible. The facts of the case do not suggest that there was any intention on the part of the assessee to furnish inaccurate particulars of income or to conceal his income. No justification on the part of lower authorities in levying/confirming the penalty on these issues also.- Decided in favour of assessee Penalty u/s 271 - whether the compensation of amount received by the assessee was exigible to capital gains tax in A.Y. 2006-07 or in A.Y. 2007-08? - Held that - in view of the assessee, since the possession had been taken in the Financial Year 2006-07 relevant to A.Y. 2007-08, therefore amount of capital gain was assessable in A.Y. 2007-08 and the assessee had also offered the same in A.Y. 2007-08. The Tribunal, considering the facts, has held that it was a case of difference of opinion and that the issue was a debatable issue but there was no concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal therefore deleted the penalty relating to the similar transaction in the case of the mother of the assessee namely Smt. Asha Laxmikant Babladi. Since the facts of the case of the assessee are identical and are relating to the same transaction, hence respectfully following the above cited decision of the co-ordinate bench of the Tribunal, we hold that the penalty under section 271(1)(c) of the Act is not leviable on this issue in the case of the assessee also.
Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income Tax Act. 2. Disallowance of expenses. 3. Understatement of income. 4. Short term capital gain. 5. Capital receipt claimed as a gift. 6. Difference of opinion on capital gains tax timing. 7. Addition on account of undisclosed bank balance. Issue-wise Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c) of the Income Tax Act: The primary issue across all appeals is the levy of penalty under section 271(1)(c) of the Income Tax Act. The Tribunal analyzed whether the penalties were justified based on the evidence and explanations provided by the assessees. 2. Disallowance of Expenses: For the assessee Mr. Satish Babladi, the penalty related to disallowed expenses of ?43,832/-. The Tribunal noted that the assessee earned ?40,50,000/- in professional fees and claimed the expenses in the computation of income. The AO disallowed these expenses due to a lack of proof. However, the Tribunal found that the disallowances were not due to inaccurate particulars of income but due to the inability to furnish required evidence during assessment. Hence, the penalty was not justified and ordered to be deleted. 3. Understatement of Income: In Mr. Satish Babladi's case, an income understatement of ?45,081/- was identified. The Tribunal observed that this addition was due to discrepancies in figures as the assessee did not maintain regular books of accounts. The Tribunal concluded that this was not a case of concealment or avoidance of tax but an inability to reconcile figures, and thus, the penalty was not justified. 4. Short Term Capital Gain: The penalty on short term capital gains of ?1,14,763/- was also contested by Mr. Satish Babladi. The Tribunal found that the assessee was under a bona fide belief that the gains were not taxable due to continuous investments. The Tribunal accepted the explanation and noted that there was no intention to furnish inaccurate particulars or conceal income. Consequently, the penalty was deleted. 5. Capital Receipt Claimed as Gift: Both Mr. Satish Babladi and Smt. Asha Babladi faced penalties for capital receipts claimed as gifts (?5,00,000/- and ?10,00,000/- respectively). The Tribunal found that the assessees provided substantial evidence, including donor details, PAN numbers, gift declarations, and bank statements. The AO's disbelief was based on the assumption rather than disproving the claim. The Tribunal held that the evidence was not proven false, and the penalty was unjustified, ordering it to be deleted. 6. Difference of Opinion on Capital Gains Tax Timing: For the A.Y. 2006-07, Mr. Satish Babladi faced a penalty due to a difference of opinion on whether the compensation received was taxable in A.Y. 2006-07 or A.Y. 2007-08. The Tribunal referenced a similar case involving the assessee's mother, where it was held that this was a debatable issue with no concealment of income. Following this precedent, the Tribunal deleted the penalty in Mr. Satish Babladi's case. 7. Addition on Account of Undisclosed Bank Balance: Smt. Asha Babladi faced a penalty for an undisclosed bank balance of ?10,200/-. The Tribunal noted that the assessee fully disclosed her bank account, and the discrepancy was a simple accounting error. Considering the small amount and full disclosure, the Tribunal found no justification for the penalty and ordered its deletion. Conclusion: In all cases, the Tribunal found that the penalties under section 271(1)(c) were not justified due to the lack of evidence proving inaccurate particulars or concealment of income. The penalties were therefore ordered to be deleted for both Mr. Satish Babladi and Smt. Asha Babladi. All four appeals were allowed.
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