2016 (12) TMI 456 - AT - Income Tax

Penalty under section 271(1)(c) - unaccounted gift received - Held that - The explanation of the assessee is that sum of ₹ 36,000/- was deposited out of the gifts received on the birth-day of his son. Such gifts were received from relatives. As far as second addition is concerned, it is based on a document which was found during the course of search at the residence of the assessee. This document is unregistered sale deed. An unregistered sale deed does not confer any title. There is nothing on record which can conclusively say that title of this land vested with the assessee, more so, it was cancelled. Section 17 of the Registration Act contemplates that any immovable property having value of more than ₹ 100/- cannot be transferred unless it is registered. Then, what would be evidentiary value of such document. It appears that authorities have been influenced in the quantum proceedings by the pendency of criminal proceedings for prosecution of the assessee on account of corruption. Allegation against the assessee was that he was accepting ₹ 80,000/- as bribe. This appears to be main reasons for making addition on the basis of circumstantial evidence. AO failed to prove that explanation of the assessee was false. There is no concrete positive evidence against the assessee exhibiting unexplained investment, except unregistered sale deed, which does not confer any title. Addition might have been confirmed, but this type of evidence would not be sufficient to visit the assessee with penalty, therefore, delete penalty. - Decided in favour of assessee.

Summary

Issues:
Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal was against the confirmation of a penalty of ?45,285 under section 271(1)(c) of the Income Tax Act, 1961. The assessee, employed as an inspector in the Department of Custom and Central Excise, was involved in a case where he allegedly demanded a bribe from truck owners to avoid interference by the custom department. The penalty was imposed by the Assessing Officer, and the CIT(A) upheld it. The assessee contended that he had been acquitted of charges under the Prevention of Corruption Act, presenting judgments from various courts to support his claim. He argued that no disproportionate assets were proven, and explanations for the disputed amounts were provided. The counsel argued that the penalty should be deleted.

The key legal provision in question was section 271(1)(c) of the Income Tax Act, which pertains to the concealment of income or furnishing inaccurate particulars. The section allows for penalties ranging from 100% to 300% of the tax evaded due to such concealment. The deeming provisions in Explanation 1 of the section establish situations where concealment is deemed to have occurred, such as when an explanation is false or cannot be substantiated. The section emphasizes the importance of proving that explanations are bona fide and all relevant facts have been disclosed. The judgment highlighted the significance of these provisions in determining penalties for income concealment.

The Tribunal analyzed the facts of the case and noted that the judgment by the Special Judge, Jamnagar, was not available during the quantum proceedings. The explanation provided by the assessee regarding the disputed amounts was considered, including gifts received and the unregistered sale deed for land. The Tribunal found that the authorities may have been influenced by the pending criminal proceedings against the assessee, but there was insufficient concrete evidence to support the penalty. The unregistered sale deed did not establish ownership conclusively, and the circumstantial evidence was deemed insufficient to justify the penalty. Consequently, the Tribunal allowed the appeal and deleted the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961.

In conclusion, the Tribunal held that the penalty imposed on the assessee was not justified based on the available evidence and explanations provided. The legal provisions regarding income concealment and penalties were carefully considered, emphasizing the need for concrete evidence and substantiated explanations. The Tribunal's decision to delete the penalty was based on the lack of sufficient proof to support the imposition of the penalty under section 271(1)(c) of the Income Tax Act, 1961.