2017 (7) TMI 572 - AT - Income Tax

Levy of penalty u/s 271(1)(c)- Held that - There is no iota of evidence on record to show that the income returned by the assessee was on the lower side. The addition also was made on adhoc basis without any shred of evidence in support of concealment of income to that extent. Clearly the Assessing Officer accepted the contention of the assessee without making any further investigation either with regard to the income estimated or the income surrendered. The additions made are purely adhoc and mere estimations only which do not tantamount to concealment of particulars of income or furnishing of inaccurate particulars of income. The case laws relied upon by the Ld. CIT(A) while upholding the levy of penalty are mainly related to the attraction of the Explanation to section 271(1)(c) which we find is not applicable in the present case since there is no finding of concealment of income or furnishing of inaccurate particulars of income in the first place for which the assessee was required to give any explanation. The assessee had on the first occasion admitted that it had estimated the income of its ahatas even before the AO could discover anything adverse to this effect which in any case we find he did not even after aforesaid admittance by the assessee and surrender of income on this account or for that matter on account of expenses. In view of the above we set aside the order of the Ld. CIT (Appeals) and delete the penalty levied. - Decided in favour of assessee.

Summary

Issues involved: Appeal against penalty u/s 271(1)(c) of the Income Tax Act, 1961 for assessment years 2007-08 and 2008-09.

Analysis:

1. Initial Dismissal and Recall of Appeals: The appeals were initially dismissed due to non-appearance of the assessee, but later recalled upon a Miscellaneous Application, and both appeals were heard together.

2. Identical Issue in Both Appeals: The issue in both appeals was identical, concerning the levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961.

3. Background and Assessment Proceedings: The assessee, a wine contractor, filed a return with an income declaration. During assessment, discrepancies were found in the income declared, leading to additions on account of ahata income and expenses. Penalty proceedings were initiated under section 271(1)(c).

4. Penalty Imposition and CIT(A) Decision: The Assessing Officer imposed a penalty based on deliberate furnishing of inaccurate particulars of income. The CIT(A) upheld the penalty, stating that the assessee attempted to understate taxable income.

5. Arguments and Appeals: The assessee appealed against the penalty, arguing that additions were agreed upon and made without specific defects pointed out. The counsel cited various case laws to support the appeal.

6. Judicial Review and Assessment: The Tribunal reviewed the case and found that the additions made were adhoc and lacked evidence of concealment of income. The burden of proof lay on the department to establish concealment, which was not done conclusively.

7. Legal Precedents and Rulings: The Tribunal referred to legal precedents and highlighted that mere estimations do not amount to concealment of income. The Explanation to section 271(1)(c) was deemed inapplicable due to lack of evidence of concealment.

8. Decision and Outcome: The Tribunal set aside the CIT(A)'s order and deleted the penalty imposed, ruling in favor of the assessee in both appeals.

In conclusion, the Tribunal found that the penalty was unjustified as there was no concrete evidence of intentional concealment of income by the assessee. The decision was based on the lack of findings supporting the penalty imposition and the adhoc nature of the additions made during assessment.