2017 (9) TMI 1413 - HC - Income Tax

Penalty u/s 271(1)(c) - additions on account of interest on FDRs with Dena Bank and TDR sale receipts - said incomes were detected by the Assessing Officer on examination of books of accounts and not declared voluntarily by the assessee in the return of income - ITAT deleted the addition - Held that - Once the assessee is a beneficiary of the amount received as a consequence of the transfer executed by her husband, of which she had no knowledge, she offered that during the course of the assessment proceedings, that does not mean that her act can be brought within the penalty provision. The explanation rendered by the assessee is bona fide. There was no factual dispute. Therefore, Tribunal held that the assessee has discharged the primary burden. There was no material brought by the Revenue to show that the explanation of the assessee is either false or lacking in bonafides. It is in these circumstances, the Commissioner was justified in deleting the penalty. That view of the Commissioner was upheld. We do not think any wider question or larger controversy was dealt with by the Tribunal. The penalty is deleted essentially in the above factual background. - Decided in favour of assessee.

Summary

Issues: Deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 based on additions to the return of income; Whether the assessee's explanation for non-disclosure of income during assessment proceedings justifies the deletion of penalty.

Analysis:
1. The main issue in this case revolved around the deletion of a penalty under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal had to consider whether the penalty imposed by the Assessing Officer of ?45,38,213 was justified based on certain additions made to the return of income by the assessee.

2. The Tribunal noted that the additions to the income were related to low household withdrawals, interest income, TDR receipts, and short-term capital gains. The Assessing Officer considered three of these additions as concealed income warranting the penalty under Section 271(1)(c).

3. The assessee, an individual, initially did not disclose the income during the assessment proceedings but later agreed to pay tax on the disputed amount of ?1,11,67,378. The explanation provided was that the income was received as a result of a settlement in Court regarding a transaction executed by the deceased husband.

4. The Tribunal analyzed the facts and circumstances, emphasizing that the assessee was not the owner of the assets in question and had no knowledge of the transaction conducted by her husband. The Tribunal found the assessee's explanation to be bona fide and upheld the Commissioner's decision to delete the penalty.

5. The Tribunal concluded that the assessee had discharged the primary burden of proof, and there was no evidence presented by the Revenue to suggest that the explanation provided was false or lacked bona fides. Therefore, the Tribunal held that there was no substantial question of law justifying the imposition of the penalty, leading to the dismissal of the appeal.

6. In essence, the Tribunal's decision to delete the penalty was based on the factual background of the case, where the assessee's explanation for non-disclosure of income during the assessment proceedings was considered genuine and justified. The Tribunal's ruling focused on the specific circumstances of the case and the lack of evidence to support the imposition of the penalty under Section 271(1)(c) of the Income Tax Act, 1961.