2022 (7) TMI 849 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Addition u/s 68 - assessee had failed to prove the identity and creditworthiness of the shareholders as well as genuineness of the transaction - HELD THAT - A perusal of the concluding part of the assessment order reveals that the Assessing Officer, in this case, has initiated the penalty proceedings u/s 271(1)(c) of the Act on both limbs i.e. for concealing particulars of income and furnishing inaccurate particulars of income. We agree with the DR contentions in such cases both the limbs i.e. furnishing of inaccurate particulars of income and concealment of income overlap each other. Assessing Officer, in this case, has specifically mentioned that the penalty proceedings are initiated under both the limbs. All the facts relating to the share application money and share premium and that being not genuine transaction and the identity and creditworthiness of the share subscribers being not proved have been duly discussed in the assessment order and based on the aforesaid facts, the penalty proceedings have been initiated. It is not a case where the assessee was not aware of the facts of the case or the charge upon which the penalty proceedings have been initiated. The assessee neither come forward with any explanation during the penalty proceedings u/s 271(1)(c) of the Act nor during the appellate proceedings before the CIT(A). Even the assessee has failed to attend the proceedings before this Tribunal and no explanation has been put forth by the assessee in this case. - Assessee appeal dismissed.

Summary

Issues:
1. Levy of penalty u/s 271(1)(c) of the Income Tax Act.

Analysis:
The appellant preferred an appeal against the order of the Commissioner of Income Tax (Appeals)-6, Kolkata, contesting the penalty imposed under section 271(1)(c) of the Income Tax Act. Despite multiple hearing notices, the appellant did not appear before the Tribunal, indicating a lack of interest in the proceedings. The Assessing Officer initiated penalty proceedings as the appellant failed to prove the identity and creditworthiness of shareholders, treating the share application money as income from undisclosed sources. The CIT(A) upheld the penalty due to the appellant's non-submissions, leading to the appeal before the Tribunal.

2. Failure to specify the limb for penalty proceedings.

The appellant argued that the Assessing Officer did not specify the limb on which the penalty proceedings were initiated, resulting in penalties imposed on both limbs. The ld. DR contended that in this case, both limbs were applicable as the appellant furnished inaccurate particulars of income and concealed income through bogus share capital and premium. The Tribunal agreed with the ld. DR, noting that both limbs overlapped in this case. The Assessing Officer clearly mentioned the initiation of penalty proceedings under both limbs, supported by discussions on the lack of genuineness in transactions and failure to prove identity and creditworthiness of shareholders. The appellant failed to provide explanations during the penalty proceedings or the appellate process, leading to the dismissal of the appeal.

In conclusion, the Tribunal dismissed the appeal, upholding the penalty imposed under section 271(1)(c) of the Income Tax Act due to the appellant's failure to prove the genuineness of transactions and the identity of shareholders, resulting in the concealment of income.