1999 (12) TMI 688 - AT - Income Tax

Tribunal cancels penalty under Income-tax Act for jewellery item valuation dispute.

Deputy Commissioner of Income-tax Versus Piyushkumar O. Desai

The Tribunal upheld the cancellation of penalty under section 271(1)(c) of the Income-tax Act for the specific jewellery item valued at Rs. 12,728. ... Penalty - For concealment of income Issues:1. Deletion of penalty under section 271(1)(c) of the Income-tax Act by the Commissioner of Income-tax (Appeals).2. Assessment of concealed income and reduction of penalty amount.3. Search operation revealing cash and jewellery.4. Acceptance of explanations for most items of jewellery found.5. Sustaining of addition in the case of specific jewellery item.6. Consideration of reasons for sustaining the addition.7. Justification for cancellation of penalty under section 271(1)(c).Issue 1: Deletion of Penalty under Section 271(1)(c)The appeal by the Revenue was against the Commissioner of Income-tax (Appeals) deleting the penalty under section 271(1)(c) of the Income-tax Act. The Revenue contended that despite the ITAT upholding additions for concealed income, the penalty was deleted in full. The Assessing Officer initially calculated concealed income at Rs. 3,54,822, but after the ITAT quantum appeal, the assessed income was reduced to Rs. 2,46,753. The penalty was reduced to Rs. 12,728, and another addition of Rs. 19,853 was pending verification. The Tribunal considered whether the cancellation of penalty for the Rs. 12,728 addition was justified.Issue 2: Assessment of Concealed Income and Penalty ReductionThe search operation revealed cash and jewellery, with explanations accepted for most items except a specific jewellery item valued at Rs. 12,728. The Revenue argued that since this item was not accepted even by the Appellate Tribunal, the penalty could have been upheld. However, the Tribunal found no case of concealment of income or furnishing inaccurate particulars under section 271(1)(c) of the Income-tax Act. The explanation provided by the assessee was substantially accepted, and no evidence suggested the jewellery did not belong to the claimed individuals. The Tribunal upheld the cancellation of penalty for the Rs. 12,728 addition, stating that the explanation, though not fully accepted, was not proven to be non-bona fide.Issue 3: Search Operation Revealing Cash and JewelleryDuring a search operation, cash and jewellery were found at the assessee's premises. The jewellery was claimed to belong to specific individuals, with explanations accepted for most items. The Revenue contested the penalty based on one specific jewellery item valued at Rs. 12,728, which was not accepted by the Appellate Tribunal.Issue 4: Acceptance of Explanations for Most Items of Jewellery FoundThe explanations provided for the majority of the jewellery items found during the search operation were accepted, leading to the deletion of penalties. However, the Revenue raised concerns regarding the non-acceptance of the explanation for a particular jewellery item valued at Rs. 12,728.Issue 5: Sustaining of Addition in the Case of Specific Jewellery ItemThe Appellate Tribunal sustained the addition for a specific jewellery item valued at Rs. 12,728, which was part of a larger sum related to Mamtaben's ornaments. The Tribunal's decision was based on the lack of concrete evidence linking the seized papers to the specific ornaments mentioned in the Panchnama.Issue 6: Consideration of Reasons for Sustaining the AdditionThe reasons for sustaining the addition for the specific jewellery item were analyzed, focusing on the lack of precise details about the withdrawals made in the proximity of the acquisition period. The Tribunal highlighted discrepancies in the explanations provided and the lack of supporting evidence to establish the acquisition of the items.Issue 7: Justification for Cancellation of Penalty under Section 271(1)(c)The Tribunal justified the cancellation of the penalty under section 271(1)(c) by emphasizing that the assessee's explanation was substantially accepted, and there was no concrete evidence to prove concealment of income or furnishing inaccurate particulars. The Tribunal concluded that the penalty for the Rs. 12,728 addition was rightly cancelled, and the impugned order was upheld, resulting in the dismissal of the Revenue's appeal.