2014 (6) TMI 278 - AT - Income Tax

ITAT affirms penalty for undisclosed income from unexplained jewelry under section 158BFA(2)

The ITAT upheld the decision of the Ld. CIT(A) in a case involving challenges to the order on the ground of being time-barred under section 158BFA(2) and ... Order being time barred u/s 158BFA(2) of the Act – Levy of penalty - Held that:- The categorical finding of CIT(A) that Tribunal’s order was received for the first time on 20-07-2009 by the CIT concerned has not been controverted by the assessee by placing any material on record to the contrary, CIT(A) was justified in holding that the penalty order u/s. 158BFA(2) was passed within the prescribed statutory time limit - During the course of search of gold jewellery weighing 1576.1 gms was found from assessee’s possession out which AO accepted 939 gms as explained on the basis of preliminary statement of assessee and his wife recorded at the time of search - Matter reached upto Tribunal and jewellery weighing 191.1 gms remained unexplained and it was considered to be acquired out of undisclosed income Rs. 95,550/- and the figure was arrived at by giving benefit of doubt to the assessee in all respects i.e. due credit was given for possession of jewellery of all family members including married daughter, inheritance or parents and in view of CBDT Instruction No. 1916 – there is no need to interfere with the order passed by CIT(A) in confirming the action of AO in levying penalty u/s. 158BFA(2) of the Act – Decided against Assessee. Issues:1. Challenge to the order of Ld. CIT(A) on the ground of being time-barred under section 158BFA(2).2. Levying of penalty under section 158BFA(2) of Rs. 58,000.Issue 1: Challenge to the order of Ld. CIT(A) on the ground of being time-barred under section 158BFA(2):The appellant challenged the order of the Assessing Officer (AO) on the basis of being time-barred under section 158BFA(2). The Ld. CIT(A) dismissed this ground by explaining the timeline of events leading to the penalty order. The Ld. CIT(A) mentioned that the penalty order was passed within the prescribed statutory time limit. The appellant failed to provide any material to counter the finding that the ITAT's order was received on a specific date. Consequently, the Ld. CIT(A) was justified in holding that the penalty order was within the statutory time limit. Therefore, the first ground of the appellant was dismissed.Issue 2: Levying of penalty under section 158BFA(2) of Rs. 58,000:The penalty was levied concerning undisclosed income of Rs. 95,550 related to unexplained jewelry found during a search. The AO held that since the source of investment in gold ornaments amounting to Rs. 95,550 was unexplained, the penalty under section 158BFA(2) was justified. The Ld. CIT(A) confirmed this penalty after considering the submissions of the appellant. The Ld. CIT(A) detailed the process of determining the undisclosed income and explained the rationale behind the penalty imposition. The appellant argued against the penalty, citing the quantity of unexplained jewelry and requesting leniency due to being a retired individual. However, after considering all aspects, including the explanations provided by the appellant, the Hon'ble ITAT upheld the penalty of Rs. 58,000 under section 158BFA(2). The decision was based on the unexplained portion of jewelry, the benefit of doubt given to the appellant, and the relevant guidelines. Consequently, the second ground of the appellant was also dismissed.In conclusion, the ITAT upheld the decision of the Ld. CIT(A) regarding both issues raised by the appellant. The appeal was dismissed, and the penalty under section 158BFA(2) of Rs. 58,000 was confirmed.