2016 (8) TMI 1410 - AT - Income Tax

Tribunal Upholds Penalty for Concealment of Income Due to Unsubstantiated Bank Deposits

The tribunal confirmed the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, as the Assessee failed to provide sufficient explanation ... Penalty u/s 271(1)(c) - unexplained deposits on bank - addition on peak of one bank account and unexplained cheque deposits - Held that:- The Assessee is found have been depositing money into his bank account in cash as well as cheque for which the Assessee could not given adequate explanation and therefore such sum was found to be undisclosed income of the Assessee. The Assessee did not give complete name, address of those persons on account of whom he has obtained demand draft. During the course of assessment proceedings the Assessee submitted that he is not in a position to supply all the names of the creditors. No such evidences were even filed during penalty proceedings also. Therefore in absence of any plausible explanation the Assessee is found to have concealed the particulars of his income as he has failed to offer explanation which he is not able to substantiate and further has failed to prove that such explanation is bonafide and that the relevant and material facts relating to the computation of income. In view of these facts the provision of section 271(1)(c) gets attracted correctly. See MAK DATA P. LTD.case [2013 (11) TMI 14 - SUPREME COURT] - decided against assessee. Issues:1. Confirmation of penalty u/s 271(1)(c) of the Income Tax Act, 1961.Analysis:1. The appeal was filed against the order confirming the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act. The Assessee had declared income of &8377; 99500/-, but it was found that he had deposited a significant sum in his bank accounts without proper explanation. The AO made additions to the income considering the undisclosed deposits, which were confirmed by the CIT(A) and ITAT. Consequently, a penalty of &8377; 658586/- was levied, leading to the appeal before the tribunal.2. The Assessee argued that the cash deposits were made on behalf of customers for Housing Board applications, providing some names of customers. However, he failed to provide complete details and claimed that his commission income had already been offered for tax. The Assessee contended that the penalty should not be levied as he had discharged his onus. The Revenue, on the other hand, argued that the Assessee did not provide sufficient evidence about the nature and source of the deposits, amounting to concealment of income.3. The tribunal noted that the Assessee failed to provide adequate explanation for the undisclosed deposits and did not furnish complete details of the persons on whose behalf the deposits were made. The tribunal observed that the Assessee's inability to substantiate his explanation and failure to prove its bonafide nature led to the conclusion that he had concealed the particulars of his income. Citing the decision in CIT Vs. Mak data, the tribunal upheld the penalty under section 271(1)(c) based on the Assessee's lack of genuine disclosure.4. The tribunal considered the decision of the Hon'ble Supreme Court in CIT Vs. Mak data, emphasizing that the surrender of income was not voluntary and the Assessee had concealed true particulars of income. The tribunal found no infirmity in confirming the penalty under section 271(1)(c) based on the facts and legal precedents. Consequently, the appeal for the Assessment year 2006-07 was dismissed, and a similar decision was made for the Assessment year 2007-08, resulting in the dismissal of both appeals.This detailed analysis of the judgment highlights the issues involved, arguments presented by both parties, and the tribunal's reasoning based on legal provisions and precedents.