2012 (9) TMI 1241 - AT - Income Tax

Tribunal Affirms Reduction of Penalties for 1993-97; Cites Insufficient Grounds for Some Imposed Penalties.

The Tribunal upheld the CIT(A)'s decision to reduce the penalty for A.Y. 1993-94, finding the explanation for unexplained share application money ... - Issues Involved:1. Reduction of penalty imposed u/s 271(1)(c) for A.Y. 1993-94.2. Levy of penalty u/s 271(1)(c) for A.Y. 1994-95.3. Levy of penalty u/s 271(1)(c) for A.Y. 1996-97.Summary:Issue 1: Reduction of Penalty Imposed u/s 271(1)(c) for A.Y. 1993-94The Revenue appealed against the CIT(A)'s order reducing the penalty of Rs. 10,00,000/- imposed u/s 271(1)(c) by the amount of penalty relatable to an addition of Rs. 16,49,000/- towards unexplained share application money. The penalty was initially levied based on additions for unexplained share application money, unsecured loans, and disallowance of interest. The CIT(A) deleted the penalty, stating that the appellant had disclosed all facts and provided confirmations for the share application money. The Tribunal upheld the CIT(A)'s decision, noting that the penalty could not be justified merely on the preponderance of probability and that the explanation provided by the assessee was not disproved. The Tribunal also noted that the penalty on the unsecured loan addition was premature as the matter was restored to the AO for fresh consideration.Issue 2: Levy of Penalty u/s 271(1)(c) for A.Y. 1994-95The cross-appeals were filed against the CIT(A)'s order granting part relief on the penalty of Rs. 24 lacs imposed for unexplained cash credits, unexplained share application money, unaccounted interest income, disallowance of interest on borrowed funds, and disallowance u/s 43B. The CIT(A) held that penalty could not be levied for share application money and disallowance of expenses as the appellant had disclosed all details. However, the penalty was justified for unaccounted interest income and unexplained cash credits. The Tribunal noted that the issue of share application money and cash credits was remitted back to the AO, making the penalty on these additions premature. The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal for statistical purposes.Issue 3: Levy of Penalty u/s 271(1)(c) for A.Y. 1996-97The assessee appealed against the CIT(A)'s order granting part relief on the penalty of Rs. 19 lacs. The Tribunal noted that the issues of unexplained cash credits were restored to the AO for fresh consideration. The Tribunal emphasized that the AO must independently examine the evidence while levying the penalty. The Tribunal upheld the CIT(A)'s decision to delete the penalty on the disallowance of interest expense, noting that there was no suppression of facts and the addition was based on a probability rather than deliberate concealment. The assessee's appeal was partly allowed for statistical purposes.Result:1. Assessee's appeal ITA No.1528/Ahd/2006 for A.Y. 1994-95 is allowed for statistical purposes.2. Assessee's appeal ITA No.1529/Ahd/2006 for A.Y. 1996-97 is partly allowed for statistical purposes.3. Revenue's appeal ITA No.1603/Ahd/2006 for A.Y. 1993-94 is partly allowed for statistical purposes.4. Revenue's appeal ITA No.1604/Ahd/2006 for A.Y. 1994-95 is dismissed.