Tribunal overturns penalty for share application money sourced from Directors, citing Supreme Court precedent.

The Tribunal allowed the appeal, setting aside the penalty imposed under section 271(1)(c) of the Income Tax Act. The decision was based on the finding that the case did not involve furnishing inaccurate particulars or concealment of income, as the share application money in question was from the Directors or their minor children, which did not warrant a penalty as per the Supreme Court precedent.

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

Analysis:
1. The appeal was filed against the penalty imposed by the Commissioner of Income Tax (Appeals) confirming the penalty u/s. 271(1)(c) of the Income Tax Act. The assessee, engaged in the business of manufacturing and selling MS steel ingots, had a search and seizure operation conducted under section 132 of the Act. The Assessing Officer made an addition of a specific amount related to share application money introduced in the company. The CIT(A) confirmed part of the addition, which led to the penalty imposition.

2. The CIT(A) upheld the penalty stating that the appellant failed to satisfactorily explain the sources of the funds. The appellant contested that there were no inaccurate particulars of income furnished and that the minors involved had sufficient sources. The penalty order was based on the grounds of furnishing inaccurate particulars of income, which the appellant disputed.

3. The Tribunal considered the facts and contentions presented. It was noted that the share application money in the company was from the Directors or their minor children. The CIT(A) provided relief concerning the investments made by the Directors, who were income tax assessees, including the investments in the names of minor children. The Tribunal agreed with the appellant that the case did not fall under 'concealment of income' or 'furnishing of inaccurate particulars'. The Tribunal referenced the Supreme Court case of CIT Vs. Reliance Petro products P. Ltd., emphasizing that the mere addition of share capital from minor children does not warrant a penalty under section 271(1)(c).

4. Consequently, the Tribunal allowed the appeal of the assessee, setting aside the orders of the AO and CIT(A) levying the penalty under section 271(1)(c) of the Income Tax Act. The decision was based on the lack of furnishing inaccurate particulars and the absence of concealment of income.

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