2017 (7) TMI 958 - HC - Income Tax

Tribunal Penalty Upheld for Failure to Substantiate Gifts

The High Court upheld the Tribunal's decision to impose a penalty under Section 271(1)(c) of the Income Tax Act, 1961 on the appellant for the assessment ... Penalty under Section 271(1)(c) - no explanation offered by the assessee to explain the genuineness of the gifts - Held that:- As recorded by the Tribunal that no explanation was offered by the assessee to explain the genuineness of the gifts. He merely gave the name of the donors but did not prove their identity, credit-worthiness and genuineness of the transactions. It was concluded by the Tribunal that since the assessee did not offer any explanation and whatever explanation was offered was not substantiated through any evidence or material on record, explanation 1 to Section 271(1)(c) of the Act was clearly attracted to his case. There was concealment on the part of the assessee so as to levy penalty under Section 271(1)(c) of the Act. Thus, the Tribunal was right in denying benefit under Proviso to Section 56(2)(vi) of the Act and levying penalty under Section 271(1)(c) of the Act. - Decide against assessee. Issues:- Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 despite full disclosure of gifts received on daughter's marriage.- Disallowance of exemption claim leading to penalty initiation.- Imposition of penalty on a debatable issue.Analysis:1. The appellant-assessee filed an appeal against the order of the Income Tax Appellate Tribunal, challenging the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2007-08. The appellant disclosed receiving gifts on his daughter's marriage but was asked to justify why they should not be treated as income. The Assessing Officer initiated penalty proceedings without recording satisfaction on concealment. Appeals to CIT(A) and Tribunal were unsuccessful, leading to the current appeal.2. The appellant argued that penalty cannot be levied as there was no concealment or inaccurate particulars, citing a Supreme Court judgment. During assessment, the appellant added gifts received to the capital account, claiming exemption under Section 56(2)(vi) of the Act. The Tribunal found the appellant failed to prove the genuineness of the gifts, leading to concealment and penalty under Section 271(1)(c).3. The Tribunal concluded that the appellant did not offer any substantiated explanation or evidence regarding the gifts, attracting Explanation 1 to Section 271(1)(c) for deemed concealment. The Tribunal's decision was based on the lack of evidence proving the genuineness of the gifts, justifying the penalty imposition.4. Referring to a Supreme Court judgment, the Court emphasized the need for concealment or furnishing inaccurate particulars for penalty under Section 271(1)(c). As the appellant could not prove the genuineness of the gifts, the judgment in another case supported the penalty imposition in the present scenario.5. The Court upheld the Tribunal's decision, stating it was based on a plausible view of the evidence. No illegality or perversity was shown in the order, leading to the dismissal of the appeal as no substantial question of law arose from the case.