2018 (6) TMI 1032 - AT - Income Tax

Appeal granted, penalty under Income Tax Act set aside due to lack of evidence for deliberate concealment

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 lack of ... Penalty u/s 271(1)(c) - unexplained investment - Held that:- As assessee has furnished documents in support of the source of fund of ₹ 1,45,000/-. According to the authorities below this can be insufficient to prove the claim of the assessee but the fact cannot be termed as ‘concealment of income’ as neither the authorities below came to a finding that the evidence adduced is false. Taking into consideration of the entire facts of the case, find that the penalty imposed by the authorities below is harsh and improper indeed without consideration of the conduct of the assessee of making genuine attempts to prove the source of investment of ₹ 1,45,000/- as financed from personal savings including pin amount over a period of time. It also appears that while the total investment is an amount of ₹ 56,26,300/-, the amount in question of ₹ 1,45,000/- is a very negligible one and since the assessee has filed her return for a long time, it can be well presumed that this amount has been shown as an income of the assessee in the earlier assessment years - no mens rea of evasion of tax which is sine qua non for imposition of penalty. The explanation offered by the assessee seems to be bonafide - Decided in favour of assessee. Issues Involved:1. Levy of penalty under section 271(1)(c) of the Income Tax Act.2. Allegation of unexplained investment of Rs. 1,45,000 by the assessee.Issue-wise Detailed Analysis:1. Levy of Penalty under Section 271(1)(c) of the Income Tax Act:The primary issue in this appeal was whether the penalty imposed under section 271(1)(c) of the Income Tax Act for the assessment year 2009-10 was justified. The penalty was levied by the Assessing Officer (AO) on the grounds of concealment of income and furnishing inaccurate particulars of income by the assessee. The AO's decision was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], leading to the assessee's appeal to the Appellate Tribunal.2. Allegation of Unexplained Investment of Rs. 1,45,000:The case revolved around an investment of Rs. 56,26,300 made by the assessee to purchase a property. During the assessment, the AO found the assessee's explanation for Rs. 1,45,000 of this amount unsatisfactory due to a lack of supporting evidence, deeming it an unexplained investment and adding it to the total income. This led to the initiation of penalty proceedings under section 271(1)(c).Detailed Analysis:Background:The assessee purchased a property for Rs. 56,26,300 on 07.10.2008. The AO questioned the source of Rs. 10,26,300 of this amount, particularly focusing on Rs. 1,45,000, which was deemed unexplained due to insufficient evidence. The AO treated this as concealed income and initiated penalty proceedings under section 271(1)(c).Proceedings and Submissions:The assessee provided a written submission on 03.11.2011, explaining the sources of the total investment, but failed to furnish evidence for the specific amount of Rs. 1,45,000. Consequently, the AO imposed a penalty, which was upheld by the CIT(A). The assessee's appeal to the Tribunal argued that the penalty was unjustified as there was no concealment of income.Tribunal's Findings:The Tribunal examined whether the penalty could be imposed based on the addition of Rs. 1,45,000 for alleged concealment of income. It noted that neither the AO nor the CIT(A) established any conscious act by the assessee to furnish inaccurate particulars with the intent to evade tax. The Tribunal referred to the Supreme Court's judgment in Dilip N. Shroff vs. Jt.CIT, emphasizing that concealment and furnishing inaccurate particulars require a deliberate act by the assessee.Key Points from the Supreme Court Judgment:- The term 'conceal' implies a deliberate attempt to hide income.- 'Inaccurate particulars' refer to deliberate errors or omissions.- The burden of proof lies on the revenue to establish concealment or inaccurate particulars.- Penalty proceedings are quasi-criminal, requiring fresh consideration beyond assessment findings.Conclusion:The Tribunal found that the assessee had furnished documents, including bank statements and withdrawal receipts, to substantiate the source of Rs. 1,45,000. The amount was relatively small compared to the total investment, and the assessee's conduct did not indicate any mens rea (intent) to evade tax. The Tribunal concluded that the penalty was harsh and improper, considering the assessee's genuine attempts to explain the source of funds. The penalty order was set aside, and the appeal was allowed.Final Judgment:The Tribunal allowed the assessee's appeal, setting aside the penalty imposed under section 271(1)(c) of the Income Tax Act. The decision was pronounced in open court on 11/06/2018.