2019 (3) TMI 644 - AT - Income Tax

Tribunal upholds Rs. 90,000 penalty for undisclosed investment related to hundies.

Shri Shrichand Valecha Versus ACIT Circle 2 (1), Indore

The Tribunal upheld the penalty of Rs. 90,000 imposed under section 158BFA(2) of the Income Tax Act for an undisclosed investment of Rs. 1,50,000 related ... Penalty u/s 158BFA(2) - addition made on account of hundies found - search was conducted at the residential premises of the assessee - HELD THAT:- Assessee failed to rebut the findings of fact by Ld. CIT(A) and only gave general submission that as the broker Shri Shyamlal Arya is absconding after search and remains untraceable the assessee could not provide evidence before any of the appellate authorities that these hundies were kept as a guarantee from the broker Shri Shyamlal Arya. In the given facts and circumstances of the case there remains no disputes that ₹ 1,50,000/- was an un accounted and undisclosed investment of the assessee and therefore penalty has been rightly levied on the alleged addition of ₹ 1,50,000/-. We therefore confirm the penalty levied by the Ld. A.O u/s 158BFA(2). Ground No.1 of the assessee stands dismissed. Issues Involved:Appeal against penalty u/s 158BFA(2) of the Income Tax Act for the Assessment Year 1991-92 to 2001-02.Detailed Analysis:1. Background:The appeal was filed by the assessee against the orders of the Ld. Commissioner of Income Tax (Appeals)-III, Indore, pertaining to the Assessment Year 1991-92 to 2001-02. The appeal was directed against the order u/s 158BFA(2) of the Income Tax Act 1961 framed by ACIT, Circle-2(1), Indore.2. Grounds of Appeal:The assessee raised two grounds of appeal. Firstly, challenging the confirmation of a penalty of Rs. 90,000 under section 158BFA(2) for an addition of Rs. 1,50,000 related to hundies found. Secondly, a general ground allowing the appellant to modify the grounds of appeal during the hearing.3. Issue Raised:The sole issue raised by the assessee was regarding the penalty u/s 158BFA(2) of the Act amounting to Rs. 90,000, confirmed by the Ld. CIT(A). The search conducted at the assessee's premises revealed incriminating material, including hundies, jewellery, and cash. While the assessee received relief from the Ld. CIT(A) and the Tribunal for various items, the addition of Rs. 1,50,000 related to hundies in the name of the minor son was confirmed, leading to the penalty imposition.4. Contentions and Findings:The assessee's counsel failed to challenge the findings of the Ld. CIT(A) and only argued that the broker associated with the hundies was absconding, making it impossible to provide evidence that the hundies were kept as a guarantee. The Tribunal confirmed that the Rs. 1,50,000 was an undisclosed investment, leading to the justified penalty of Rs. 90,000 under section 158BFA(2) of the Act. Ground No.1 of the assessee was dismissed as a result.5. Decision and Conclusion:Considering the unaccounted nature of the Rs. 1,50,000 investment, the penalty of Rs. 90,000 was upheld by the Tribunal. The general nature of Ground No.2 did not require further adjudication. Consequently, the appeal of the assessee was dismissed, and the order was pronounced in open court on 11.03.2019.