1984 (9) TMI 128 - AT - Income Tax

Assessee wins appeal against penalty for concealing income under section 271(1)(c)

The ITAT Indore allowed the appeal of an assessee against a penalty under s. 271(1)(c) for concealing income. The Tribunal canceled the penalty after ... Penalty under section 271(1)(c) for concealment of income - Burden of proof under the Explanation to section 271(1)(c) - Genuineness of cash credits and creditworthiness of creditors - Onus in quasicriminal penalty proceedingsPenalty under section 271(1)(c) for concealment of income - Genuineness of cash credits and creditworthiness of creditors - Burden of proof under the Explanation to section 271(1)(c) - Onus in quasicriminal penalty proceedings - Validity of penalty imposed under s. 271(1)(c) in respect of cash credits treated as concealed income - HELD THAT: - The Tribunal examined whether the cash credits appearing in the assessee's accounts could be treated as concealed income attracting penalty under s. 271(1)(c). The assessee produced the credited party as a witness and the AAC had accepted the genuineness of the credits; on Revenue's second appeal the Tribunal restored an addition because the creditors' creditworthiness had not been established. The ITAT observed that where the assessee, in quasicriminal penalty proceedings, examines the creditor the initial evidential onus is discharged and the burden shifts to the Department to prove that the cash credits actually represented the assessee's concealed income. Reliance was placed on the precedential approach exemplified by the Patna High Court decision in CIT v. Nipani Tobacco Stores that once the assessee produces the creditor the Explanation's initial onus is treated as met. In the present case the Department produced no further material or circumstances to establish that the credited amounts were in fact concealed income of the assessee. In the absence of such material the imposition of penalty could not be sustained.Penalty under s. 271(1)(c) in respect of the cash credits is cancelled for want of material proving that the credits represented concealed incomeFinal Conclusion: The appeal is allowed and the penalty imposed under s. 271(1)(c) is quashed inasmuch as the Department failed to establish that the cash credits represented the assessee's concealed income after the assessee had produced the creditor. The ITAT Indore heard an assessee's appeal against a penalty under s. 271(1)(c) for concealing income. The penalty was reduced by the AAC but later restored by the Tribunal. The Tribunal found that the assessee had discharged the burden of proof by examining the creditor, and since the Department did not provide evidence that the cash credit represented concealed income, the penalty was canceled. The appeal was allowed, and the penalty was canceled. (Case Citation: 1984 (9) TMI 128 - ITAT INDORE)