2013 (1) TMI 851 - AT - Income Tax

Summary

Issues involved: Appeal against imposition of penalty u/s 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1996-97.

Assessment of Business Income:
- The assessee filed a return of income at &8377; 2,44,550, but assessment was framed at an income of &8377; 13,20,000.
- Tribunal reduced the income from business by &8377; 1.30 lakhs but confirmed the addition on account of cash credit.
- Hon'ble High Court accepted substantial question of law u/s 260A of the Income-tax Act, 1961.

Penalty Proceedings:
- Assessing Officer levied penalty u/s 271(1)(c) of the Act, which was confirmed by CIT(A).
- Assessee contended that penalty should not be levied as it can substantiate no concealment of income.
- Assessee produced cash creditors who confirmed advancing of loan by account payee cheque.
- Legal arguments presented citing relevant case laws to support the contention against penalty imposition.
- Ld. Sr. DR supported penalty imposition based on Tribunal's confirmation of addition made by Assessing Officer.

Tribunal's Decision:
- Tribunal confirmed reduction of business income but upheld addition on cash credit.
- Hon'ble High Court admitted substantial question of law regarding the cash credit addition.
- Decision of Coordinate Bench and other High Courts cited to support the assessee's position.
- Tribunal did not find justification for penalty imposition where substantial question of law was accepted.
- Penalty confirmed for the addition in business income as no substantial question of law was accepted.

Conclusion:
- Penalty upheld for the addition in business income but not for the cash credit addition.
- Appeal of the assessee partly allowed based on the Tribunal's decision.
- The order was pronounced on 29th January, 2013.