2017 (9) TMI 1843 - AT - Income Tax

Penalty u/s 271(1)(c) - addition made in the quantum assessment proceeding - HELD THAT - Mere addition made in the quantum assessment proceeding would not result in levy of penalty under Section 271(1)(c) automatically. Each and every addition made in the assessment proceeding cannot be construed to be concealment of income or furnishing of inaccurate particulars. However in this case the assessee claims that the money was not deposited during the year under consideration. The assessee has not provided the details of deposit of money in the account. In the absence of any details with regard to deposit or investment of money in the bank account we do not find any reason to find fault with the authorities below that the balance as on 31.12.2001 is the money belonging to the assessee for the year under consideration. Therefore this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the penalty. Quantum of penalty the Assessing Officer levied penalty at 300%. However the CIT(Appeals) restricted the same to 100%. Tribunal is of the considered opinion that levy of penalty is the discretion of the Assessing Officer. CIT(Appeals) has also power coterminous as that of Assessing Officer. Therefore when the lower authority exercised his discretion in restricting the penalty to 100% instead of 300% levied by the AO this Tribunal do not find any reason to interfere with the discretion exercised by the lower authority. Therefore we do not find any reason to find fault with the CIT(Appeals) in restricting the penalty to 100%.

Summary

Issues:
Appeal against penalty under Section 271(1)(c) for assessment year 2002-03.

Analysis:
The appeals by both the assessee and Revenue were directed against the Commissioner of Income Tax (Appeals) order confirming the penalty levied by the Assessing Officer under Section 271(1)(c) of the Act for the assessment year 2002-03. The Revenue contended that the penalty should be 300% due to funds transferred to a foreign account, impacting the Indian economy. The assessee argued that no amount was invested during the relevant year and that penalty should be for the earlier assessment year, urging re-examination by the Assessing Officer. The Tribunal found that the assessee had deposited funds in a foreign bank account, with the declaration of endowment signed by the assessee. Despite the assessee's claim of no involvement with the account, the Tribunal held that the deposit was made during the year under consideration as the exact date of deposit could not be proven by the assessee. The Tribunal emphasized that the burden of proof was on the assessee to demonstrate when the money was deposited. The Tribunal upheld the penalty, as the assessee failed to provide details of the deposit, leading to the presumption that it was made during the relevant year.

The Tribunal clarified that the assessment and penalty proceedings are distinct, requiring a re-evaluation of evidence in penalty proceedings. Mere additions in the assessment do not automatically lead to penalty under Section 271(1)(c). In this case, since the assessee did not provide details of the deposit, the Tribunal upheld the penalty, considering the balance as on 31.12.2001 to be the assessee's money for the relevant year. The Tribunal noted that the CIT(Appeals) rightfully confirmed the penalty due to the lack of evidence provided by the assessee regarding the deposit. Regarding the quantum of penalty, the Assessing Officer initially levied it at 300%, but the CIT(Appeals) reduced it to 100%. The Tribunal held that the CIT(Appeals) had the discretion to restrict the penalty, and there was no reason to interfere with this decision. Consequently, both appeals by the Revenue and assessee were dismissed, affirming the penalty under Section 271(1)(c) for the assessment year 2002-03.