RAJUBHAI S. PATEL vs.INCOME TAX OFFICER (INTERNATIONAL
TAXATION)
AHMEDABAD TRIBUNAL
RAJPAL YADAV, JM & MANISH BORAD, AM.
ITA No. 904 and 905/Ahd/2014
Mar 1, 2016
(2016) 46 cch 0214 AhdTrib
Legislation Referred to
Section 69, 148, 271(1)(c)
Case pertains to
Asst. Year 2002-03 and 2003-04
Decision in favour of: Assessee
Penalty u/s 271(1)(c)—Assessee was non-resident Indian and
he had FDRs with Dena bank in FCNR NRE category—Interest income out of those
FDRs was exempt from tax—Assessee had given power of attorney to ’X’ who had
maintained FDR/OD account with fixed deposit overdraft facility—According to
AO, certain amounts had been deposited in FD/OD account—Assessee filed returns
of income declaring NIL income, because interest income from FDs was exempt
from tax—AO determined taxable income of assessee at Rs.30,99,810 on ground
that deposits had been made in FD/OD account which remained unexplained—AO held
that assessee concealed his income or furnished inaccurate particulars of
income—AO thus initiated penalty proceedings u/s 271(1)(c) and imposed penalty
of Rs.1,50,000 in relevant AYs—CIT(A) confirmed penalty imposed by AO u/s
271(1)(c)—Held, bare perusal of s 271(1)(c) would reveal that for visiting any
assessee with penalty, AO or CIT(A) during course of any proceedings before
them should be satisfied that assessee concealed his income or furnished
inaccurate particulars of income—As far as quantification of penalty was
concerned, penalty imposed under this section can range in between 100% to 300%
of tax sought to be evaded by assessee, as result of such concealment of income
or furnishing inaccurate particulars—However s 271(1)(c) not only covers
situation in which assessee had concealed income or furnished inaccurate
particulars but in certain situation, even without there being anything to
indicate so, statutory deeming fiction for concealment of income comes into
play—Assessee had given explanation about source of deposits in
accounts—Explanation could not be substantiated with supporting evidence, but
explanation was not held by AO as false—AO had not issued any notice to ’X’ in
order to find out if explanation given by assessee was false or not—Similarly,
in AY 2003-04, explanation given by assessee was that he had received back
Rs.1.50 lakhs from ’X’ and that amount was deposited in bank account— AO accepted
facts that sum of Rs.3.00 lakhs advanced by assessee, but disbelieved
explanation of Rs.1.50 lakhs—Again explanation of assessee was not held to be
false—It was thus held that assessee did not deserve to be visited with penalty
u/s 271(1)(c) and accordingly impugned penalty in both appeals were
cancelled—Assessee’s Appeal allowed
Held
A bare perusal of this section would reveal that for
visiting any assessee with the penalty, the Assessing Officer or the Learned
CIT(Appeals) during the course of any proceedings before them should be
satisfied, that the assessee has; (i) concealed his income or furnished
inaccurate particulars of income. As far as the quantification of the penalty
is concerned, the penalty imposed under this section can range in between 100%
to 300% of the tax sought to be evaded by the assessee, as a result of such
concealment of income or furnishing inaccurate particulars. The other most
important features of this section is deeming provisions regarding concealment
of income. The section not only covered the situation in which the assessee has
concealed the income or furnished inaccurate particulars, in certain situation,
even without there being anything to indicate so, statutory deeming fiction for
concealment of income comes into play.
(Para 9)
Assessee had given explanation about the source of deposits
in the accounts. The explanation could not be substantiated with the supporting
evidence, but the explanation was not held by the AO as false. Had the assessee
given confirmation from M/s.Shrinathji Corporation in the Asstt.Year 2002-03,
then the addition itself would have been deleted, but the AO had not issued any
notice to M/s.Shrinathji Corporation in order to find out whether the
explanation given by the assessee is false or not. Similarly, in the Asstt.Yar
2003-04, the explanation given by the assessee was that he had received back
Rs.1.50 lakhs from Shri Anvarbhai Kapadia and that amount was deposited in the
bank account. The AO had accepted the facts that a sum of Rs.3.00 lakhs
advanced by the assessee, but disbelieved the explanation of Rs.1.50 lakhs.
Again the explanation of the assessee was not held to be false. Therefore, in
view of ITAT discussion, ITAT was of the view that the assessee did not deserve
to be visited with penalty under section 271(1)(c) of the Act, and accordingly
impugned penalty in both the appeals were cancelled.
(Para 10)
Conclusion
