CIT vs Deep Chand

Ajay Kumar Mittal, J.—This appeal u/s 260A of the income tax Act, 1961 (for short "the Act"), has been filed by the Revenue against the order dated 2-3-2006, passed by the income tax Appellate Tribunal, New Delhi Bench "SMC", New Delhi (in short "the Tribunal") in I. T. A. No. 4892/Del/2005, relating to the assessment year 1993-94.

The appeal was admitted on 26-3-2007, for determination of the following substantial question of law :

Whether on the facts and in the circumstances of the case, the learned income tax Appellate Tribunal was right in law in confirming the order of the Commissioner of income tax (Appeals) in cancelling the penalty levied u/s 271(1)(c) by placing reliance upon the case of Commissioner of Income Tax Vs. Munish Iron Store, whereas the facts of the two are entirely different ?

The facts, in brief, necessary for adjudication as narrated in the appeal are that during the assessment year under consideration, the assessee had received a gift amounting to Rest. 1,75,000 on payment of an equal amount in cash, along with premium for arranging that gift. During proceedings u/s 148 of the Act initiated against the assessee, the amount equal to the amount of the gift, i.e., Rest. 1,75,000 and Rest. 17,500 on account of premium at the rate of 10 per cent, were added to the income of the assessee. The Commissioner of income tax (Appeals) (in short "the CIT(A)"), confirmed the order of the Assessing Officer whereas the Tribunal accepted the appeal of the assessee and deleted the penalty, vide order dated 22-9-2005. Meanwhile proceedings u/s 271(1)(c) of the Act were also initiated against the assessee whereby a penalty of Rest. 82,000 was imposed on the assessee. The assessee preferred appeal against imposition of penalty. The Commissioner of income tax (Appeals) cancelled the penalty imposed, vide order dated 26-10-2005. The appeal carried by the Revenue was dismissed by the Tribunal vide order under appeal and it was observed that since the Assessing Officer had not recorded his satisfaction before initiating the penalty proceedings, the order of penalty could not be sustained.

Hence, this appeal at the instance of the Revenue.

We have heard learned counsel for the parties and have perused the record.

The point for consideration in this case is, whether the Tribunal was justified in deleting the penalty levied against the assessee u/s 271(1)(c) of the Act.

The gift amounting to Rest. 1,75,000 said to have been received by the assessee was held to be bogus. Once that is so, the only conclusion is that the assessee had furnished inaccurate particulars of his income and the order of the Tribunal deleting the penalty is unsustainable in law. Accordingly, it is held that the assessee had concealed the particulars of income and, thus, penalty was liable to be levied against him u/s 271(1)(c) of the Act. Further, the issue regarding recording of satisfaction for initiation of penalty proceedings in the course of assessment proceedings stands concluded against the assessee in the judgment of this court reported in Commissioner of Income Tax Vs. Pearey Lal and Sons (EP) Ltd.,

In view of the above, the substantial question of law is answered in favor of the Revenue and the appeal is allowed accordingly.