Gift from Mother: ITAT deletes Penalty since AO does not examine the Veracity of Affidavit filed by Assessee’s Mother [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench consisting of Suchitra Kamble, Judicial Member, and Waseem Ahmed, Accountant Member held that details in return of income which are not correct, filed by the assessee shall be treated as inaccurate particulars.

The assessee, Anisha R. Dhanani is an individual. A search was carried out under Section(u/s) 132 of the Act in the Dhanani group of cases including the assessee. Accordingly, a notice under 153A of the Act was issued and the assessee declared the income in the return filed under section 153A of the Act at Rs. 29,96,937/- only under the head salary, STCG, and other sources. The assessment u/s 143(3) and 153A were completed at Rs. 36,03,037/- after making an addition of Rs. 5,40,000/- on account of low household expenses, Rs. 40,000/- on account of unexplained loan and Rs. 26,099 on account of capital gain vide order dated 31/03/2013. On appeal learned Commissioner of Income Tax (CIT) upheld the additions of Rs. 40000 on account of unexplained loan and addition on account of low household expenses to the extent of Rs. 1,40,000/- only. The Assessing Officer (AO) with respect to such additions i.e. low household expenses of Rs. 1,40,000/- and unexplained cash credit of Rs. 40,000/- initiated penalty proceedings u/s 271(1)(c) of the Act on account of concealment of income. the assessee claimed that there cannot be any penalty proceeding u/s 271(1)(c) of the Act on account of such addition. However, the AO disagreed with the contention of the assessee and held that the assessee has furnished inaccurate particulars of income and thereby concealed his income to avoid the tax. Accordingly, the AO levied the penalty of Rs. 55,620/- being 100% of the tax amount sought to be evaded. The aggrieved assessee preferred an appeal to the CIT who deleted the penalty with respect to the addition made on account of low household expenses and confirmed the penalty with respect to other addition. Aggrieved by the order of the CIT the assessee preferred to appeal before the Tribunal.

The Tribunal said “Now, if we analyse the facts of the present case in the light of the above-stated discussion, with respect to the penalty levied on account of the loan amount of Rs. 40,000/- We note that the assessee has furnished the necessary explanation and confirmation from the NRI sister but the same was rejected on the reasoning that the creditworthiness was not explained to the satisfaction of the authorities below. In this regard, we note that there was not furnished any inaccurate particular of income. It is for the reason that the details of the loan entry were duly furnished which was also supported by the confirmation.”

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