By TIOL News Service

NEW DELHI, DEC 15, 2017: THE ISSUE BEFORE THE COURT IS - Whether citing of past instance or lack of absence of cross-examination, can vitiate the initiation and culmination of penalty proceedings. NO IS THE VERDICT.

Facts of the case:

The AO during course of assessment, had summoned and recorded the statement of the creditor who admitted accommodating the assessee, in exchange of cash and after conceding that the transaction was not genuine. The amounts were brought to tax u/s 68, after the AO held that the genuineness of the transaction was exposed. In addition, the AO also levied Rs. 45,301/- as penalty u/s 271.

High Court held that,

++ the assessee's counsel submits that the facility of cross-examination was never afforded to the assessee and the creditor had been examined in its absence. It was also urged that in similar instances in the past, greater amounts were advanced by the same creditor, but the AO did not raise any objection. This Court is of the opinion that given the finality to the quantum proceedings which fixed the liability upon the income of Rs. 1,34,584/- and the nature of the addition, the imposition of penalty in the circumstances could not be faulted. The citing of past instance or the lack of absence of cross-examination in no way, in the opinion of the Court, vitiates the initiation and culmination of penalty proceedings.

(See 2017-TIOL-2583-HC-DEL-IT)