Stay can be allowed for Penalty u/s 271(1)(c) if the same is levied as a Result of Enhancement of Income in First Appeal: ITAT [Read Order]

The Income Tax Appellate Tribunal recently ruled that the stay can be allowed for penalty under Section 271(1)(c) of the Income Tax Act, 1961 if the same is levied as a result of enhancement of income by the Commissioner of Income Tax (Appeals) while disposing the first appeal.

In the instant case, the assessee has moved stay applications seeking stay of outstanding demand raised in quantum appeal proceedings and penalty proceedings for the AY 2007-08.

The revenue submitted that while conducting a search and seizure operation in Anoop Mehta and his group, it was found that executors of the Estate of late Vrajlal Mehta (father of Anoop Mehta) took steps to bring money lying in the HSBC bank, Geneva into India. Monies were remitted from HSBC Bank Geneva to the account of Estate of late Vrajlal Mehta during the financial year relevant to A.Y. 2012-13 and said receipts were offered as income in A.Y. 2012-13.

The Assessing Officer completed the assessment by making certain additions, which were challenged before the CIT (A). The present stay applications are related to the demand arising on account of enhancement made by CIT(A) and also related to penalty levied by him u/s 271(1)(c) of the Act.

While hearing rival submission bench pointed that explanation of the assessee that two bank accounts belonged to Shri Rajesh Mehta have been accepted by the search officials as well as Assessing Officer.

The tribunal bench has also noticed that the assessee has already paid a sum of ` 2 crores and further a sum of ` 85.84 lakhs requires adjustment. According to this set of facts, ITAT has a view that the balance of convenience is in favour of granting partial stay to the assessee.

Accordingly, ITAT bench acting B.R. Baskaran (AM) & Ramlal Negi (JM) directed the assessee to pay sum of 1.20 crore in two equal installments and also directed the revenue not to enforce the collection of outstanding demand in the case of quantum appeal proceeding as well as in the penalty proceedings till the disposal of the appeals of the assessee or till six months from the date of this order, whichever period expires earlier.