Income Tax Act, 1961

--Penalty under section 271(1)(c)--Furnishing of inaccurate particulars of income Bona fide explanation regarding receipt of gifts--During the course of assessment proceedings, assessing officer found that assessee had received gifts from two persons in the name of his son and daughter. Since there were cash deposits in the donors' account prior to the date of making gift, assessing officer doubted their creditworthiness and treated the gift as bogus and unexplained. Accordingly, he made addition under section 68 and also initiated penalty proceedings under section 271(1)(c). Assessee submitted that all the particulars of gifts received were duly disclosed in the return filed by him and the donors were income-tax assessees who had also disclosed the gifts made by them to assessee. He further submitted that gifts were made out of love and affection and since he had explained the source of gifts with complete documents by way of furnishing gift deeds, copies of income-tax returns, capital account, balance sheet and pass book of donors therefore, penalty under section 271(1)(c) should be deleted. Held : Admittedly, the assessee had furnished particulars of gifts in the return of income originally filed by him. Such particulars were not found incorrect, erroneous or false. Therefore, it could not be a case of furnishing inaccurate particulars by the assessee for inviting penalty under section 271(1)(c) of the Act. That apart, the assessee had furnished income-tax particulars as well as declarations for making gifts from the donors along with their balance sheets furnished with the income-tax return. But, the assessing officer made no enquiry but jumped to the conclusion of imposition of penalty on the basis of quantum addition sustained by the Appellate Tribunal. In view of above, the explanation furnished by the assessee was found bona fide and therefore, penalty levied under section 271(1)(c) was not sustainable.