Dhiren Gopal Vs DCIT (ITAT Bangalore)
The appeal concerns the validity of penalty proceedings initiated under Section 271(1)(c) of the Income Tax Act for Assessment Year 2015–16. The assessee had originally filed a return declaring income of Rs. 10.31 crore. Subsequently, a search and seizure operation under Section 132 was conducted in November 2019, during which documents relating to undisclosed foreign income and investments were found. It was observed that the assessee and his brothers had received funds from a Singapore-based company in the form of loans, which were not disclosed in the original return. Out of the total amount, a portion was admitted as additional income and offered to tax in a return filed under Section 153C.
During assessment proceedings, the Assessing Officer (AO) disallowed certain interest expenses and initiated penalty proceedings for concealment of income. A penalty of Rs. 55.21 lakh was imposed under Section 271(1)(c). The first appellate authority partly allowed relief, deleting penalty on interest disallowance but sustaining penalty relating to deemed dividend income, holding that the disclosure was not voluntary and ignorance of law was not a valid defence.
Before the Tribunal, the assessee raised an additional legal ground challenging the validity of the penalty proceedings on the basis that the initial show cause notice issued under Section 274 read with Section 271(1)(c) was unsigned. The Tribunal admitted this ground, noting that it was purely legal and required no fresh investigation of facts.
