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Issues involved: Assessment of penalty u/s. 271(1)(c) for failure to disclose additional income offered during search and seizure operation u/s. 132(1) and subsequent revised return filing.
Summary: Issue 1: Failure to disclose additional income in return filed u/s. 153A: The appellant failed to include additional income of Rs. 40,00,000 in the return filed in response to notice u/s. 153A, leading to penalty proceedings u/s. 271(1)(c) initiated by the Assessing Officer. The AO found the omission to be a result of the assessee's malafide intention, as taxes were not fully paid and the admission made u/s. 132(4) was retracted. The AO concluded that penalty was justified due to non-compliance with Sec. 132(4) and intentional concealment. Issue 2: Justification of penalty by CIT(A): The CIT(A) upheld the penalty, stating that the appellant lost immunity by not extending the admission made u/s. 132(4) to the return of income and tax payment. The CIT(A) found the disclosure not voluntary, as it came after questioning and was driven by the assessment proceedings. Citing legal precedents, the CIT(A) emphasized that post-detection disclosures are not considered voluntary, leading to the imposition of penalty u/s. 271(1)(c). Issue 3: Appeal before ITAT: The ITAT confirmed the penalty, noting that the disclosure was made only after the detection of bogus gifts during the search and seizure operation. Relying on legal precedent, the ITAT held that the addition was based on independent detection, not voluntary disclosure, justifying the penalty imposed by the AO and upheld by the CIT(A). In conclusion, the appeal filed by the assessee was dismissed, and the penalty u/s. 271(1)(c) was confirmed by the ITAT.
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