2012 (4) TMI 712 - AT - Income Tax

Summary

Issues involved:
The judgment involves appeals against penalty orders u/s 271(1)(c) of the Income Tax Act for Assessment Years 2002-03, 2003-04, and 2006-07. The main issue is whether the penalty was rightly imposed on the assessee for offering additional income in the returns filed u/s 153A without any concealment of income.

Assessment Year 2002-03:
The assessee challenged the penalty upheld by CIT(A) for offering additional income without concealment u/s 271(1)(c). The Assessing Officer initiated penalty proceedings based on the additional income admitted by the assessee in response to notice u/s 153A. The assessee argued that the income was voluntarily disclosed without any incriminating material found during search and seizure. The Assessing Officer accepted the income returned by the assessee u/s 153A without pointing out any undisclosed income. The tribunal noted that the difference in income was due to clerical errors and rectifications, not concealment. The additional income was based on the same books of account, not new material. Therefore, the tribunal held that the penalty was unwarranted and deleted it.

Common Grounds for All Years:
The tribunal heard all three appeals together as the facts leading to the penalty were identical. The assessee had filed returns u/s 139 before a search and seizure action. After filing returns u/s 153A admitting additional income, the Assessing Officer finalized assessments accepting the returned income. The penalty was imposed on the basis that additional income was offered due to the search. The tribunal found that the additional income disclosed was not due to undisclosed material but voluntary disclosure based on existing records. The tribunal emphasized that the disclosure was not due to any new facts discovered during the search. Relying on legal precedents, the tribunal concluded that the penalty was unjustified and deleted it for all three assessment years.

Conclusion:
The tribunal held that the penalty imposed u/s 271(1)(c) was not justified as the additional income offered by the assessee was voluntary and based on existing records, not concealment. Therefore, the appeals filed by the assessee were allowed, and the penalty was deleted for all three assessment years.