2014 (5) TMI 1166 - HC - Income Tax

Penalty u/s 271(1)(c) - voluntary surrender of income - Held that - In the present case the assessee did produce all the relevant material in the form of books of account bank statements vouchers sale bills etc. During the course of further enquiry in the assessment proceedings. The assessee voluntarily offered a sum of 75 lacs for assessment stating that even though all the material existed yet in order to buy peace it was offering the amount to tax. The facts of this case are clearly such that the decision in MAK Data (2013 (11) TMI 14 - SUPREME COURT) in the opinion of this Court cannot be attracted. The assessee at no point seem to have accepted the revenue s contentions that such claimed expenditure was bogus and that it was not allowable he offered the amount only to buy peace. There is also no finding by the AO that the appellant had failed to offer an explanation in respect of the income returned or had failed to disclose material particulars. - Decided in favour of assessee.

Summary

Issues involved:
1. Penalty imposed by the Assessing Officer.
2. Contradiction with Supreme Court ruling in MAK Data Pvt Ltd. v. Commissioner of Income Tax.

Detailed analysis:
1. The appellant challenged an order of the Income Tax Appellate Tribunal (ITAT) upholding the assessee's appeal against the penalty imposed by the Assessing Officer. The appellant reported income of Rs. 4,35,757 for the assessment year 2009-2010, primarily from the business of supplying earth soil purchased from farmers for construction purposes. The Assessing Officer raised concerns regarding payments to suppliers and transactions in shares, leading to penalty proceedings under section 271(1)(c) of the Income Tax Act. The AO imposed a penalty of Rs. 47,96,000, later reduced to 150% of the tax payable by the CIT (Appeals). The ITAT allowed the appeal, emphasizing the voluntary nature of the offer made by the assessee to buy peace, distinct from the scenario in MAK Data case.

2. The appellant argued that the ITAT's decision contradicted the Supreme Court ruling in MAK Data case, where the surrender of income was deemed non-voluntary due to detection during a search in the sister concern of the assessee. The Supreme Court in MAK Data case emphasized the statutory duty of the assessee to disclose true income, holding that the surrender was not voluntary as it followed detection by the AO. In contrast, the present case involved the voluntary offer of Rs. 75 lakhs by the assessee, supported by adequate documentation, without any findings of concealment or failure to disclose material particulars by the AO. The High Court concluded that the facts did not align with the scenario in MAK Data case, dismissing the appeal as no substantial question of law arose from the matter.