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2011 (7) TMI 765 - AT - Income TaxPenalty u/s 271(1)(c) - Search and seizure - Unaccounted income - Concealment of income - Held that the assessee has failed to establish that disclosure of additional income in the revised return by way of declaring G.P. rate at 15% as against 6.93% shown in return filed u/s. 153A of the Act was voluntary and in good faith to buy peace with the department - assessee filed the revised return only after the concealment was detected by the AO and he confronted the assessee with the same - Decided against the assessee
Issues Involved:
1. Justification of cancellation of penalty under Section 271(1)(c) of the Income Tax Act. 2. Applicability of the Supreme Court judgment in the case of CIT v. Suresh Chandra Mittal. 3. Voluntariness and good faith of the revised return filed by the assessee. Detailed Analysis: 1. Justification of Cancellation of Penalty under Section 271(1)(c): The primary issue was whether the cancellation of the penalty under Section 271(1)(c) by the CIT(A) was justified. The penalty was initially imposed because the assessee declared additional income only after being confronted with evidence during the assessment proceedings. The CIT(A) cancelled the penalty, reasoning that the revised return was filed to buy peace and avoid litigation, and there was no concealment of income or furnishing of inaccurate particulars since the revised return was accepted without modification. The Appellate Tribunal, however, found that the revised return was filed only after the concealment was detected by the Assessing Officer (A.O.) and the assessee was confronted with the findings. The Tribunal noted that the assessee's explanation regarding the payments to karigars (artisans) through her husband's account was not credible, as the payments were shown in the books as made to different parties, but in reality, the cheques were deposited in her husband's account. 2. Applicability of the Supreme Court Judgment in CIT v. Suresh Chandra Mittal: The CIT(A) relied on the Supreme Court judgment in CIT v. Suresh Chandra Mittal to cancel the penalty, asserting that there was no concealment as the income was voluntarily disclosed. The Tribunal, however, distinguished the facts of the present case from Suresh Chandra Mittal. In the present case, the revised return was filed only after the A.O.'s investigation and confrontation, unlike in Suresh Chandra Mittal where the disclosure was voluntary and in good faith. 3. Voluntariness and Good Faith of the Revised Return: The Tribunal scrutinized whether the revised return filed by the assessee was voluntary and in good faith. The Tribunal found that the revised return was not filed voluntarily but was a result of the A.O.'s thorough investigation and confrontation with the findings. The Tribunal noted that the assessee did not disclose the additional income until after being confronted with evidence of concealment. The Tribunal also observed that the explanation provided by the assessee regarding the payments to karigars was not credible and was found to be false. Conclusion: The Tribunal concluded that the CIT(A) was not justified in cancelling the penalty under Section 271(1)(c) as the revised return was not filed voluntarily but was a result of the A.O.'s investigation and confrontation. The Tribunal upheld the penalty imposed by the A.O., holding that the assessee had concealed income and furnished inaccurate particulars. The Tribunal also distinguished the present case from the Supreme Court judgment in CIT v. Suresh Chandra Mittal, noting that the revised return in the present case was not filed in good faith. Separate Judgment: The dissenting opinion by the Accountant Member (A.M.) was that the penalty should be upheld, emphasizing that the revised return was not voluntary and was filed only after the A.O.'s investigation. The Third Member concurred with the A.M., leading to the final decision to uphold the penalty. Final Order: In accordance with the majority view, the appeals of the department were allowed, and the penalty under Section 271(1)(c) was upheld.
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