2012 (9) TMI 353 - AT - Income Tax

Deletion of penalty u/s 271(1)(c) by CIT (A) - Held that - As particular purchases made was recorded twice in the books of the assessee once when invoice was received in the month of March, 2000 and again when the goods were received in the month of April, 2000 with no mistake detected by the auditors either at the time of statutory audit or tax audit & when a mistake came to the notice during the block assessment proceedings, the assessee filed revised return voluntarily offering income to tax being accepted by AO while completing assessment u/s 143(3) r.w.s. 147 on protective basis without making any other additions, thus no penalty can be imposed on concealment of income or furnishing inaccurate particulars of income. As the conduct of the assessee in coming out voluntarily and offering the amount of Rs.1.68 crores to tax, a liberal view has to be taken in the matter of imposition of penalty u/s 271(1)(c) - in favour of assessee.

Summary

Issues:
1. Challenge to the imposition of penalty u/s 271(1)(c) of the Act.

Detailed Analysis:
The case involved a manufacturer of domestic LPG cylinders who filed a return of income declaring an amount which was accepted in the assessment order. However, during a search and seizure operation, it was found that a particular purchase had been recorded twice in the books of accounts. The Assessing Officer (AO) imposed a penalty u/s 271(1)(c) for concealing income or furnishing inaccurate particulars. The assessee contended it was a mistake by the Accountant and voluntarily offered the amount to tax. The AO imposed a penalty, leading to an appeal before the CIT (A) challenging the penalty imposition.

The CIT (A) considered the submissions and observed that the issue was not a bogus purchase but a mistake made by oversight. The AO accepted the revised return but still imposed a penalty. The CIT (A) found the penalty unjustified, considering the voluntary disclosure and lack of concealment or inaccurate particulars. The AR cited legal opinions favoring the appellant, and the penalty was deemed unwarranted.

The Tribunal noted that the purchase was recorded twice due to a bona fide mistake, not detected by auditors. The assessee voluntarily disclosed the error and offered the amount to tax, which was accepted by the AO during assessment. Citing a Supreme Court case, the Tribunal emphasized that when income was voluntarily disclosed and accepted, no penalty for concealment or inaccurate particulars should be imposed. Consequently, the Tribunal upheld the CIT (A) order and dismissed the appeal filed by the Revenue.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing the voluntary disclosure of income and the absence of concealment or inaccurate particulars. The penalty imposition was deemed unjustified in light of the circumstances, leading to the dismissal of the Revenue's appeal.