2013 (7) TMI 135 - AT - Income Tax

Penalty u/s.271(1)(c) - search u/s 132 - assessee introduced unaccounted cash which was detected during the course of search in response to a notice u/s.153A - Held that - As in identical facts in other group cases, the Tribunal has consistently taken a view that assessment made by the AO on the basis of admission of assessee and not on basis of any material found during the course of search is not the case that the assessee has furnished inaccurate particulars or concealed any particulars of income in the return of income filed u/s.153A. If the additional income offered by the assessee in the revised return u/s.153A, after the search had been accepted in its entirety without detailed discussion of the seized documents and without making any attempt to obtain explanation of the assessee, penalty u/s.271(1)(c) is not leviable. In favour of assessee.

Summary

Issues:
- Appeal against penalty levied under section 271(1)(c) for AY 2006-07 and AY 2003-04.
- Interpretation of conditions under Explanation-5 to section 271(1)(c) for penalty imposition.
- Admissibility of undisclosed income and payment of tax for immunity under Explanation 5(2) to section 271(1)(c).
- Consideration of case laws and judicial decisions in penalty imposition matters.
- Comparison of facts with other Tribunal decisions for consistency in penalty deletion.

Analysis:

The judgment pertains to an appeal against penalties imposed under section 271(1)(c) for the assessment years 2006-07 and 2003-04. The penalties were challenged based on the interpretation of the conditions specified in Explanation-5 to section 271(1)(c). The Assessing Officer (AO) had levied penalties as the income was offered only after a search was conducted, and the manner in which the undisclosed income was earned was not specified by the assessee. The AO contended that the conditions under Explanation-5 were not fulfilled. The matter was then brought before the Commissioner of Income Tax (Appeals) [CIT(A)].

During the proceedings before the CIT(A), the assessee argued that there was willingness to disclose the income and pay tax, which led to the deletion of penalties. The CIT(A) considered various case laws and held that the benefit of immunity under Explanation 5(2) to section 271(1)(c) could not be denied to the appellant. The CIT(A) emphasized that the crucial requirement for availing immunity was the statement under section 132(4) and that substantial compliance was observed in the case, leading to the cancellation of penalties for the relevant assessment years.

Additionally, the judgment referred to decisions by other benches of the Income Tax Appellate Tribunal (ITAT) in similar cases, where penalties were deleted based on the acceptance of additional income without detailed discussion of seized documents. The ITAT upheld the deletion of penalties in the present case by following consistent decisions and holding that penalties were not justified based on the facts and circumstances presented.

In conclusion, the appeals by the Revenue against the penalties imposed were dismissed, affirming the deletion of penalties for the assessment years in question based on the interpretation of relevant legal provisions and consistent application of judicial decisions by the ITAT.