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2013 (12) TMI 1000 - AT - Income TaxPenalty u/s 271(1)(c) Held that - The assessee filed return of income on 26.2.2009 which was a valid return u/s 139(4) - No material has been brought on record by the Revenue to show that any income was concealed by the assessee in the return of income filed for the year under consideration - The assessee filed only one return for the year under consideration and the income shown therein was found correct on assessment - No difference in the tax on this returned income and the tax on the assessed income - No penalty u/s 271(1)(c) of the Act is legally tenable Decided in favour of assesse.
Issues Involved:
1. Levying of penalty under Section 271(1)(c) of the Income Tax Act. 2. Validity of revised returns filed post-survey. 3. Bona fide explanation for non-disclosure of income. 4. Applicability of precedents and legal principles. Detailed Analysis: Issue 1: Levying of Penalty under Section 271(1)(c) of the Income Tax Act The primary issue in all the appeals was whether the CIT(A) erred in confirming the Assessing Officer's order levying penalty under Section 271(1)(c) of the Income Tax Act. The penalty was levied for the assessment years 2002-03 to 2007-08 due to the non-disclosure of income from fixed deposits and interest earned thereon in the original returns. The penalty amounts varied for each year, with the highest being Rs. 4,15,694/- for the assessment year 2004-05. Issue 2: Validity of Revised Returns Filed Post-Survey The assessee, a transport contractor, was subjected to a survey under Section 133A of the Act on 6.1.2009, which led to the detection of undisclosed income from fixed deposits. Subsequent to the survey, the assessee filed revised returns in response to notices issued under Section 148, disclosing additional income. The Assessing Officer levied penalties on the grounds that these revised returns were filed only after the survey detected the investments, implying that the income would not have been disclosed otherwise. Issue 3: Bona Fide Explanation for Non-Disclosure of Income The assessee contended that the fixed deposits were renewals of old deposits dating back to 1971 and that the income was surrendered due to ill health and to settle matters with the Department. The CIT(A) rejected this explanation, stating that the assessee's awareness of TDS provisions indicated knowledge of the Income Tax Act, and no evidence was provided to substantiate the claim of agricultural income or the renewals of old deposits. The CIT(A) concluded that the explanation was an afterthought and not bona fide. Issue 4: Applicability of Precedents and Legal Principles The assessee relied on several legal precedents, including the Supreme Court's judgment in CIT vs. Suresh Chandra Mittal, which held that the burden of proof lies initially on the revenue to establish concealment. However, the CIT(A) and the Tribunal found these precedents inapplicable, as the revised returns were filed in response to notices under Section 148, not as voluntary disclosures. The Tribunal also noted that no material evidence was provided to support the claim that the investments were renewals of old deposits. In contrast, the Department cited cases like CIT vs. Sangmeshwara Associates and CIT vs. Krishna & Co., where penalties were upheld in similar circumstances. The Tribunal agreed with the Department, emphasizing that the assessee failed to disclose the true income in the original returns and only did so after the survey and issuance of notices under Section 148. Conclusion: For the assessment years 2002-03 to 2007-08, the Tribunal upheld the penalties, agreeing with the lower authorities that the assessee failed to provide a bona fide explanation for the non-disclosure of income in the original returns. The revised returns filed post-survey were not considered voluntary or bona fide. For the assessment year 2008-09, however, the Tribunal found that the return filed on 26.2.2009 was valid under Section 139(4) and that no income was concealed in this return. Consequently, the penalty for this year was deleted, as the income disclosed was accepted by the Department without any additions. Final Order: The appeals for the assessment years 2002-03 to 2007-08 were dismissed, confirming the penalties. The appeal for the assessment year 2008-09 was allowed, and the penalty was deleted.
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