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2014 (2) TMI 82 - AT - Income TaxPenalty u/s 271(1)(c) of the Act Survey conducted u/s 133A of the Act Held that - There cannot be any penalty on income which is declared in a return of income - When an income which is ultimately brought to tax is declared in a return of income there can be no question of treating the Assessee as having concealed particulars of income or furnished inaccurate particulars of income - The starting point of determining concealment for imposing penalty is the return of income - If the return of income declares income which is ultimately brought to tax there can be no complaint by the revenue that the Assessee is guilty of concealing particulars of income or furnishing inaccurate particulars of income . There can be no concealment or non-disclosure as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax and therefore no penalty under s. 271(1)(c) could be levied - Decision to initiate penalty proceedings is taken while making assessment order - the expression in the course of any proceedings under this Act cannot have the reference to survey proceedings - It necessarily follows that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the IT return filed by it - there cannot be any penalty only on surmises conjectures and possibilities - Sec. 271(1)(c) has to be construed strictly - Unless it is found that there is actually a concealment or non-disclosure of the particulars of income penalty cannot be imposed - There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the IT return and offered the surrendered amount for the purposes of tax - Relying upon Commissioner of Income-tax Versus SAS Pharmaceuticals 2011 (4) TMI 888 - Delhi High Court There can be no justification for imposition of penalty on the income offered in the return of income by the Assessee because there cannot be any penalty on income which is declared in a return of income Decided in favour of Assessee.
Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act. 2. Determination of concealment of income or furnishing inaccurate particulars of income. 3. Applicability of Explanation 3, 5, and 5A to Section 271(1)(c) of the Income Tax Act. Detailed Analysis: 1. Imposition of Penalty under Section 271(1)(c) of the Income Tax Act: The assessee challenged the order of the CIT(Appeals) which confirmed the penalty imposed by the AO under Section 271(1)(c) of the Income Tax Act. The penalty was imposed on the grounds that the assessee had concealed income amounting to Rs. 81,36,400 from a joint venture known as 'Singapore Layout'. The AO's decision was based on the fact that this income was declared only after a survey conducted under Section 133A of the Act. 2. Determination of Concealment of Income or Furnishing Inaccurate Particulars of Income: The Tribunal analyzed whether the assessee had concealed particulars of income or furnished inaccurate particulars of income. It was noted that the assessee had filed a return of income declaring the total income, including the income from the joint venture, which was accepted by the AO. The Tribunal emphasized that penalty under Section 271(1)(c) is imposed for "concealing particulars of income or furnishing inaccurate particulars of income." Since the income declared in the return was accepted and brought to tax, there was no concealment or furnishing of inaccurate particulars. The Tribunal referred to the legal position that the starting point for determining concealment is the return of income. 3. Applicability of Explanation 3, 5, and 5A to Section 271(1)(c) of the Income Tax Act: The Tribunal examined the applicability of Explanation 3, 5, and 5A to Section 271(1)(c). Explanation 3 applies to cases where a person fails to furnish a return of income within the specified period and is deemed to have concealed particulars of income. However, in this case, the assessee filed the return within the stipulated period, and the notice under Section 148 was issued within two years from the end of the assessment year. Therefore, Explanation 3 did not apply. Explanations 5 and 5A pertain to cases of search under Section 132, which were not applicable in this case as it involved a survey under Section 133A. The Tribunal concluded that there was no justification for imposing a penalty on the income declared in the return, as there was no concealment or non-disclosure. The Tribunal cited the Delhi High Court's decision in the case of SAS Pharmaceuticals and its own decision in Vasavi Shelters, which supported the view that penalty cannot be imposed if the income declared in the return is accepted and brought to tax. Conclusion: The Tribunal allowed the appeal by the assessee, holding that there was no justification for imposing a penalty under Section 271(1)(c) on the income declared in the return. The decision emphasized that penalty provisions must be construed strictly, and unless there is actual concealment or non-disclosure of income, penalty cannot be imposed. The Tribunal's decision was pronounced on August 14, 2013.
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