2014 (7) TMI 1029 - AT - Income Tax

Penalty u/s 271(1)(c) Disclosure of additional income - Held that - the assessee voluntarily disclosed additional income during the course of assessment proceedings and paid tax - it cannot be said that additional income disclosed during the course of assessment proceedings was not voluntary or that the assessee wanted to conceal the income - Even though the revised return was found to be invalid, the AO accepted the income as declared in the revised return and computation - AO did not bring any material on record that the declaration of income made by the assessee in his revised return or his explanation was not bona fide - there appears to be no basis for imposition of penalty on the ground that the assessee furnished inaccurate particulars of income - revenue have not placed before us any material nor brought to our notice any contrary decision so as to enable us to take a different view in the matter Decided against Revenue.

Summary

Issues involved:
1. Penalty under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income and concealment of income.

Detailed Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) regarding the penalty imposed under section 271(1)(c) of the Income Tax Act. The primary issue in this case was whether the penalty was justified for the assessee's disclosure of additional income after the issuance of a notice under section 143(2) of the Act. The assessee originally filed a return disclosing income, but later filed a second return with a significantly higher income based on peak deposits in the bank account, which could not be substantiated with evidence.

The Assessing Officer (AO) initiated an investigation and completed the assessment, levying a penalty for inaccurate particulars of income and concealment. The AO contended that the additional income disclosed by the assessee was not a voluntary disclosure as it was made after the notice under section 143(2) was issued. However, the Commissioner of Income Tax (Appeals) deleted the penalty, stating that the disclosure was made before detection by the department.

During the appeal, the Departmental Representative argued that the revised return was not valid, and the disclosure was made after the notice was issued. On the other hand, the assessee's representative supported the CIT(A)'s decision, citing a Delhi Tribunal case where voluntary disclosure of additional income was considered.

The Tribunal found that the disclosure of additional income by the assessee was not after its detection by the department. The Tribunal distinguished a Gujarat High Court case where detection of income led to the penalty imposition, unlike in the present case. Additionally, a Delhi Tribunal decision emphasized that voluntary disclosure during assessment proceedings does not warrant penalty if the disclosure was bona fide.

Ultimately, the Tribunal upheld the CIT(A)'s decision to delete the penalty, as the additional income disclosure was considered voluntary and not an attempt to conceal income. The Tribunal found no error in the CIT(A)'s order and dismissed the appeal of the revenue, following the precedent set by previous decisions.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing the voluntary nature of the additional income disclosure and the absence of any material suggesting concealment. The decision highlighted the importance of bona fide disclosures during assessment proceedings and upheld the deletion of the penalty under section 271(1)(c) of the Income Tax Act.