2014 (11) TMI 98 - AT - Income Tax

Levy of penalty u/s 271(1)(c) Undisclosed income Inaccurate particulars furnished by assessee - Held that - The assessee had filed revised return after a survey was conducted at the business premises of the assessee, that he admitted an additional income of ₹ 75 lakhs, that the AO held that the assessee had not disclosed the cash receipts in the original return, that he levied penalty u/s 271(1)(c)of the Act The assessee had filed the revised return only after the survey action, therefore, it cannot be held that it was a voluntary return - filing of such a return cannot be termed voluntary filing of return - the rebuttal of the assessee is neither relevant materials and not cogent - the omission or wrong statement by the assessee in the original return was not due to any bona fide or inadvertent mistake on his part - there is proper application of mind on part of the AO and there is recording of an opinion on his part that a case for initiation of penalty proceedings was made as there was furnishing of incorrect particulars by the assessee, with an intention to avoid payment of tax - there is a distinction between furnishing of wrong particulars and making a wrong calculation on the basis of the particulars furnished and a mistaken calculation is distinct from concealment. There existed an intent to prevent relevant facts from becoming known - The assessee does have a duty to verify the particulars furnished by him are accurate - If all the circumstances and developments till the assessment is completed are taken into consideration, their collective effect show that the revised return was filed only after the evidences for filing inaccurate particulars were detected - the AO had held that commission/brokerage income of ₹ 39.12 lakhs were not offered for taxation for the year under consideration - the assessee not disclosed a part of his income, while filing his return and it was only after the survey that he revised the return - an intention of concealment of true particulars of income or deliberate furnishing of inaccurate particulars by the assessee was established by the AO - the AO had not accepted any conditional admission, rather his order is based on facts relevant for the year thus, the order of the FAA is set aside Decided in favour of revenue.

Summary

Issues Involved:
1. Deletion of quantum addition on undisclosed income detected during a search under Section 133A.
2. Applicability of the case law M/s. Bhagat & Co. vs. ACIT to the present case.
3. Justification of the penalty levied under Section 271(1)(c) of the Income Tax Act.

Detailed Analysis:

1. Deletion of Quantum Addition on Undisclosed Income Detected During a Search Under Section 133A:

The assessee, engaged in Real Estate Consultancy and Broking, had filed a return declaring an income of Rs. 12,31,330/-. A survey under Section 133A was conducted, and it was found that the assessee had accepted brokerage/commission in cash, which was not accounted for in the books of account. The assessee admitted to an undisclosed income of Rs. 75 lakhs and revised the return declaring a total income of Rs. 87,31,330/-. During assessment, the Assessing Officer (AO) found that Rs. 30,12,752/- of cash receipts were not disclosed in the original return and initiated penalty proceedings under Section 271(1)(c). The AO levied a penalty of Rs. 9.65 lakhs. The First Appellate Authority (FAA) deleted the penalty, stating that the amount declared by the assessee was much more than the discrepancies found by the AO.

2. Applicability of the Case Law M/s. Bhagat & Co. vs. ACIT:

The AO contended that the FAA erred in relying on the case law M/s. Bhagat & Co. vs. ACIT, arguing that the facts and circumstances of the present case were different. The FAA had used this case to justify the deletion of the penalty. However, the Tribunal noted that the facts of the present case involved the filing of a revised return after the survey, which indicated that the revised return was not voluntary but made under compulsion due to the findings of the survey.

3. Justification of the Penalty Levied Under Section 271(1)(c):

The Tribunal discussed the general principles regarding concealment penalty and the filing of revised returns. It emphasized that for the levy of concealment penalty, there must be material or circumstances leading to the reasonable conclusion that the amount represents the assessee's income, and there must be conscious concealment or furnishing of inaccurate particulars by the assessee. The Tribunal noted that the revised return was filed only after the survey action, indicating it was not voluntary. The AO found that the assessee had not disclosed all material facts and had not disclosed the cash receipts in the original return. The Tribunal held that the omission or wrong statement in the original return was not due to any bona fide or inadvertent mistake. The Tribunal reversed the FAA's order, stating that the FAA had ignored the fact that the revised return was filed due to the incriminating material found during the survey. The Tribunal concluded that the AO had rightly levied the penalty under Section 271(1)(c) as the assessee had an intention of concealment of true particulars of income or deliberate furnishing of inaccurate particulars.

Conclusion:

The Tribunal upheld the AO's decision to levy a penalty of Rs. 9.65 lakhs under Section 271(1)(c) of the Income Tax Act, reversing the FAA's order that had deleted the penalty. The Tribunal found that the revised return filed by the assessee was not voluntary but was a result of the findings from the survey, indicating deliberate concealment of income. The Tribunal emphasized that the assessee's conduct and the circumstances collectively showed an intention to conceal true particulars of income.