2015 (1) TMI 60 - AT - Income Tax

Penalty u/s 271(1)(c) Held that - The assessee had not been filing his ROI over the years, despite the fact that he had enjoyed overall taxable income - the factum of the assessee not filing the ROI despite having taxable income was unearthed when the department undertook search operations over the assessee - it was only after the search and after a considerably long gap of 17 months that the assessee finally filed his ROI - all these facts culminate into the positive assumption that the assessee is callous, and not inclined to pay taxes voluntarily - this has been proved by the CIT(A), when he made the observation, further, even after search, the appellant had not filed the return of income for 17 months and taxes on the same were also not paid till the commencement of the appellate proceedings - it is also clear from the fact that the appellant did not contest the addition in appeal as he had nothing to say on the matter. The decision in CIT vs Reliance Petroproducts Ltd. 2010 (3) TMI 80 - SUPREME COURT , is not applicable on the present facts as the present is a case where the assessee did not file his return of income even though he had taxable income. This is a clear case of concealment of income - the detection of the assessee having taxable income came to light only when the assessee was searched u/s 132 - this cannot be taken into the realm of assessee furnishing the details and disallowed by the revenue authorities - rather, it would fall into the category of concealment, with an intention to conceal the particulars of income and evade tax, which would squarely fall within the precinct of section 271(1)(c) thus, the levy of penalty u/s 271(1)(c) is sustained Decided against assessee.

Summary

Issues Involved:
Sustaining penalty under section 271(1)(c) at Rs. 48,02,538/- by CIT(A) against Rs. 96,05,076/- levied by AO.

Detailed Analysis:

Issue 1: Sustaining Penalty by CIT(A)
The appeal was against the CIT(A)'s order upholding the penalty under section 271(1)(c) at Rs. 48,02,538/-, reduced from Rs. 96,05,076/- by the AO. The assessee argued for complete deletion of the penalty based on various grounds, including alleged bonafide belief in certain claims. The CIT(A) reduced the penalty due to the circumstances involving the assessee's father's illness and death. The AO justified the penalty citing non-compliance and tax non-compliance by the assessee. The CIT(A) considered the remand report and the appellant's submissions, ultimately reducing the penalty to 100% of the tax sought to be evaded.

Issue 2: Assessee's Non-Compliance and Concealment
The assessee had not filed returns of income despite having substantial income, which was discovered during a search operation. The CIT(A) noted the assessee's pattern of behavior, including not filing returns for 17 months even after the search. The CIT(A) found that the assessee's actions pointed towards evasion of tax, especially regarding share trading income and fixed deposits. The CIT(A) observed that the assessee's conduct indicated a deliberate attempt to evade tax obligations.

Issue 3: Application of Legal Precedents
The assessee relied on the case law CIT vs Reliance Petroproducts Ltd. to argue against the penalty. However, the ITAT found that the circumstances of the present case differed significantly from the cited case. The ITAT emphasized that the assessee's failure to file returns despite having taxable income constituted concealment, distinct from the scenario in the Reliance Petroproducts case. The ITAT upheld the penalty under section 271(1)(c) due to the clear pattern of concealment and evasion exhibited by the assessee.

Conclusion:
The ITAT dismissed the appeal, sustaining the penalty under section 271(1)(c) at Rs. 48,02,538/- as determined by the CIT(A). The decision was based on the assessee's non-compliance, concealment of income, and the distinct nature of the case compared to the legal precedent cited. The ITAT found the assessee's behavior indicative of intentional tax evasion, justifying the penalty imposed by the CIT(A).