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2015 (5) TMI 537 - AT - Income TaxPenalty under Section 271(1)(c) - admission of income during survey - Held that - As relying on case of Vasavi Shelters 2013 (4) TMI 485 - ITAT BANGALORE wherein it was held that there can be no justification for the levy of penalty under Section 271(1)(c) of the Act in respect of income offered in the return of income for the concerned assessment year which is in a similar factual matrix as the case on hand, we hold that there can be no justification for the imposition of penalty under Section 271(1)(c) on income admitted and offered for taxation as part of the income in the return of income for Assessment Year 2007-08 filed on 26.10.2007. Consequent to this finding of ours, we cancel the penalty levied under Section 271(1)(c) - Decided in favour of assessee.
Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961. 2. Alleged concealment of income or furnishing of inaccurate particulars of income by the assessee. Issue-wise Detailed Analysis: 1. Levy of Penalty under Section 271(1)(c) of the Income Tax Act, 1961: The appeal was directed against the order confirming the levy of penalty under Section 271(1)(c) imposed by the Assessing Officer (AO). The assessee, a dealer in ceramic tiles, filed the return of income for Assessment Year (AY) 2007-08 admitting an income of Rs. 14,21,220. A survey conducted under Section 133A revealed discrepancies in stock, leading to the admission of excess stock amounting to Rs. 10,35,000, which was included in the income declared in the return. The AO initiated penalty proceedings and levied a penalty of Rs. 4,34,738 under Section 271(1)(c) for the alleged concealment of income. 2. Alleged Concealment of Income or Furnishing of Inaccurate Particulars of Income by the Assessee: The assessee contended that the penalty was unjustified as the excess stock was voluntarily declared in the return of income, and there was no concealment or furnishing of inaccurate particulars. The assessee argued that the penalty provisions under Section 271(1)(c) are applicable only if there is concealment or inaccurate particulars in the return filed. The assessee cited the decision of the Hon'ble Apex Court in CIT v. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158, asserting that penalty cannot be imposed when the income is declared in the return. The Tribunal referred to the case of Vasavi Shelters v. ITO, where it was held that there can be no penalty under Section 271(1)(c) for income declared in the return. The Tribunal emphasized that the starting point for determining concealment is the return of income. If the income declared in the return is ultimately brought to tax, there can be no concealment or furnishing of inaccurate particulars. The Tribunal noted that the penalty provisions must be construed strictly, and unless there is actual concealment or non-disclosure, penalty cannot be imposed. Conclusion: The Tribunal concluded that there was no justification for the imposition of penalty on the income of Rs. 10,35,000 admitted and offered for taxation as part of the income of Rs. 14,21,220 in the return filed for AY 2007-08. The penalty of Rs. 4,34,738 levied under Section 271(1)(c) was canceled, and the appeal was allowed in favor of the assessee. Order Pronounced: The order was pronounced in the open court on 10th April, 2015, allowing the assessee's appeal for AY 2007-08.
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