2015 (9) TMI 1101 - AT - Income Tax

Penalty under Sec.271(1)(c) read with section Sec. 250 - Held that - From the facts of the case, it is apparent that the assessee has not concealed its income or furnished inaccurate particulars in the return of income filed before the Revenue. The excess stock found at the time of search was taken into account for arriving at the income of the assessee during the relevant assessment year as observed by Ld. Assessing Officer in his assessment order. The Ld. CIT (A) also observed in his order that the appellant s case do not fall under Explanation (3) to Section-271(1)(c) of the Income Tax Act because concealment of income starts only after the return of income was filed or subsequent to filing of belated return of income when the Department detects certain income as escaped. - Decided against revenue.

Issues:
- Appeal against deletion of penalty under Sec. 271(1)(c) of the Income Tax Act by the Ld. CIT (A).

Analysis:
1. Background: The appeal was filed by the Revenue against the order of the Learned Commissioner of Income Tax(A)-VI, Chennai, challenging the deletion of penalty under Sec. 271(1)(c) of the Act by the Ld. CIT (A).

2. Factual Overview: The case involved a firm engaged in the business of jewelry, which filed its income tax return admitting income of &8377;74,55,303/- after a survey revealed excess stock of gold, silver, and diamonds. The assessment concluded with the admitted income, including the excess stock value.

3. Penalty Initiation: The Assessing Officer initiated penalty proceedings under Sec. 271(1)(c) of the Act, levying a penalty of &8377;9,62,094/- due to alleged concealment of income by the firm.

4. Reasoning for Penalty: The Assessing Officer justified the penalty by stating that even though the firm cooperated and paid taxes on the additions made, the intention to evade tax was evident from the survey conducted, leading to a calculated concealed income of &8377;31,13,574/-.

5. Ld. CIT (A) Decision: The Ld. CIT (A) deleted the penalty, emphasizing that the firm was a regular taxpayer, and no positive concealment was detected beyond the recorded entries. The Ld. CIT (A) cited various judicial decisions to support the deletion, highlighting that penalty is not applicable if income is disclosed in the return.

6. Appellant's Argument: The firm's representative argued that no concealment occurred as the discrepancies were rectified and included in the income return. It was contended that inaccurate particulars were not furnished, warranting the deletion of the penalty.

7. Judgment: The Tribunal observed that there was no concealment or inaccurate particulars in the firm's income return. The excess stock was considered in determining the income, and the case did not fall under Explanation (3) to Section-271(1)(c) as per the Ld. CIT (A)'s findings.

8. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the deletion of the penalty under Sec. 271(1)(c) of the Income Tax Act by the Ld. CIT (A) based on the firm's compliance and inclusion of excess stock in the income calculation.

This detailed analysis outlines the key aspects of the legal judgment, including the factual background, penalty initiation, reasoning for penalty imposition, the Ld. CIT (A)'s decision, arguments presented, the Tribunal's judgment, and the final outcome of the appeal.

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