2015 (10) TMI 528 - AT - Income Tax

Penalty under section 271(1)(c) - surrendered amount in respect of sundry creditors during survey - CIT(A) deleted the penalty - Held that - It is evident from the record that surrender was made during the course of survey by the assessee and furnished the return of income declaring additional income and paid the tax thereon. Nothing has been brought out on record by the Assessing Officer that the surrender was made when the assessee was cornered by the Assessing Officer. Though the Assessing Officer has mentioned in the order that the additions, on which penalty was levied, were challenged before the ld. CIT(A), but the facts are otherwise. The assessee has made voluntary surrender on account of sundry creditors and returned the additional income in the return of income filed and paid tax thereon. We have also carefully examined the judgment referred to by the parties and we find that it is a case of voluntary surrender by the assessee during the course of survey. Therefore, penalty under section 271(1)(c) of the Act cannot be levied. We have carefully perused the order of the ld. CIT(A) and we find that the ld. CIT(A) has adjudicated the issue judiciously in the light of various judicial pronouncements referred to before him. Since no infirmity has been pointed out in the order of the ld. CIT(A), we confirm the same. - Decided in favour of assessee.

Summary

Issues:

1. Appeal against deletion of penalty under section 271(1)(c) of the Income-tax Act, 1961.

Analysis:

The case involved an appeal by the Revenue against the deletion of a penalty of Rs. 15.39 lakhs under section 271(1)(c) of the Income-tax Act, 1961. The assessee, a partnership firm engaged in manufacturing and trading, had filed a revised return after a survey, including amounts surrendered during the survey proceedings. The Assessing Officer imposed the penalty, contending that the surrender was not voluntary as the assessee had appealed against other additions made during assessment. The ld. CIT(A) deleted the penalty, emphasizing that the surrender was voluntary and no incriminating material was found during the survey. The Tribunal upheld the ld. CIT(A)'s decision, noting that the surrender was made during the survey, and there was no evidence to suggest it was coerced. The Tribunal found no fault in the ld. CIT(A)'s order, confirming the deletion of the penalty.

The crux of the issue revolved around whether the surrender made by the assessee was voluntary or coerced. The Assessing Officer argued that the surrender was not voluntary as the assessee had challenged other additions, indicating a lack of cooperation. However, the ld. CIT(A) and the Tribunal found that the surrender was voluntary, as it was made during the survey without any incriminating material compelling the disclosure. The Tribunal emphasized the importance of assessing the circumstances surrounding the surrender to determine its voluntariness.

The ld. CIT(A) based the deletion of the penalty on the absence of incriminating material during the survey and the assessee's cooperation with the department. Various judicial pronouncements were cited to support the view that a voluntary surrender, made without coercion or concealment, should not attract penalty under section 271(1)(c) of the Act. The Tribunal concurred with the ld. CIT(A)'s reasoning, highlighting the bona fide nature of the surrender and the lack of evidence indicating concealment or deliberate misrepresentation.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the deletion of the penalty under section 271(1)(c) of the Act. The decision underscored the importance of assessing the voluntariness of a surrender in tax proceedings and highlighted the significance of cooperation and bona fide disclosures in determining the applicability of penalties under the Income-tax Act, 1961.