2015 (10) TMI 1762 - HC - Income Tax

Penalty u/s 271(1)(c) - undisclosed income - assessee had offered the additional income for taxation only after it was detected by the department while conducting a survey operation u/s 133A(1) - ITAT set aside penalty - Held that - r. In the facts of the present case, neither the Assessing Officer nor the Commissioner (Appeals) has recorded any categorical finding as to what is the nature of concealment or the inaccurate particulars furnished by the assessee. As noticed earlier, the revised return filed by the assessee has been accepted by the Assessing Officer as it is. Evidently therefore, it cannot be said that any particulars of income had been concealed by the assessee while filing the said return, nor is there any finding that any inaccurate particulars of income were furnished. The Assessing Officer has invoked the provision of section 271(1)(c) of the Act on the ground that the disclosure made in the return was not voluntary. In this regard it may be noted that section 271(1)(c) of the Act does not include involuntary disclosure as one of the grounds for imposing penalty. Under the circumstances, no infirmity can be found in the impugned order passed by the Tribunal in setting aside the order of penalty. - Decided in favour of assessee.

Summary

Issues:
Challenge to penalty under section 271(1)(c) of the Income Tax Act for undisclosed income.

Analysis:
The appellant revenue challenged the order of the Income Tax Appellate Tribunal regarding the deletion of a penalty of Rs. 45,50,000 imposed under section 271(1)(c) of the Act. The respondent, a firm, disclosed additional income of Rs. 1,20,00,000 during a survey operation by the Income Tax Department. The Assessing Officer initiated penalty proceedings, alleging inaccurate particulars/concealed income. The Assessing Officer held that the disclosure was not voluntary, leading to the penalty imposition. The Commissioner (Appeals) upheld the penalty, but the Tribunal overturned it.

The appellant contended that the disclosure was not voluntary as it was made after a survey by the Department, citing the Supreme Court's decision in Mak Data Private Limited v. Commissioner of Income Tax-II. The Supreme Court emphasized that voluntary disclosure does not absolve an assessee from penalty if concealment is proven. The Tribunal noted that the Assessing Officer accepted the revised return without making any additions, indicating no actual concealment or inaccurate particulars. The Tribunal reasoned that since no concealment was found, penalty under section 271(1)(c) would not apply.

The Supreme Court's decision highlighted that the intention to declare true income is crucial. In this case, no undisclosed income was detected during the survey, and the assessee voluntarily declared the income in the revised return, which was accepted by the Assessing Officer. The Tribunal found no evidence of concealment or furnishing inaccurate particulars, leading to the penalty's dismissal. The Tribunal's decision was upheld, emphasizing that no substantial question of law arose for interference.

In conclusion, the Tribunal's decision to set aside the penalty was upheld as no concealment or inaccurate particulars were found in the revised return accepted by the Assessing Officer. The absence of legal infirmity in the Tribunal's order led to the dismissal of the appeal challenging the penalty under section 271(1)(c) of the Income Tax Act.