2015 (12) TMI 446 - AT - Income Tax

Penalty u/s.271(1)(c) - survey action was conducted at the premises of the assessee wherein assessee admitted to the introduction of share capital - Revenue s contention is that, in case, the survey would have not been carried out at the premises of the assessee, it might have not included this amount into its return of income - Held that - In the present case, the assessee had filed its return of income before the due date of filing and including the amount on which penalty has been levied, admittedly, prior to initiation of assessment proceedings. The assessee has included the amount into the return of income, therefore, in our considered view, the assessee cannot be held guilty of concealing the particulars of income. - Decided in favour of assessee

Summary

Issues:
Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Confirmation of penalty under section 271(1)(c)
The appeal was against the confirmation of a penalty of Rs. 1,99,35,135 levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2010-11. The assessee had filed its return of income before the due date, declaring total income of Rs. 6,29,21,560. The penalty proceedings were initiated based on the unaccounted share capital of Rs. 5,86,50,000 admitted during survey proceedings. The assessee contended that the penalty was unjustified as all income particulars were declared in the return. The authorities argued that the disclosure was not voluntary and relied on a Supreme Court judgment in a similar case. The Tribunal analyzed the facts and legal provisions, emphasizing that penalty proceedings require concealment or inaccurate particulars of income. The AO's assumption that the survey prompted the disclosure was deemed conjectural. The Tribunal noted that the return was valid, filed on time, and the disclosed income was accepted. The judgment in a similar case highlighted the importance of voluntary disclosure, which was absent in the present case. The Tribunal concluded that the penalty was unwarranted, directing the AO to delete it. The appeal was allowed, and the penalty was set aside.

Conclusion:
The Tribunal ruled in favor of the assessee, allowing the appeal and directing the deletion of the penalty under section 271(1)(c) of the Income Tax Act, 1961. The decision emphasized the importance of voluntary disclosure and clarified that penalty proceedings require concealment or inaccurate particulars of income, which were not present in this case. The judgment highlighted the distinction between valid returns and the initiation of penalty based on conjectures, ultimately leading to the cancellation of the penalty.