2016 (1) TMI 745 - AT - Income Tax

Penalty u/s 271(1)(c) - income has been detected on account of scrutiny assessment - Held that - It is evident that the assessee had received the amount of ₹ 5,38,854/-, which should have been made the assessee curious about this entry in his bank account. Therefore, it is clear that this amount had not been truly disclosed and explained by the assessee at the time of filing of its return of income, therefore, this amount was treated as concealed income and therefore, the reliance was placed upon on the decision of Zoom Telecommunication Ltd. (2010 (5) TMI 34 - DELHI HIGH COURT) wherein it has been held that since the income has been detected on account of scrutiny assessment and would be evaded if the scrutiny assessment was not done the penalty on concealment should be imposed. Therefore, the AO was fully justified in imposing the penalty u/s. 271(1)(c) of the I.T. Act, 1961 and Ld. CIT(A) was also right in reducing the amount of TDS and rightly confirmed the penalty of ₹ 1,25,306/- instead of ₹ 1,45,906/-. Hence, no reason to interfere with the well reasoned order passed by the Ld. CIT(A) - Decided against assessee.

Summary

Issues:
Penalty imposition under section 271(1)(c) of the Income Tax Act, 1961 based on undisclosed income.

Analysis:
The case involved an appeal by the Assessee against the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961. The penalty was imposed due to the Assessee's failure to disclose an amount of Rs. 5,38,854 as income during the assessment proceedings. The AO considered this undisclosed amount as concealed income and imposed a penalty of Rs. 1,45,906. The Assessee appealed before the Commissioner of Income Tax (Appeals) who reduced the penalty to Rs. 1,25,306. Subsequently, the Assessee appealed before the Appellate Tribunal.

The primary issue revolved around whether the undisclosed amount of Rs. 5,38,854 should be considered as concealed income attracting penalty under section 271(1)(c). The Assessee contended that there was no intention to conceal income and relied on judicial pronouncements to support their argument. However, the Tribunal noted that the Assessee had received the amount in question, which should have raised questions about its origin, indicating non-disclosure. The Tribunal referred to the decision of Zoom Telecommunication Ltd. (Del) 2011, emphasizing that the income detected during scrutiny assessment and not disclosed would warrant a penalty for concealment.

The Tribunal upheld the imposition of penalty under section 271(1)(c) by the AO, agreeing with the Commissioner's decision to reduce the penalty amount to Rs. 1,25,306. The Tribunal directed the AO to consider any TDS deductions and adjust the penalty amount accordingly. Ultimately, the Tribunal dismissed the Assessee's appeal, affirming the penalty imposed for non-disclosure of income.

In conclusion, the Tribunal upheld the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, emphasizing the importance of disclosing all income to avoid penalties for concealment. The decision was based on the Assessee's failure to explain the origin of the undisclosed amount, leading to the confirmation of the reduced penalty amount by the Tribunal.