2017 (7) TMI 1174 - HC - Income Tax

Penalty u/s 271(1)(c) - assessee filed revised computation of income during the course of assessment proceedings by surrendering a sum of ₹ 1.50 crores on account of unverified creditors and on account of wrong claim of deduction u/s 80G - Held that - Taking into consideration the first finding by the CIT(A) and affirmed by the Tribunal holding that mere concealment will not be the case for penalty but there should be some evidence to establish that it was a concealment. Mere disclosure on the contrary as facilitated by the AO is no reason for adding income. We are in complete agreement with the view taken by the authorities. The issue is required to be answered in favour of the assessee against the department.

Summary

Issues:
- Appeal against Tribunal's order confirming CIT(A) decision on penalty imposed under section 271(1)(c) for revised computation of income.
- Justification of the Tribunal in canceling the penalty.
- Assessment of undisclosed income and imposition of penalty by AO.
- Legal interpretation of concealment of income and inaccurate particulars.
- Comparison with relevant case laws and decisions.
- Arguments presented by both sides.

Detailed Analysis:

1. The appellant challenged the Tribunal's decision affirming the CIT(A)'s order on penalty under section 271(1)(c) concerning the revised computation of income. The primary issue was whether the Tribunal was justified in canceling the penalty, specifically in a case where the assessee filed a revised computation during assessment proceedings, surrendering amounts related to unverified creditors and incorrect deduction claims under section 80G.

2. The appellant contended that despite findings by the AO during proceedings, including the admission of bogus expenses and undisclosed income through accommodation entries, the CIT(A) reduced the disclosed amount without identifying specific creditors. The appellant argued that the disclosure was made to buy peace and did not constitute concealed income or inaccurate particulars, as the liabilities were subsequently paid.

3. The appellant relied on the Gujarat High Court case of LMP Precision Engineering Co. Ltd. and the Supreme Court case of Mak Data P. Ltd. Commissioner of Income Tax to support their argument. The Gujarat High Court case highlighted instances of revised returns disclosing additional income, while the Supreme Court emphasized the non-voluntary nature of surrendering income based on detection by tax authorities in related cases.

4. The respondent referred to the Tribunal's order and cited decisions from the Madras High Court and other tribunals to support upholding the CIT(A)'s decision. The Tribunal, after discussing relevant laws, upheld the CIT(A)'s order, leading to the dismissal of the appeal.

5. The High Court, after hearing arguments from both sides, considered the CIT(A)'s finding that mere concealment is insufficient for penalty imposition, emphasizing the need for evidence to establish concealment. The court agreed with this view, ruling in favor of the assessee against the department, ultimately dismissing the appeal.

In conclusion, the judgment analyzed the legal aspects of penalty imposition under section 271(1)(c) in cases of revised income computation, emphasizing the distinction between concealment and voluntary disclosure. The court's decision was based on the requirement for evidence to prove concealment and the applicability of relevant case laws in determining the outcome of the appeal.