2016 (9) TMI 1510 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - filing of belated return of income only after conduct of search operation u/s 132 and after issuing notice u/s 153A - HELD THAT - After scrutiny of seized materials and verification of particulars filed by the assessee, the AO found that the assessee has made undisclosed investments. During the course of penalty proceedings, the assessee has simply stated that out of the three additions made, the assessee has agreed for the addition made on unexplained investment to the tune of ₹.60 lakhs to have amicably settled with the Department. The assessee did not have any credible and cogent explanation for not offering the income in the form of unexplained investment in property before the search operation; he was bound to agree for the quantum addition and not preferred any appeal before the first appellate authority against various additions made by the Assessing Officer. Just because the assessee has agreed for addition of undisclosed investment in property, he cannot be escaped from levy of penalty - assessee has no valid reason for concealment and furnishing inaccurate particulars in the belated return filed against the notice under section 153A of the Act. In this case, neither the assessee filed his return before due date of filing of return of income nor furnished complete particulars of income or even after service of notice under section 153A of the Act, the assessee has furnished complete and true particulars of income. Furnishing of inaccurate particulars by the assessee would not have detected at all if the search operation had not been conducted by the Department and the case not taken up subsequently for further scrutiny. Since the assessee has no valid reason for concealment of income and furnishing of inaccurate particulars, penalty under section 271(1)(c) of the Act clearly attracts in this case. - Decided against assessee.

Summary

Issues:
Late filing of appeal by the assessee, condonation of delay, penalty under section 271(1)(c) of the Income Tax Act, 1961, undisclosed investments, assessment proceedings, penalty proceedings, appeal before CIT(A), sustenance of penalty, appeal before ITAT Chennai.

Analysis:
The appeal was filed late by the assessee, leading to a petition for condonation of delay due to the illness of the petitioner's C.A. The Tribunal, considering the sufficient cause for the delay, condoned the delay and admitted the appeal for hearing.

The case involved a film actor whose residential premises were searched under section 132 of the Act, leading to the discovery of unaccounted cash. The assessment was reopened, and penalty proceedings were initiated under section 271(1)(c) of the Act based on additions made by the Assessing Officer.

During the penalty proceedings, the assessee agreed to one addition but contested others, claiming they were inevitable expenses. The Assessing Officer imposed a penalty, which was partly sustained by the CIT(A) based on the concealment of income related to undisclosed investments.

The ITAT Chennai, after hearing both sides, upheld the penalty, emphasizing that the assessee did not voluntarily disclose true income, filed a belated return after the search operation, and failed to provide credible explanations. The Tribunal concluded that the penalty was rightly confirmed by the CIT(A), dismissing the appeal filed by the assessee.

In summary, the ITAT Chennai upheld the penalty under section 271(1)(c) of the Act, as the assessee failed to disclose true income voluntarily, filed a belated return, and lacked credible explanations, leading to the dismissal of the appeal.