2012 (7) TMI 1099 - AT - Income Tax

Summary

Issues involved: Appeal against cancellation of penalty u/s.271(1)(c) by Ld. CIT (A) -1, Thane.

Summary:

Issue 1: Surrender of undisclosed income during search action

The appellant, an individual engaged in money lending, surrendered undisclosed income during a search action u/s.132(4), including unaccounted transactions and investments. The income was declared in the return filed later, and assessment was completed by the AO. Penalty proceedings u/s.271(1)(c) were initiated by the AO, but the appellant claimed immunity under Explanation 5 to sec.271(1)(c). The AO imposed a penalty of &8377; 52,94,190/-, denying the claimed immunity.

Issue 2: Appeal before Ld. CIT (A) and Tribunal

The penalty imposed by the AO was challenged before the Ld. CIT (A), who allowed the claim for immunity under Explanation 5. The Ld. CIT (A) relied on legal provisions and previous court decisions to cancel the penalty. The revenue appealed to the Tribunal, where the Ld. DR supported the AO's penalty, while the Ld. Counsel for the assessee relied on the Ld. CIT (A)'s order.

Issue 3: Tribunal's decision

The Tribunal observed that the undisclosed income was surrendered during the search, declared in the return, and accepted by the AO during assessment. The AO imposed the penalty by denying the immunity under Explanation 5 due to lack of specific details in the statement recorded u/s.132(4). The Tribunal referred to previous court decisions, including the Hon'ble Gujarat High Court and Allahabad High Court, which emphasized substantial compliance with the provisions of Explanation 5. The Tribunal upheld the Ld. CIT (A)'s decision to cancel the penalty, citing the benefit of immunity under Explanation 5 to sec.271(1)(c).

In conclusion, the Tribunal dismissed the revenue's appeal, affirming the cancellation of the penalty imposed by the AO u/s.271(1)(c) by the Ld. CIT (A).