2014 (4) TMI 1259 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee has declared additional income in response to notice u/s 153A and thereafter voluntarily revised return before the completion of the assessment u/s 153A - HELD THAT - In the present case, the assessee has submitted the explanation with regard to the additional income of ₹ 71,00,000/- offered from business. The assessee was confronted with the chart containing the detail of properties alongwith sources of investment thereof. Once the assessee has offered explanation, which has been accepted by the A.O. and the assessee having paid taxes and interest thereon then there is no ground of penalty. See A.N. ANNAMALAISAMY (HUF) 2013 (2) TMI 734 - ITAT CHENNAI - CIT(A) is not justified in confirming the penalty levied by the Assessing Officer - Decided in favour of assessee.

Summary

Issues Involved:
1. Legality of the CIT(A)'s order dated 30.10.2013.
2. Confirmation of penalty of Rs. 24,54,090/- under Section 271(1)(c) by the CIT(A).
3. Assessee's right to add or amend grounds of appeal.

Issue-Wise Detailed Analysis:

1. Legality of the CIT(A)'s Order Dated 30.10.2013:
The appellant contended that the CIT(A)'s order was against the law and facts of the case. The primary issue was whether the additional income of Rs. 71,00,000/- disclosed in the revised return filed in response to notice under Section 153A should attract a penalty under Section 271(1)(c). The CIT(A) confirmed the penalty, stating that the income was not disclosed in the original return filed under Section 139, thus constituting concealed income.

2. Confirmation of Penalty of Rs. 24,54,090/- Under Section 271(1)(c):
The assessee argued that the penalty was wrongly imposed, as the additional income was voluntarily disclosed before the completion of the assessment under Section 153A. The Assessing Officer (AO) initiated penalty proceedings on the grounds that the additional income was from undisclosed sources. The AO relied on Explanation 5 to Section 271(1)(c), which requires that the disclosed income must relate to a period for which the time for filing return under Section 139(1) was still available on the date of the search. The AO and CIT(A) both held that the assessee did not fulfill these conditions, thus attracting the penalty.

The CIT(A) further emphasized that the assessee did not disclose the income in the original return before the search and did not pay the tax due on time. The CIT(A) referenced several judicial decisions, including Surender Paul vs. CIT and Ashok Kumar Gupta vs. CIT, to support the imposition of the penalty.

The Tribunal, however, noted that the due date for filing the return under Section 139(4) had not expired at the time of the search, and the assessee filed the return within this extended period. The Tribunal cited multiple judicial precedents, including CIT vs. Rajesh Jalan and CIT vs. Jagriti Aggarwal, which supported the view that the extended due date under Section 139(4) should be considered.

3. Assessee's Right to Add or Amend Grounds of Appeal:
The assessee reserved the right to add or amend any grounds of appeal before the final hearing and disposal of the appeal. This procedural right was acknowledged but did not directly impact the substantive judgment.

Conclusion:
The Tribunal concluded that the penalty under Section 271(1)(c) was not justified as the assessee had filed the return within the extended due date under Section 139(4). The Tribunal reversed the orders of the CIT(A) and the AO, directing the cancellation of the penalty. The appeal was allowed, and the penalty of Rs. 24,54,090/- was set aside. The Tribunal's decision was pronounced in the open court on 8th April 2014.