2016 (7) TMI 844 - AT - Income Tax

Penalty u/s 271(1)(c) - bogus gifts receipts - reopening of assessment - Held that - There is detection by revenue authorities of the assessee being beneficiary of bogus gift of ₹ 5,00,000/- consequent to searches on Shah group in October 2002 and lists were prepared by Pune directorate for Mumbai region whereby the assessee was listed as one of the beneficiary of bogus gift of ₹ 5,00,000/- and the assessee filed revised return of income on 21-10-2004 declaring and surrendering ₹ 5,00,000/- as miscellaneous income under the head income from other sources in the said revised return of income which was filed beyond the prescribed time limit u/s 139(5) of the Act for filing revised return and was an invalid return being non-existent in the eyes of law. The assessee filing return in response to notice dated 14-07-2005 u/s 148 of the Act whereby the said gift of ₹ 5,00,000/- was surrendered and offered as miscellaneous income was post recording of the reasons for re-opening and cannot be said to be voluntary act on the part of the assessee. In our considered view, the action of the A.O. in levying the penalty u/s 271(1)(c) of the Act of ₹ 1,45,089/- for concealment of income , which was later confirmed/sustained by the learned CIT(A) was quite justified and we confirm the same - Decided against assessee.

Issues Involved:
1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961.
2. Validity and voluntariness of the revised return filed by the assessee.
3. Whether the revised return filed by the assessee can be considered as a voluntary act or was it a consequence of detection by the Revenue.

Detailed Analysis:

1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961:
The primary issue revolves around the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was levied by the Assessing Officer (AO) on the grounds that the assessee failed to voluntarily disclose an income of ?5,00,000 received as a bogus gift. The AO concluded that the revised return filed by the assessee was not voluntary but was a result of detection by the Revenue during a search operation on the Shah Group. The CIT(A) upheld the AO's decision, confirming that the revised return was filed only after the detection of the bogus gift by the Revenue.

2. Validity and voluntariness of the revised return filed by the assessee:
The assessee filed a revised return on 21st October 2004, declaring the ?5,00,000 as miscellaneous income under the head 'income from other sources.' This filing occurred prior to the issuance of notice under Section 148 of the Act on 14th July 2005. The assessee argued that the revised return was a voluntary act and that taxes were duly paid on the declared income. However, the AO and CIT(A) found that the revised return was filed after the detection of the bogus gift by the Revenue, rendering it non-voluntary. Additionally, the revised return was filed beyond the prescribed time limit under Section 139(5) of the Act, making it non-est in the eyes of the law.

3. Whether the revised return filed by the assessee can be considered as a voluntary act or was it a consequence of detection by the Revenue:
The Tribunal observed that the assessee's revised return was filed after the Revenue had detected the bogus gifts during a search operation on the Shah Group in October 2002. The Tribunal noted that the assessee's name appeared in a list prepared by the Pune Directorate as a beneficiary of the bogus gift. The revised return filed on 21st October 2004, declaring the ?5,00,000 as miscellaneous income, was deemed non-voluntary as it was filed after the detection by the Revenue and beyond the prescribed time limit under Section 139(5) of the Act. The Tribunal concluded that the revised return had no evidentiary value and that the assessee had not provided any explanation for the receipt of the bogus gift during the assessment or penalty proceedings.

Conclusion:
The Tribunal upheld the penalty of ?1,45,089 levied under Section 271(1)(c) of the Act, agreeing with the AO and CIT(A) that the revised return was not a voluntary disclosure but a consequence of the Revenue's detection of the bogus gift. The appeal filed by the assessee was dismissed, and the penalty was confirmed.

Order:
The appeal filed by the assessee in ITA No. 2553/Mum/2009 for the assessment year 2002-03 is dismissed. Order pronounced in the open court on 13th July 2016.

← Previous Next →