2016 (8) TMI 311 - AT - Income Tax

Levy of penalty u/s 271(1)( c) - benami bank account possession - Held that - It is undisputed that the assessee filed the original return on 5-06-2006 which was selected for scrutiny u/s 143(2) of the Act by notice dtd. 21-06-2007. The ld. AR of the assessee could not reply to the query of the Bench as to what was the date of hearing fixed by notice u/s 143(2) of the Act. According to him, it was a routine notice. The revised return of income was filed on 16-10-207 i.e. after 04 months from the date of u/s 143(2) notice. Neither the ld. AR of the assessee nor the ld. DR could inform the date of hearing fixed by the said notice, any hearing or the information of Benami account with ld. AO. Thus the contention of the assessee that there was no information in the possession of Department about benami account could not be verified. Besides, in considered view the issue needs to be restored to the file of the ld. CIT(A) and as according to the assessee penalty appeals for the assessment years 2004-05 and 2005-06 are pending for decision. I am of the considered opinion that the relevant facts and the issue of imposition of penalty should be decided together with earlier years. It should be duly verified from record whether any information, inquiry or query about Benami bank a/c preceded filing of the revised return by the assessee and whether owning up the said benami account was prompted by good intention or due to some information in possession of the Department. In view of the above, it is deemed just and proper that ld. CIT(A) shall decided all the appeals together afresh. - Decided in favour of assessee for statistical purposes.

Summary

Issues Involved:
Levy of penalty under section 271(1)(c) of the Income Tax Act for concealment of income in a benami bank account.

Detailed Analysis:

Issue 1: Background and Facts
The appellant, engaged in the business of manufacturing and trading of Bidi, operated a Bank of Baroda benami account in the name of the son. The account remained undisclosed for multiple assessment years. After a notice under section 143(2), the appellant filed a revised return owning up the benami account and subsequent proceedings were initiated leading to the imposition of penalty under section 271(1)(c).

Issue 2: AO and CIT(A) Observations
The AO objected to the revised return, stating that it was not a case of unintentional omission but intentional concealment of income. The CIT(A) confirmed the penalty, emphasizing that the revised return cannot be filed under section 139(5) if the original return was known to be false, citing relevant case laws.

Issue 3: Assessee's Contention
The appellant argued that the revised return was valid as the omission was unintentional and unknown to the assessee before the notice under section 142(1). The appellant claimed that the revised return was voluntary and filed before detection by the department, thus penalty under section 271(1)(c) should not be imposed.

Issue 4: Arguments and Precedents
The appellant's counsel cited cases where penalty was not levied in similar circumstances. The Department, however, relied on precedents supporting penalty imposition, including a High Court judgment. The appellant contended that the High Court judgment was not applicable in this case as there was no prior information with the department regarding the concealment.

Issue 5: Tribunal's Decision
The Tribunal found discrepancies in the information provided by both parties regarding the timeline of events and the department's knowledge of the benami account. Considering the pending penalty appeals for previous years, the Tribunal decided to restore the issue to the CIT(A) for a fresh decision, emphasizing the need to consider all relevant facts and previous years' penalties together.

Conclusion
The Tribunal allowed the appeal for statistical purposes, directing the CIT(A) to decide all appeals together after verifying the information, inquiries, and intentions related to the benami account. The decision highlighted the importance of a comprehensive review of facts and consistency in penalty imposition across multiple assessment years.