2016 (12) TMI 293 - AT - Income Tax

Penalty under Section 271 (1) ( c) - Bogus purchases - voluntary disclosure by assessee - Held that - After going through the statement so recorded during survey, the revised return filed by the assessee offering the income to stop the litigation and to purchase piece of mind and the findings given by the AO while framing assessment under Section 143(3) read with Section 147 wherein he has accepted the purchases so made. We found that in present case also assessee explain the genuineness of purchases. But assessee voluntarily offered @50% of purchases as additional income just to buy peace and avoid litigation. The same accepted by AO. It is clear from the above order of the AO that there was neither concealment of income nor furnishing of inaccurate particulars of income. Since, in the instant case the assessee has not concealed any particulars of the income, nor has furnished inaccurate particulars of such income and has even disclosed and submitted all the particulars correctly. Therefore, levy of penalty was not justified in all the years under consideration. - Decided in favour of assessee

Summary

Issues Involved:
1. Imposition of penalty under Section 271(1)(c) for alleged concealment of income.
2. Genuineness of purchases from certain suppliers.
3. Voluntary disclosure of additional income by the assessee.
4. Application of judicial precedents to the case.

Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c):
The main issue pertains to the imposition of penalty under Section 271(1)(c) for alleged concealment of income by the assessee. The penalty was levied by the AO on the grounds that the assessee had concealed particulars of income by not disclosing certain purchases as genuine in their original return.

2. Genuineness of Purchases:
During a survey at the assessee's business premises, it was alleged that purchases from M/s. Thane Steel Pvt. Ltd., Manish & Barkha, and Parshva & Co. were not genuine. The assessee, represented by Mr. Kishore Golani, offered 50% of the purchases as additional income due to discrepancies in documentation, not because the purchases were bogus. The AO, after independent verification, accepted the additional income offered by the assessee.

3. Voluntary Disclosure of Additional Income:
The assessee voluntarily revised its return of income to include the additional income offered during the survey. The revised return was filed before the issuance of notice under Section 148, and the AO accepted the revised income after verification. The assessee's explanation for the additional income was due to lapses in documentation following the demise of key partners, not due to any intention to conceal income.

4. Application of Judicial Precedents:
The Tribunal referred to several judicial precedents, including the Bombay High Court's decision in Hiralal Doshi, which held that voluntary disclosure of income to avoid litigation does not automatically justify the imposition of penalty under Section 271(1)(c). The Tribunal also cited the case of Vipul Life Sciences Ltd., where it was held that no penalty can be imposed if the income surrendered is accepted by the AO without any separate addition.

Conclusion:
The Tribunal concluded that the penalty under Section 271(1)(c) was not justified as the assessee had not concealed any particulars of income nor furnished inaccurate particulars. The additional income was offered voluntarily due to procedural lapses and to avoid litigation. The AO's acceptance of the revised return and the genuineness of the purchases further supported the assessee's case. The appeals filed by the assessee were allowed, and the penalty orders were set aside.