2017 (5) TMI 347 - AT - Income Tax

Penalty under Section 271(1)(c) - disallowance u/s 40A(2)(a) - revised ROI filled after survey operation - Held that - It is an admitted fact that the assessee has filed revised return of income under Section 139(5) of the Act voluntarily disclosing all the income earned during the year under consideration. Other than the statutory disallowance of ₹ 5,43,708/- under Section 40A(2)(a) of the Act, the entire income disclosed by the assessee was accepted without any further addition. When the assessee has filed revised return within the statutory period, under Section 139(5) of the Act, this Tribunal is of the considered opinion that it cannot be said that the assessee has concealed any part of income or furnished any inaccurate particulars of income. The statutory provision allows the assessee to file revised return whenever there was omission to disclose the income which is otherwise taxable under the Income-tax Act. In this case, after the survey operation, the assessee found there was omission to disclose the income otherwise taxable under the Income-tax Act and accordingly filed revised return within the statutory period and offered the same for taxation. Therefore, this Tribunal is of the considered opinion that it is not a fit case for levy of penalty under Section 271(1)(c) of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
Confirmation of penalty under Section 271(1)(c) of the Income-tax Act, 1961 based on concealment of income or furnishing inaccurate particulars.

Detailed Analysis:

Issue 1: Confirmation of Penalty by Assessing Officer
The appeal was against the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961. The appellant argued that the penalty should not have been imposed as the Assessing Officer did not record any satisfaction during the survey operation or assessment proceedings regarding concealment of income or furnishing inaccurate particulars. The appellant relied on a judgment by the Delhi High Court to support the argument that unless the case falls within the scope of Section 271(1)(c), no penalty should be levied.

Issue 2: Filing of Revised Return
The appellant voluntarily filed a revised return declaring total income, which was accepted by the Assessing Officer with only a small disallowance under Section 40A(2)(a) of the Act. The appellant contended that since the return was accepted without further additions and disallowances, it cannot be said that inaccurate particulars were furnished or income was concealed. The appellant also cited a Tribunal decision where penalty was deleted based on similar facts.

Issue 3: Assessment of Concealment
During a survey, it was found that the assessee had not accounted for a part of its business turnover, generated unaccounted income through suppression of sales, and inflated purchases. The Revenue authorities concluded that the assessee had concealed income, leading to the penalty under Section 271(1)(c). However, the Tribunal analyzed the Delhi High Court's judgment, which emphasized that concealment or inaccurate particulars must be in the income-tax return filed by the assessee. The Tribunal found that since the revised return was voluntarily filed and accepted without further additions, there was no concealment or furnishing of inaccurate particulars.

Issue 4: Tribunal's Decision
The Tribunal considered both parties' submissions and the relevant material on record. It noted that the assessee had disclosed all income in the revised return, which was accepted except for a statutory disallowance. The Tribunal held that filing a revised return within the statutory period, disclosing previously omitted income, did not constitute concealment or furnishing inaccurate particulars. Referring to the Delhi High Court's judgment, the Tribunal concluded that the survey team's findings did not constitute a proceeding under the Income-tax Act. Therefore, the Tribunal set aside the orders of the lower authorities and deleted the penalty, as it was not a suitable case for levy under Section 271(1)(c) of the Act.

In conclusion, the Tribunal allowed the appeal, highlighting that the voluntary disclosure of income through a revised return and acceptance by the Assessing Officer without further additions did not warrant the imposition of a penalty for concealment or furnishing inaccurate particulars of income.