2017 (5) TMI 1105 - AT - Income Tax

Penalty u/s. 271(1)(c) - addition being business income offered by the appellant during the course of survey operation - CIT-A deleted the penalty - Held that - The assessee has surrendered ₹ 30 lacs vide its letter dated 13.3.2007 addressed to the AO, after survey u/s. 133A carried out on the business premises of the assessee on 12.2.2007, as per record available with us. We have not seen that assessee has any retraction from its surrender of ₹ 30 lacs made vide his letter dated 13.3.2007 by mentioning any plausible reasons. More seriously, the assesse has not shown the amount of ₹ 30 lacs on account of surrender in the return of income and offer for taxation, neither any mention has been made nowhere in the return of income or accounts explaining the return. Only the AO has noticed this mistake committed by the assessee in the return of income. AO asked the assessee vide his Order sheet entry dated 10.8.2009 and assessee filed its reply to the same vide his letter dated 31.8.2009 by stating that we have no objection if the assessment for the financial year 2006-07 is made considering the taxable profit at ₹ 30 lacs (surrendered during survey) plus average taxable profit for the last two preceding financial years. As per the penalty order the assessee has written a letter dated 13.3.2007 offering the surrender amount of ₹ 30 lacs on account of discrepancy in the stocks, purchases and expenses etc. and other documents. We are of the view that Ld. CIT(A) has not considered these aspects in the impugned order while deleting the penalty in dispute and passed a non-speaking order. Therefore, the impugned order is not sustainable in the eyes of law and the same is set aside. This matter requires thorough investigation as mentioned above, at the level of the Ld. CIT(A) - Decided in favour of revenue for statistical purposes

Summary

Issues:
1. Validity of the order of the Ld. CIT(A).
2. Deletion of penalty imposed under section 271(1)(c) on surrendered income.
3. Consideration of appellant's submission regarding surrender of income under pressure.
4. Failure to consider the order passed by the AO.
5. Request for adding, allowing, or amending grounds of appeal.

Analysis:

Issue 1:
The Revenue appealed against the order of the Ld. CIT(A) on various grounds challenging its validity. The Ld. CIT(A) had upheld the AO's assessment order with a minor relief granted to the Assessee.

Issue 2:
The penalty imposed under section 271(1)(c) on the surrendered income of ?30,00,000 was deleted by the Ld. CIT(A). The AO had added this amount to the Assessee's income during assessment. The Ld. CIT(A) held that the penalty was not justified solely based on the failure to include the surrendered income in the return.

Issue 3:
The Ld. CIT(A) considered the appellant's submission that the income was surrendered under pressure during the survey. However, the AO imposed the penalty without adequately addressing this aspect. The Ld. CIT(A) found the penalty not applicable without specific details on discrepancies found during the survey.

Issue 4:
The Revenue contended that the Ld. CIT(A) erred in passing the order without considering the AO's assessment order. The Tribunal found that the Ld. CIT(A) did not provide a detailed explanation for deleting the penalty, leading to the order being set aside for a thorough investigation.

Issue 5:
The appellant requested to add, allow, or amend any grounds of appeal during the hearing. However, the Tribunal noted the repeated absence of the Assessee during the proceedings, indicating a lack of interest in pursuing the case.

The Tribunal allowed the Revenue's appeal for statistical purposes, setting aside the Ld. CIT(A)'s order. The Tribunal directed the Ld. CIT(A) to reconsider the issues and pass a detailed order after hearing the parties, emphasizing the need for a comprehensive investigation.