2017 (9) TMI 488 - HC - Income Tax

Levy of penalty u/s 271(1)(c) - income surrendered during Survey - receipt of cash by way of donations - Held That - Tribunal is of view that penalty u/c 271(1)(c) is imposed only when there is concealment of income and furnishing inaccurate particulars of income.But in present case assessee has filed full particulars of income in return u/s 139 and within time and also paid tax. - Decision of the Supreme Court in the case of CIT Ahmedabad Vs. Reliance Petroproducts (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT followed wherein it has been held that if no information given in the return was found to be incorrect or inaccurate and the full particulars are disclosed the assessee cannot be held guilty for the purposes of most punishment under Section 271(1)(c) of the Act. - Decided in favor of assessee.

Summary

Issues:
Assessment year 2007-08, Surrender of cash donations, Penalty under Section 271(1)(c) of the Income Tax Act, 1961, Justification of penalty deletion by ITAT.

Analysis:
The dispute in the present appeal revolves around the assessment year 2007-08, where a survey conducted in 2006 revealed a cash donation of ?1,00,00,000 utilized for building renovation. The Assessing Authority imposed a penalty under Section 271(1)(c) of the Act due to the surrender of this amount, considering it as non-disclosure and furnishing inaccurate particulars. The Commissioner of Income Tax set aside the penalty order, which was confirmed by the Income Tax Appellate Tribunal (ITAT).

Four questions of law were raised in the appeal, all challenging the deletion of the penalty by ITAT under Section 271(1)(c). The crux of the matter was whether the Tribunal was justified in deleting the penalty despite the cash donation disclosure being made under compulsion during the survey, leading to non-disclosure and inaccurate particulars.

The ITAT's decision was based on the Supreme Court ruling in CIT Ahmedabad Vs. Reliance Petroproducts (P) Ltd., emphasizing that if no incorrect or inaccurate information is provided in the return and full particulars are disclosed, penalty under Section 271(1)(c) cannot be imposed. In this case, the assessee disclosed the cash donation in the return filed within the prescribed time, paying tax on it, and no incorrect particulars were furnished.

Therefore, the High Court upheld the ITAT's decision, stating that the assessee was not guilty of furnishing inaccurate particulars or non-disclosure, as the disclosure of the cash donation was made correctly in the return. Consequently, the penalty deletion by ITAT was deemed justified under the law and facts of the case, leading to the dismissal of the appeal.