2017 (12) TMI 473 - AT - Income Tax

Penalty u/s. 271(1)(c) - Survey operations u/s.133A(1) conducted simultaneously in the premises of some of the members of the group and Assessment u/s.153A(1)(b) completed - undisclosed income was declared by the appellant in the statement recorded during search and the same was also disclosed in the return filed pursuant to notice issued under section 153A - Held that - We find that in the case of Alok Bhandar 2017 (9) TMI 954 - ITAT DELHI under similar circumstances held that here cannot be any dispute to the fact that once a return is filed pursuant to notice under section 153A, the same is treated as return filed under section 139 of the Act refer clause (a) of section 153A(l) . Further, concealment/ furnishing of inaccurate particulars of income/undisclosed income, has to be necessarily seen vis-a-vis return filed by the appellant Once, income it is declared which is accepted as such under section 139 r.w.s. 153A of Act, then, the question of there being concealment/ furnishing of inaccurate particulars of income/undisclosed income, does not arise at all. In the present case, the entire undisclosed income has been offered for tax by the appellant-company in the return income, which was subject matter of assessment before assessing officer. The return filed by the appellant has been accepted as such by your assessing officer, without any variation. Therefore, in the absence of any undisclosed income being found in the assessment vis-a-vis the return filed, the issue of imposition of penalty does not, arise. - Decided in favour of assessee.

Summary

Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act.
2. Applicability of law for imposing penalty under Section 271(1)(c) at the time of filing the original return.
3. Retrospective effect of Explanation 5A of Section 271(1)(c) inserted by the Finance Act, 2009.

Issue-wise Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c) of the Income Tax Act:

The primary issue in this case is the imposition of a penalty amounting to Rs. 2,36,000/- under Section 271(1)(c) of the Income Tax Act. The penalty was levied by the Assessing Officer following a search and seizure operation conducted at the premises of the Bestech group, which included the assessee. The assessment was completed on a total income of ?3,25,98,240/- and the penalty proceedings culminated in the imposition of the penalty at the minimum rate of 100%.

The Tribunal noted that in similar cases involving members of the same group, such as Alok Bhandari, Rajendra Bhandari, and M/s Bestech Hospitalities Pvt. Ltd., the penalty under Section 271(1)(c) had been deleted. The Tribunal relied on these precedents to conclude that the issue in dispute was squarely covered in favor of the assessee.

2. Applicability of Law for Imposing Penalty under Section 271(1)(c) at the Time of Filing the Original Return:

The assessee argued that the law applicable for imposing the penalty under Section 271(1)(c) is the law in force at the time of filing the original return. In this case, the original return was filed on 11.11.2008, while the Finance Act (No. 2) of 2009, which inserted Explanation 5A to Section 271(1)(c) with retrospective effect from 1.6.2007, came into effect later.

The Tribunal agreed with the assessee's contention, emphasizing that the law prevailing on the date of filing the return is applicable for the imposition of penalty. The Tribunal cited the case of Alok Bhandari, where it was held that once a return is filed pursuant to notice under Section 153A, it is treated as a return filed under Section 139 of the Act. The penalty for concealment or furnishing inaccurate particulars of income has to be seen vis-a-vis the return filed by the appellant. Since the income was declared and accepted under Section 139 r.w.s. 153A of the Act, the question of concealment or furnishing inaccurate particulars does not arise.

3. Retrospective Effect of Explanation 5A of Section 271(1)(c) Inserted by the Finance Act, 2009:

The Revenue argued that Explanation 5A to Section 271(1)(c) of the Act, made effective retrospectively from 1.6.2007, justified the imposition of the penalty. However, the Tribunal noted that the original return of income in the instant case was filed before the return filed in the case of Alok Bhandari, where the Tribunal had quashed the penalty under Section 271(1)(c).

The Tribunal emphasized that the deeming fiction enacted in Explanation 5A as on the statute on 03.03.2009 (the date of filing the return of income under Section 153A) is not applicable to the facts of the appellant-company. The Tribunal also cited several judicial precedents, including Prem Arora vs. DCIT, CIT vs. SAS Pharmaceuticals, and others, to support the view that penalty cannot be imposed unless there is actual concealment or non-disclosure of particulars of income.

Conclusion:

The Tribunal concluded that since the facts and circumstances of the instant case are identical to those in the case of Alok Bhandari, the penalty under Section 271(1)(c) of the Act should be canceled. The Tribunal allowed the appeal of the assessee and quashed the penalty.

Order:

The appeal of the assessee is allowed, and the penalty under Section 271(1)(c) of the Act is canceled. The order was pronounced in the open court on 07/12/2017.