2018 (2) TMI 979 - HC - Income Tax

Penalty u/s 271(1)(c) - concealment of income on the amount offered in the returns filed under section 153 (A) - undisclosed income - Held that - We find that all the three conditions in the present case have been fulfilled because after the search and seizure, the assessee had admitted in his statement that income has been derived from the land deals in the present case and thereafter, he filed returns in pursuance of the notice issued to him under section 153 (A) of the Income Tax Act by declaring the same in the returns of income and further, the assessee had paid tax together with the interest on the undisclosed income thereafter. We further find that assessee had already paid tax along with interest, although belatedly, but there is no limitation prescribed for the same under Clause 2 of Explanation 5 to Section 271 (1) (c) as held by the Hon ble Supreme Court in the case of Gebilal Kanhaialal HUF 2012 (9) TMI 297 - SUPREME COURT). - Decided in favour of assessee

Summary

Issues:
Challenge to ITAT order dismissing appeals against CIT(A) orders imposing penalties under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The respondent, a property dealer, filed income tax returns for 2006-07 declaring income but faced penalty proceedings for alleged concealment. The Assessing Officer imposed penalties for 2006-07 and 2007-08. The respondent appealed to the CIT(A), who, relying on the Supreme Court's decision in ACIT vs. Gebilal Kanhaialal HUF, held that the conditions under Clause 2 of Explanation 5 to Section 271(1)(c) were met by the respondent. These conditions included admitting unaccounted assets, specifying the income's source, and paying tax with interest. The ITAT upheld the CIT(A)'s decision, prompting an appeal by the revenue.

The revenue contended that the respondent's disclosure was not voluntary, as it occurred post a search and seizure operation. They argued that the true income was not disclosed initially and would have remained concealed without the search. The revenue claimed a substantial question of law for the court's consideration.

The High Court reviewed the case and found that the respondent met all conditions for immunity from penalties under Clause 2 of Explanation 5. The respondent admitted income post the search, specified its source, and paid taxes with interest. The court noted that the respondent's belated tax payment did not violate the clause, as per the Supreme Court's ruling in Gebilal Kanhaialal HUF. Consequently, the court upheld the decisions of the lower authorities, finding no need for interference. It concluded that no substantial question of law arose, dismissing the appeals.