2018 (5) TMI 1539 - AT - Income Tax

Penalty levied u/s 271(1)(c) - addition on account of Income added during the course of survey as regards difference in Stock valuation - Held that - Unless it is found that there is actually a concealment or non-disclosure of the particulars of income penalty cannot be imposed. There is no such concealment or non-disclosure as the assessee had made a complete disclosure in the income-tax return and offered the surrendered amount for the purposes of tax. In absence of any satisfaction recorded by AO while passing the assessment order that there was non-disclosure of income offered during the survey proceeding, no penalty for concealed income is leviable. The income was included in the return of income by increasing the closing stock, which resulted, increased of GP to 14%. Decision in case of MAK Data (2013 (11) TMI 14 - SUPREME COURT) relied by ld CIT(A) is not applicable on the facts of the present case - Decided in favour of assessee.

Summary

Issues:
- Confirmation of penalty under section 271(1)(c) for concealment of income during survey
- Consideration of written submissions by the CIT(A)
- Appreciation of particulars as per section 271(1)(c) of the Income Tax Act
- Applicability of Supreme Court judgment in M/s Mak Data Pvt. Ltd v. CIT
- Failure to consider the difference in the return of income filed by the appellant

Analysis:
1. The appeal challenged the confirmation of a penalty under section 271(1)(c) of the Income Tax Act for concealing income during a survey. The appellant disputed the levy of penalty amounting to ?1,275,802 due to differences in stock valuation discovered during the survey. The CIT(A) confirmed the penalty, leading to the appeal.

2. The brief facts revealed that a survey was conducted at the appellant's premises, resulting in the declaration of additional income. The appellant filed the return of income, reflecting the increased closing stock and gross profit. The Assessing Officer initiated the penalty under section 271(1)(c) based on discrepancies in purchases and declared income. The penalty was levied at 100% of the tax sought to be evaded, totaling ?12,75,802.

3. During the proceedings, the appellant argued that no concealment or inaccurate particulars were furnished, as the additional income was voluntarily disclosed during the survey. The Assessing Officer did not dispute the declared gross profit. In contrast, the Revenue contended that the appellant admitted to concealing stock only when confronted during the survey.

4. The Tribunal considered the submissions and found no dispute regarding the survey or the declared stock. The Assessing Officer did not record satisfaction of inaccurate particulars or concealed income during the assessment. The penalty was imposed without clear findings of non-disclosure or inaccuracies in the return.

5. The Tribunal further noted that the CIT(A) confirmed the penalty based on a Supreme Court judgment, which was deemed inapplicable to the present case. The appellant's voluntary disclosure and inclusion of additional income in the return were crucial factors. As per legal precedents, strict interpretation of penalty provisions was emphasized, necessitating clear evidence of concealment or non-disclosure.

6. Ultimately, the Tribunal allowed the appeal, stating that in the absence of recorded satisfaction by the Assessing Officer regarding non-disclosure during the survey, the penalty for concealed income was unjustified. The unique circumstances of the case, including voluntary disclosure and inclusion in the return, led to the deletion of the penalty levied by the Assessing Officer.

This detailed analysis highlights the key legal arguments, factual background, and the Tribunal's decision in the case concerning the confirmation of a penalty for concealing income during a survey.