2018 (6) TMI 299 - HC - Income Tax

Penalty u/s 271(1)(c) - revision of the assessment u/s 264 - Held that - It is a settled legal position that the burden is on the assessee to prove non-concealment against additional income disclosure in the revised return. In the instant case, no explanation was offered for not having disclosed income earlier. Thus, for the above reasons, we find that the order passed by the Tribunal was perfectly correct and the questions of law framed for consideration, are to be answered against the assessee and in favour of the Revenue. Revision 264 - Held that - Though there is an observation regarding the order passed by the ITAT confirming the penalty proceedings in the Section 264 order, we find that is not the reason for rejecting the revision petition, but on facts, the Commissioner has recorded findings and confirmed the order passed by the Assessing Officer. We find there are no good grounds made out by the assessee to dislodge the factual findings recorded by the Commissioner in the impugned order under Section 264 of the Act

Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961.
2. Validity of the revised returns filed by the assessee.
3. Rejection of the revision petitions under Section 264 of the Income Tax Act, 1961.
4. Whether the Tribunal was correct in confirming the levy of penalty.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c):
The assessee challenged the levy of penalty for the assessment years 2001-02 and 2002-03. The penalty was imposed following a survey conducted under Section 133A, leading to discrepancies in the balances of four major suppliers. The assessee claimed that the additional income was offered to purchase peace with the department. The Tribunal and the Commissioner of Income Tax (Appeals) upheld the penalty, citing that the revised returns filed by the assessee were not voluntary but made under the constraints of exposure to adverse action by the department. The Supreme Court's decision in Mak Data (P) Ltd. vs. CIT was referenced, emphasizing that voluntary disclosure to avoid litigation does not exempt the assessee from penalty proceedings.

2. Validity of the Revised Returns Filed by the Assessee:
The assessee filed revised returns after the survey, admitting additional income. The Tribunal rejected the contention that the revised returns were filed based on an assurance from the department that no penalty would be levied. The Tribunal held that the revised returns were not voluntary as they were filed after the department detected non-disclosure and concealment of income. The Tribunal concluded that the revised returns were a clear admission of concealed income, justifying the imposition of penalty.

3. Rejection of the Revision Petitions under Section 264:
The assessee's revision petitions under Section 264 were rejected by the Commissioner of Income Tax. For the assessment year 2001-02, the Commissioner noted that the addition was made after the assessee offered the same for taxation and that the trade creditors were not traceable. For the assessment year 2002-03, the Commissioner rejected the contention that the additional income was declared without proper reconciliation, noting that the declaration was based on documents discovered during the survey. The Commissioner concluded that the additional income was offered consciously, and the order imposing penalty was confirmed by the Tribunal.

4. Tribunal's Confirmation of the Levy of Penalty:
The Tribunal upheld the levy of penalty, rejecting the assessee's arguments that the revised returns were voluntary and that there was an assurance from the department against penalty. The Tribunal emphasized that the revised returns were filed after the department found incriminating evidence during the survey. The assessee's contention that the additional income pertained to accumulated differences over several years was also rejected. The Tribunal concluded that the materials recovered during the survey revealed concealment of income, justifying the penalty.

Conclusion:
The High Court dismissed the appeals and writ petitions filed by the assessee, upholding the orders of the Tribunal and the Commissioner of Income Tax. The Court found that the revised returns were not voluntary and were filed after the department detected non-disclosure and concealment of income. The Court also upheld the rejection of the revision petitions under Section 264, noting that the additional income was offered consciously based on documents discovered during the survey. The substantial questions of law were answered against the assessee and in favor of the Revenue.

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