2018 (12) TMI 192 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - TDS was not claimed in the original return of income - Held that - The declaration, if any, made during the course of assessment proceedings, once the proceedings have been commenced and the assessee is confronted with the details in Form No.26AS statement, then such a declaration cannot be said to be voluntary and cannot discharge the assessee from his onus. We find no merit in the plea of assessee in this regard. He has time and again pointed out that it was by an inadvertent mistake the said income was not declared but keeping in mind the declaration of assessee in assessment year 2010-11 and when compared to the declaration of income in assessment year 2011-12, it is not case wherein the business income has arisen for the first time. Similar income was being carried on in earlier years, even receipts were similarly earned and the assessee had declared the business income in earlier years, then non-declaration of said business income in the year under consideration makes the assessee liable to charge of concealment i.e. non furnishing of correct particulars of income. In the case of assessee, it is not salary which was not declared but it was business receipts of assessee on which TDS was deducted and total receipts were not taxable in the hands of assessee. The claim of assessee was as per Income & Expenditure Account which needs to be verified and then net income was to be added in the hands of assessee. In such circumstances, it cannot be said to be a case of inadvertency. - Decided against assessee.

Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Whether the additional income offered by the assessee was voluntary and bona fide.
3. The impact of TDS on the penalty proceedings.
4. Applicability of the Supreme Court's decision in MAK Data (P.) Ltd. Vs. CIT.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c):
The primary issue is the levy of penalty amounting to ?4,39,162/- under section 271(1)(c) of the Income-tax Act, 1961. The assessee had declared a total income of ?4,52,640/- for the assessment year 2011-12. During scrutiny, the Assessing Officer (AO) found discrepancies between the TDS as per Form 26AS and the TDS declared in the return. The AO noted that the assessee had not declared business income, interest, dividend income, and short-term capital gains in the return. Consequently, the AO initiated penalty proceedings for concealing particulars of income.

2. Voluntary and Bona Fide Nature of Additional Income:
The assessee argued that the additional income was offered voluntarily and bona fide during the assessment proceedings. The assessee contended that the omission was due to an inadvertent mistake and not with an intention to evade tax. However, the AO and CIT(A) held that the additional income was disclosed only after being confronted by the AO, and thus, it was not a voluntary disclosure. The Tribunal upheld this view, stating that the onus was on the assessee to declare the income in the return or a revised return within the stipulated time. The declaration during assessment proceedings, after being confronted, was not considered voluntary.

3. Impact of TDS on Penalty Proceedings:
The assessee claimed that no further tax was payable after adjusting the TDS, and hence, there was no tax evasion. The Tribunal rejected this argument, stating that the deduction of TDS does not absolve the assessee from the obligation to declare the total income earned. The Tribunal emphasized that the plea of no tax due after including the concealed income cannot absolve the assessee from the levy of penalty for concealment.

4. Applicability of Supreme Court's Decision in MAK Data (P.) Ltd. Vs. CIT:
The CIT(A) and the Tribunal relied on the Supreme Court's decision in MAK Data (P.) Ltd. Vs. CIT, which held that voluntary disclosure does not release the assessee from the mischief of penal proceedings under section 271(1)(c). The Supreme Court emphasized that the Assessing Officer should not be swayed by the plea of voluntary disclosure, buy peace, avoid litigation, or amicable settlement to explain away the assessee's conduct. Applying this ratio, the Tribunal held that the assessee's disclosure during the assessment proceedings, after being confronted, was not voluntary and upheld the penalty.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the penalty of ?4,39,162/- levied under section 271(1)(c) of the Income-tax Act, 1961. The Tribunal concluded that the additional income was not voluntarily disclosed, and the plea of no tax due after TDS adjustment did not absolve the assessee from the penalty for concealment. The reliance on the Supreme Court's decision in MAK Data (P.) Ltd. Vs. CIT was deemed appropriate, reinforcing the penalty's validity.

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