2019 (2) TMI 281 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - additions resulting from search and seizure action u/s. 132(1) - addition on Advances from Customers - Held that - In the present case as has been pointed by the assessee the amounts were duly reflected in the Balance Sheet under the head Advances from Customers and Capital Account . This fact has not been disputed by the Revenue. Thus, it cannot be said that there was a concealment of income. The assessee purportedly offered the amount as additional income as the assessee failed to substantiate the source of amounts. Hence, is a case of furnishing inaccurate particulars and not concealment . Assessing Officer in assessment order while recording satisfaction for initiating penalty has invoked the charge of concealment of income within the meaning of section 5A to Section 271(1)(c) and has levied penalty for the similar reasons. Since, wrong charge has been invoked for recording of satisfaction and levy of penalty, the penalty is not sustainable. It is a well settled law that penal provisions are to construed strictly and there is no margin of error when penalties are to be levied. Thus, in our considered view penalty on the addition is bad in law and deserves to be deleted. Levy of penalty u/s. 271AAA - Held that - AR has not been able to show any perversity in the order of Commissioner of Income Tax (Appeals) in partly confirming levy of penalty u/s. 271AAA of the Act. No reason to interfere with the well reasoned order of Commissioner of Income Tax (Appeals). Accordingly, the same is upheld and the appeal of assessee is dismissed.

Summary

Issues Involved
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for the assessment years 2004-05 and 2005-06.
2. Levy of penalty under Section 271AAA of the Income Tax Act, 1961 for the assessment year 2010-11.

Detailed Analysis

1. Levy of Penalty under Section 271(1)(c) for Assessment Years 2004-05 and 2005-06

Background:
The assessee filed appeals against the orders of the Commissioner of Income Tax (Appeals)-I, Nashik, confirming the levy of penalty under Section 271(1)(c) for the assessment years 2004-05 and 2005-06. The penalties were based on additions resulting from a search and seizure action under Section 132(1) of the Act.

Facts:
- The search and seizure action led to the discovery of certain books of account and documents.
- The assessee declared additional income in the return filed under Section 153A.
- The Assessing Officer initiated penalty proceedings for 'concealing the particulars' of income under Explanation 5A to Section 271(1)(c).

Assessee's Argument:
- The penalty was levied on the wrong charge of 'concealment of particulars of income.'
- The amounts were already reflected in the Balance Sheet as 'Advances from Customers' and 'Gifts from Relatives.'
- The correct charge should have been 'furnishing inaccurate particulars of income.'

Tribunal's Findings:
- The Tribunal admitted the additional ground raised by the assessee, citing the Supreme Court's decision in NTPC Vs. Commissioner of Income Tax.
- The amounts were already reflected in the Balance Sheet, thus it was not a case of concealment.
- The Tribunal referenced the Supreme Court's decision in T. Ashok Pai Vs. Commissioner of Income Tax, which distinguishes between 'concealment of income' and 'furnishing inaccurate particulars of income.'
- The Tribunal found that the penalty was levied on the wrong charge and thus was unsustainable.

Conclusion:
- The penalty on the addition of ?10,35,950/- for the assessment year 2004-05 was deleted.
- Similarly, for the assessment year 2005-06, the penalty on the additional income of ?11,53,000/- was deleted.

2. Levy of Penalty under Section 271AAA for Assessment Year 2010-11

Background:
The assessee appealed against the order confirming the levy of penalty under Section 271AAA for the assessment year 2010-11.

Facts:
- The Assessing Officer levied a penalty of ?1,91,815/- on a total undisclosed income of ?19,18,149/-.
- The Commissioner of Income Tax (Appeals) restricted the penalty to ?56,120/- on an addition of ?5,61,199/-.

Assessee's Argument:
- The assessee reiterated the submissions made before the Commissioner of Income Tax (Appeals).

Department's Argument:
- The Department supported the impugned order, stating that the Commissioner of Income Tax (Appeals) had already been considerate in restricting the penalty.

Tribunal's Findings:
- The Tribunal did not find any reason to interfere with the well-reasoned order of the Commissioner of Income Tax (Appeals).

Conclusion:
- The penalty under Section 271AAA of ?56,120/- was upheld, and the appeal of the assessee was dismissed.

Summary
- The appeals of the assessee for the assessment years 2004-05 and 2005-06 (ITA Nos. 1162 & 1163/PUN/2015) were allowed, resulting in the deletion of penalties under Section 271(1)(c).
- The appeal for the assessment year 2010-11 (ITA No. 1164/PUN/2015) was dismissed, upholding the penalty under Section 271AAA.