2019 (2) TMI 638 - AT - Income Tax

Penalty u/s 271(1)(c) - disclosure of income being made as a result of survey proceeding and not voluntary - Held that - The assessee s plea that declaration was made by revised return or that the assessee asked for immunity from penalty for income declared in survey by and under letter dated 18.05.2010 or that disclosure was made to purchase peace and to avoid litigation or that the revised return was filed before the issuance of notice u/s 148 or that there is no addition on the income declared in revised return and therefore penalty under section 271(1)(c) cannot be levied is not tenable in law. Apart from that, voluntary disclosure does not release the assessee from the mischief of penalty proceeding. Statute does not recognize those type of defenses under the explanation of Section-1 to Section 271(1)(c) of the Act. All such issues have already been decided by the Hon ble Apex Court in the judgment of MAK Data Pvt. Ltd.-vs-CIT 2013 (11) TMI 14 - SUPREME COURT It appears from the records that the appellant failed to prove the genuineness and/or creditworthiness and identity of the persons who had given share capital and premium. Moreso, had it been the intention of the appellant to disclose the income voluntarily then the assessee would have disclosed the same by filing the revised return before survey which proves inaccurate particulars were filed in order to conceal the income in the original return of income. Explanation 1A to Section 271(1)(c), therefore, is fully satisfied and thus ultimately penalty to the tune of ₹ 5,50,000/- has been levied upon the assessee for concealment of total income of ₹ 1,60,00,000/-. Taking into consideration the entire aspect of the matter specially the conduct of the assessee and the intention as evident from the series of events and in the light of the judgment passed by the Hon ble Apex Court as cited above we find that the authorities below rightly applied the ratio of said judgment in the case in hand and levied penalty. We find no ambiguity in confirming the said penalty - decided in favour of revenue

Summary

Issues Involved:
1. Legitimacy of penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. Voluntariness and timing of income disclosure by the assessee.
3. Applicability of statutory defenses and precedents in penalty proceedings.

Detailed Analysis:

1. Legitimacy of Penalty Under Section 271(1)(c):
The appeals concern the legitimacy of penalties imposed under section 271(1)(c) of the Income Tax Act, 1961. The assessee filed a revised return declaring additional income following a survey by the Investigation Wing, which revealed undisclosed income. The penalty was levied on the grounds that the disclosure was not voluntary but a result of the survey. The authorities concluded that had the survey not occurred, the income would not have been disclosed, thus justifying the penalty.

2. Voluntariness and Timing of Income Disclosure:
The assessee argued that the revised return was filed voluntarily before the issuance of notice under section 148 and claimed immunity from penalty based on assurances from survey officers. However, the authorities found that the disclosure was made only after the survey and was not voluntary. The revised return was filed to avoid litigation and not out of genuine intent to disclose income. The Tribunal noted that the original return did not disclose the income, indicating an attempt to conceal it.

3. Applicability of Statutory Defenses and Precedents:
The Tribunal referred to the Supreme Court judgment in MAK Data Pvt. Ltd. vs. CIT, which clarified that voluntary disclosure does not absolve an assessee from penalty proceedings. The Court emphasized that explanations such as "voluntary disclosure" or "buying peace" do not negate the presumption of concealment under Explanation 1 to Section 271(1)(c). The burden is on the assessee to provide a bona fide explanation, which was not met in this case. The Tribunal found that the assessee's conduct fell under the purview of Explanation 1A to Section 271(1)(c), justifying the penalty for concealment of income.

Conclusion:
The Tribunal upheld the penalty imposed by the authorities, finding no ambiguity in the application of the law and confirming the penalty based on the assessee's conduct and the timing of the disclosure. The appeals were dismissed, reinforcing that voluntary disclosure post-survey does not exempt an assessee from penalty under section 271(1)(c).

Order Pronounced:
The order was pronounced in Open Court on 08/02/2019, dismissing the assessee's appeals.