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2019 (4) TMI 1666 - AT - Income TaxPenalty 271(1)(c) - case selected for scrutiny under CASS with the reason suspicious Long Term Capital Gain - assessee suo moto surrendered an amount before any of the authorities of the Income Tax pointed out any undisclosed income of the assessee - furnishing of inaccurate particulars of income - HELD THAT - The assessee suo moto surrendered an amount of ₹ 37 lacs and paid the due tax alongwith interest thereon much before the Investigation Wing or the A.O. pointed out any discrepancy about the undisclosed or concealed income of the assessee. Considering all the impugned penalty levied by the A.O. u/s 271(1)(c) of the Act and sustained by the CIT(A) was not justified. Accordingly, the same is deleted. This finding has been given by considering the peculiar facts of the present case, therefore, it is made clear that it may not be considered as a precedent in the other cases. - Appeal of the assessee is allowed.
Issues Involved:
1. Sustenance of penalty levied under Section 271(1)(c) of the Income Tax Act, 1961. 2. Voluntary surrender of income and its implications on penalty. 3. Investigation reports and their impact on penalty proceedings. 4. Judicial precedents and their applicability to the case. Detailed Analysis: 1. Sustenance of Penalty Levied under Section 271(1)(c): The primary issue in this case revolves around the sustenance of a penalty amounting to ?12,50,630/- levied by the Assessing Officer (A.O.) under Section 271(1)(c) of the Income Tax Act, 1961. The A.O. initiated penalty proceedings on the grounds of furnishing inaccurate particulars of income, following the assessee's surrender of ?37,00,000/- as Long Term Capital Gain (LTCG), which was claimed as exempt under Section 10(38) of the Act. 2. Voluntary Surrender of Income and its Implications on Penalty: The assessee contended that the surrender of ?37,00,000/- was voluntary and made to buy peace of mind and avoid litigation. The assessee argued that no inaccurate particulars of income were furnished, and the surrender was made before any specific detection by the Investigation Wing. The assessee cited judicial precedents, including the case of Rajiv Garg vs. Commissioner of Income-Tax, Karnal, to support the argument that voluntary surrender to avoid litigation should not attract penalty. 3. Investigation Reports and their Impact on Penalty Proceedings: The A.O. and the Commissioner of Income Tax (Appeals) [CIT(A)] relied on an investigation report that revealed the involvement of brokers and shell companies in providing bogus LTCG entries. The A.O. argued that the surrender was not voluntary but was made after the assessee became aware of the ongoing investigation. The CIT(A) sustained the penalty, noting that the surrender was made only after the assessee was aware that the Department had incriminating information. 4. Judicial Precedents and their Applicability to the Case: The assessee referred to several judicial pronouncements to argue against the penalty, including: - Rajiv Garg vs. Commissioner of Income-Tax, Karnal: The Tribunal held that additional income offered by the assessee was done in good faith, and the burden of proving concealment was not discharged by the Revenue. - Commissioner of Income-Tax vs. SAS Pharmaceuticals: The Delhi High Court held that penalty under Section 271(1)(c) could not be imposed if the income was voluntarily declared in the return. - Commissioner of Income-Tax vs. Careers Education and Infotech (P.) Ltd.: The Punjab and Haryana High Court held that surrender of income does not automatically imply concealment. - Commissioner of Income-Tax-II, Ludhiana vs. Rajnish Nath Aggarwal: The court held that penalty cannot be imposed merely because higher income was declared subsequently. Conclusion: The Tribunal, after considering the submissions and judicial precedents, concluded that the assessee's surrender of ?37,00,000/- was voluntary and made before any specific detection by the Department. The Tribunal noted that the assessee paid the due taxes and interest on the surrendered amount before any discrepancy was pointed out by the A.O. or the Investigation Wing. Therefore, the penalty levied under Section 271(1)(c) was not justified and was deleted. This decision was based on the peculiar facts of the case and was not intended to set a precedent for other cases. Result: The appeal of the assessee was allowed, and the penalty levied under Section 271(1)(c) was deleted.
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