2019 (6) TMI 423 - AT - Income Tax

Penalty u/s 271(1)(c) - during the course of assessment proceedings for AY 2010-11 it was noticed by the AO that the compensation received by assessee on cancellation of booking of fiat was not disclosed in AY 2007- 08. The assessee has admitted this and paid tax and interest and submitted a revised return along with letter dated 23-03-2013. Since the revised return was out of time notice u/s.148 was issued - HELD THAT - The said section 271(1)(c) provides for levy of penalty for concealment and furnishing of inaccurate particulars of income. In the present case we note that the assessee has duly submitted the revised return before the issue of notice u/s. 148. That the assessee has also paid taxes accordingly. The assessment has been made on the basis of sums already declared by the assessee. In these circumstances in our considered opinion assessee cannot be said to have acted contumacious manner so as to warrant levy of penalty u/s. 271(1)(c) of the Act. We also draw support from case of Hindustan Steel Ltd. Vs. State of Orissa 1969 (8) TMI 31 - SUPREME COURT , wherein as expounded that the authority may not levy penalty if the conduct of the assessee has not been found to be contumacious. Accordingly in the background of the aforesaid discussion and precedent, we set aside the orders of the authorities below and delete the levy of penalty. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty for non-disclosure of compensation received on cancellation of flat booking in the original return for A.Y. 2007-08.

Analysis:
The appellant contested the penalty imposed by the Assessing Officer (AO) for not disclosing the compensation received on the cancellation of a flat booking in the original return for A.Y. 2007-08. The appellant argued that a revised return disclosing the alleged undisclosed income was filed physically along with a letter during the assessment for A.Y. 2010-11. The appellant also claimed that the AO had assured not to reopen the assessment if the revised return was filed. Furthermore, the appellant highlighted their dependence on a consultant for tax compliance due to financial constraints and limited education. The AO initiated penalty proceedings under section 271(1)(c) for non-compliance with the notice. The AO observed that the undisclosed income was detected during the assessment for A.Y. 2010-11 and was not voluntarily disclosed by the appellant. Consequently, a penalty of ?2,04,855 was levied, representing 100% of the tax sought to be evaded.

The appellant appealed to the CIT(A), who upheld the AO's decision. However, the ITAT Mumbai, comprising Shri Shamim Yahya (AM) and Shri Ravish Sood (JM), reviewed the case. The ITAT noted that the appellant had disclosed the compensation amount through a revised return before the notice under section 148 was issued. The appellant had also paid the taxes accordingly. The assessment was based on the amounts already declared by the appellant. Considering these facts, the ITAT determined that the appellant did not act contumaciously to warrant the penalty under section 271(1)(c) of the Income Tax Act. Citing the decision in Hindustan Steel Ltd. Vs. State of Orissa 83 ITR 26, the ITAT emphasized that penalty should not be levied if the conduct of the assessee is not contumacious. Therefore, in light of the circumstances and legal precedent, the ITAT set aside the lower authorities' orders and annulled the penalty.

In conclusion, the ITAT allowed the appeal filed by the assessee, thereby deleting the penalty imposed. The judgment was pronounced on 3.5.2019 by the ITAT Mumbai.