2019 (6) TMI 1091 - AT - Income Tax

Penalty u/s 271(1)(c) - whether penalty proceedings were initiated for furnishing inaccurate particulars of income whereas penalty was levied for concealment of income as well as for furnishing inaccurate particulars of income? - HELD THAT - There is no variation in the charge for levy of penalty and show cause notice issued for levy of penalty. Accordingly, the proposition laid down by the Coordinate Bench in the case of HPCL Mittal Energy Ltd. Vs ACIT 2018 (6) TMI 1554 - ITAT AMRITSAR will not help the assessee so as to persuade us to cancel the penalty so imposed. Accordingly, we hold that the penalty has been correctly levied in so far as the charge for initiation of penalty as well as charge while levying the penalty was same. Thus, we do not find any merit in the contention of the ld AR. With regard to merit of penalty so imposed u/s 271(1)(c) we found that there was survey at the business premises of the assessee wherein on the basis of incriminating documents so found, unaccounted sales was worked out. Reasonably the A.O. made addition with regard to profit earned on such unaccounted sales which has been confirmed by the CIT(A) and the Tribunal. There is no dispute with regard to the concealment of income and furnishing of inaccurate particulars of income, in so far as the addition has been upheld up to the last extent. It has not been shown by the ld AR as to whether the order of the Tribunal in quantum appeal was challenged before the Hon ble High Court and the Hon ble High Court has accepted substantial questions of law so as to suggest that it is debatable issue. The penalty has been levied with reference to the incriminating material found during the course of survey which indicated exact amount of unaccounted sales. These unaccounted sales have been confirmed both by the CIT(A) and the Tribunal. A.O. has levied penalty only with respect to profit earned on these unaccounted sales which has not been disclosed in the return of income. Accordingly, it cannot be said that the penalty was levied with reference to estimation of income. Accordingly, we do not find any infirmity in the penalty so imposed. We are inclined to agree with the DR Shri Ashok Khanna that the A.O. was justified in imposing penalty u/s 271(1)(c) - Decided against assessee.

Summary

Issues Involved:
1. Legality of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961.
2. Whether the penalty was correctly levied for "concealment of income" and "furnishing inaccurate particulars of income".
3. Validity of penalty based on estimated additions.

Detailed Analysis:

1. Legality of Penalty Imposed under Section 271(1)(c):
The assessee contended that the penalty proceedings were initiated for "furnishing inaccurate particulars of income", whereas the penalty was levied for both "concealment of income" and "furnishing inaccurate particulars of income". The assessee argued that this discrepancy renders the penalty not in accordance with law. The Tribunal referred to the decision in HPCL Mittal Energy Ltd. Vs. ACIT, which established that the nature of the charge must be consistent from the notice to the penalty order. However, in this case, the Tribunal found that both the initiation notice and the penalty order consistently mentioned "concealment of income and furnishing inaccurate particulars of income". Therefore, the Tribunal held that the penalty was legally imposed.

2. Correctness of Penalty for "Concealment of Income" and "Furnishing Inaccurate Particulars of Income":
The Tribunal examined whether the penalty was justified on the merits. The case involved a survey conducted under Section 133A, which discovered unaccounted sales amounting to ?13,37,586. The assessee's argument that the documents found were rough calculations or belonged to other parties was rejected. The Tribunal noted that both the CIT(A) and the Tribunal had confirmed the addition based on these unaccounted sales. The penalty was levied on the profit derived from these unaccounted sales, which was not disclosed in the return of income. The Tribunal concluded that the penalty was rightly imposed as the assessee had indeed concealed income and furnished inaccurate particulars.

3. Validity of Penalty Based on Estimated Additions:
The assessee argued that the penalty was based on estimated additions, which should not attract penalty. However, the Tribunal clarified that the penalty was not on an estimated basis but on concrete evidence of unaccounted sales discovered during the survey. The profit on these unaccounted sales was precisely calculated and formed the basis for the penalty. Thus, the Tribunal found no infirmity in the penalty imposed on this ground.

Conclusion:
The Tribunal dismissed the appeal, upholding the penalty of ?1,28,128 under Section 271(1)(c) of the Income Tax Act, 1961. The judgment emphasized the consistency in the charge from initiation to imposition of penalty and confirmed that the penalty was based on concrete evidence rather than estimation. The Tribunal found that the assessee had concealed income and furnished inaccurate particulars, justifying the penalty imposed.