2019 (9) TMI 934 - AT - Income Tax

Penalty u/s 271(1)(c) - Surrender of income as income from other sources in the revised return after receipt of summoned from the Dy. Director of Income Tax (Investigation) - further additions towards difference between the income shown in the revised return and the amount actually received in the bank account - HELD THAT - The provisions of section 271(1)(c) of the Act are penal in nature and they are required to be strictly construed. These cannot be extended by way of liberal interpretation to include the cases, which otherwise, do not fall within the purview and scope of the provisions of section 271(1)(c) of the Act. In view of this, since the income has already been declared in the revised return, which was valid and filed within the limitation period prescribed for filing the same, hence, in view of our discussion made above, the penalty in respect of the aforesaid income declared is not leviable and the same is accordingly ordered to be deleted. Difference of an amount between the income shown in the revised return and the amount actually received in the bank account of the assessee asssessee could not address convincing arguments in this respect. The said difference between the amount offered for taxation and the amount actually received by the assessee was found by the A.O. during the assessment proceedings. Hence, there was concealment of income in respect of the aforesaid amount. Hence the penalty in respect of the income detected during scrutiny assessment proceedings is confirmed @ 100% of the tax amount sought to be evaded on the said income. In view of our findings given above, the appeal of the assessee is treated as partly allowed.

Summary

Issues Involved:
1. Validity of the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961.
2. Validity of the revised return filed by the assessee.
3. Concealment of income and furnishing of inaccurate particulars of income.
4. Difference between the income declared and the amount actually received.

Issue-wise Detailed Analysis:

1. Validity of the Penalty Levied under Section 271(1)(c):
The primary issue in this case revolves around the penalty of ?16,28,624/- levied by the Assessing Officer (A.O.) under Section 271(1)(c) of the Income Tax Act, 1961. The A.O. held that the assessee had concealed particulars of income amounting to ?43,55,891/-. The penalty was levied at 110% of the tax sought to be evaded. The assessee's appeal against this penalty was dismissed by the Commissioner of Income Tax (Appeals) [CIT(A)].

2. Validity of the Revised Return Filed by the Assessee:
The assessee filed the original return on 31.07.2014, declaring a net taxable income of ?98,36,430/- and claimed an exempt income of ?41,45,665/- on account of Long Term Capital Gains. After being summoned by the Dy. Director of Income Tax (Investigation), the assessee filed a revised return on 08.10.2015, declaring the said income as "income from other sources" and paid the due taxes. The A.O. observed that the revised return was filed after the commencement of scrutiny assessment proceedings and did not submit the ITR-V online to CPC, Bangaluru. However, the tribunal noted that the revised return was filed within the stipulated period prescribed under Section 139(5) of the Act, making it a valid return.

3. Concealment of Income and Furnishing of Inaccurate Particulars of Income:
The A.O. considered the income of ?41,55,876/- as "undisclosed income" since the assessee initially claimed it as tax-exempt. The tribunal, however, emphasized that the revised return was validly filed within the limitation period, and the A.O. was supposed to make the assessment taking the revised return as the base return. Since the income was declared in the revised return and due tax was paid, no further addition was made by the A.O. on this account. The tribunal cited the decision in 'CIT Vs. Kulwant Singh' to support that if there is no addition to the income, there is no tax sought to be evaded, and hence, no penalty can be levied under Section 271(1)(c).

4. Difference Between the Income Declared and the Amount Actually Received:
The A.O. noticed a difference of ?2,00,015/- between the income shown by the assessee and the amount actually received in the bank account. The assessee accepted the discrepancy and agreed to the addition of this amount. The tribunal confirmed the penalty for this amount, as it was detected during the assessment proceedings, indicating concealment of income. The penalty was confirmed at 100% of the tax amount sought to be evaded on the said income.

Conclusion:
The tribunal concluded that the penalty in respect of the income declared in the revised return amounting to ?41,55,876/- was not leviable, as the revised return was valid and filed within the limitation period. However, the penalty for the difference of ?2,00,015/- was confirmed due to concealment of income. Thus, the appeal of the assessee was partly allowed. The order was pronounced in the Open Court on 01.07.2019.