2019 (10) TMI 16 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - assessee filed revised return which was reassessed - Discrepancy between the difference in the income admitted in the original and the revised returns - HELD THAT - During the penalty proceedings, the assessee has not given any explanation towards the discrepancy between the difference in the income admitted in the original and the revised returns. Therefore the AO held that the assessee offered this income due to survey action and therefore it is proved beyond doubt that the assessee has concealed income / filed inaccurate particulars. CIT(A) found that the assessee has failed to offer any explanation in respect of the difference between the original income and the revised income and sustained the penalty levied by the AO. Before us also the assessee is not able to offer any explanation in respect of the difference of income admitted between the original and revised returns as required under Explanation 1 of section 271(1)(c) of the Act. Therefore the differential sum between the revised return and original return is deemed to represent the income in respect of which particulars have been concealed. Therefore we sustain the penalty levied U/s.271(1)(c) to that extent. As pointed out by the ld.AR the levy of penalty could be made only on the tax that is sought to be evaded on the undisclosed income of 84, 88, 831/- ( 97, 80, 000 - 12, 91, 169) only. Therefore we direct the AO to recompute the penalty U/s.271(1)(c) accordingly. The assessee s appeal is allowed to this extent.

Summary

Issues:
1. Appeal against order of Commissioner of Income Tax (Appeals)-10, Chennai
2. Assessment year 2008-09
3. Penalty proceedings under Section 271(1)(c)
4. Concealment of income and inaccurate particulars

Analysis:

Issue 1: Appeal against order of Commissioner of Income Tax (Appeals)-10, Chennai
The assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals)-10, Chennai in ITA No. 229/16-17/CIT(A)-10 dated 28.02.2019 for the assessment year 2008-09.

Issue 2: Assessment year 2008-09
The assessee admitted a total income of &8377; 12,91,169/- for the assessment year 2008-09 in the original return. However, after a survey conducted by the DDIT(Inv.), Unit 4(3), Chennai, the assessee admitted income of &8377; 97,38,400/- for the same assessment year. Subsequently, a notice U/s.148 was issued, and a revised return was filed admitting the same income. Penalty proceedings under Section 271(1)(c) were initiated based on the difference in the income admitted in the original and revised returns.

Issue 3: Penalty proceedings under Section 271(1)(c)
The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) and levied a penalty on the income admitted in the revised return. The assessee contended that the penalty was not warranted as the additional income was voluntarily disclosed without any malafide intention. The AO, however, held that the assessee concealed income by not disclosing the true income in the original return, leading to the penalty imposition.

Issue 4: Concealment of income and inaccurate particulars
The dispute revolved around whether the assessee concealed income or furnished inaccurate particulars. The department argued that the huge undisclosed income admitted by the assessee post-survey indicated concealment, as the original income disclosed was significantly lower. The Tribunal upheld the penalty under Section 271(1)(c) but directed the AO to recompute the penalty based on the undisclosed income amount. The assessee's appeal was partly allowed, and the penalty was sustained to the extent of the difference between the original and revised income.

In conclusion, the Tribunal partially allowed the assessee's appeal, sustaining the penalty under Section 271(1)(c) based on the undisclosed income amount. The judgment highlighted the importance of disclosing true income in the original return and the consequences of concealing income or furnishing inaccurate particulars.