2020 (1) TMI 352 - AT - Income Tax

Penalty u/s.271(1)(c) - assessment u/s.153A - assessee has disclosed excess income over and above the income declared in the original return, the same was not mentioned in the body of the show cause notice issued by the AO - HELD THAT - In the returns filed in response to notice u/s.153A of the Act the assessee claimed that additional income has been received by him and the same was not declared by him in the returns filed before the date of search, therefore the CIT(A) has rightly observed that provisions of Explanation 5A to section 271(1)(c) of the Act are applicable on account of concealment of particulars of his income or furnished inaccurate particulars of income, because all the conditions laid down in Explanation 5A have been met and the deeming provisions of section 271(1)(c) of the Act are clearly applicable to both the cases of the assessee. In view of the above, it is established beyond doubt that the assessee has concealed particulars of its income to the extent of additional income received by him. Ld. AR before us also could not bring any cogent material to controvert the above findings of the authorities below. Accordingly, we do not see any good reason to interfere in the orders of both the authorities below and, hence, we uphold the same and dismiss both the appeals of the assessee for A.Y.2010-2011 2011-2012, respectively. Penalty u/s.271(1)(c) - AY 2012-2013 to 2015-2016 - HELD THAT - AO in the assessment has initiated penalty u/s.271(1)(c) of the Act on the differential amount disclosed in the return of income filed u/s.153A of the Act by the assessee without mentioning either of the two limbs as provided under the provisions of Section 271(1)(c) of the Act i.e. for concealment of particulars of income or for furnishing of inaccurate particulars of such income. Thereafter in the penalty order dated 28.06.2018, also the AO while levying penalty u/s.271(1)(c) of the Act has used both the expression. AO is not sure on which count he intends to levy penalty as per the provisions of Section 271(1)(c) of the Act either for concealment of particulars of income or for furnishing of inaccurate particulars of such income. Both these situations are contradictory to each other. Neither the assessment order nor the penalty order nowhere states the specific charge of alleged concealment and/or furnishing of inaccurate particulars of income. Therefore, in our opinion, the entire penalty imposed by the AO and confirmed by the CIT(A) stands vitiated and, therefore, is not sustainable. Further, in all the cases, the revised return filed by the assessee has been accepted by the AO. Admittedly, it is also a fact that in the all the cases, both returned income and the assessed income are same. Therefore, when the revised return is accepted and the income is assessed as per the revised return, there is no scope for penalty. - Decided in favour of assessee

Issues Involved:
1. Confirming the penalty levied under Section 271(1)(c) of the Income Tax Act for assessment years 2010-2011 and 2011-2012.
2. Confirming the penalty levied under Section 271(1)(c) of the Income Tax Act for assessment years 2012-2013 to 2015-2016.

Issue-wise Detailed Analysis:

1. Confirming the penalty levied under Section 271(1)(c) for assessment years 2010-2011 and 2011-2012:

The assessee, a doctor employed by the Government of Odisha and engaged in private practice, filed his original returns for the assessment years 2010-2011 and 2011-2012. A search and seizure action under Section 132 of the Income Tax Act was conducted on 03.09.2015, leading to the issuance of notices under Section 153A. The assessee subsequently filed revised returns disclosing higher incomes. During the assessment proceedings, the AO discovered additional income and unexplained investments, leading to the completion of assessments and initiation of penalty proceedings under Section 271(1)(c) for concealment of income. The CIT(A) upheld the penalties, leading to the appeals before the ITAT.

The assessee argued that the additional income disclosed in the revised returns filed under Section 153A should not automatically lead to penalties, relying on the decision in Neeraj Jindal (2017) 393 ITR 1 (Del). The Revenue contended that the additional income was not disclosed in the original returns, invoking the provisions of Section 271(1)(c) read with Explanation 5A.

The ITAT found that the assessee had indeed disclosed additional income only after the search and could not provide a reasonable cause for not disclosing it earlier. The Tribunal upheld the CIT(A)'s decision, confirming that the conditions under Explanation 5A to Section 271(1)(c) were met, thus justifying the penalties. The appeals for these years were dismissed.

2. Confirming the penalty levied under Section 271(1)(c) for assessment years 2012-2013 to 2015-2016:

The facts and issues for these years were similar, with the assessee disclosing additional income in revised returns filed under Section 153A following the search. The AO added the differential amounts as undisclosed income and levied penalties under Section 271(1)(c). The CIT(A) upheld these penalties, leading to further appeals.

The assessee argued that the AO did not specify whether the penalties were for concealment of income or furnishing inaccurate particulars, thus vitiating the penalty orders. The ITAT agreed, noting that neither the assessment nor the penalty orders specified the exact charge, rendering the penalties unsustainable. The Tribunal cited the Gujarat High Court's decision in Snita Transport Pvt. Ltd., which emphasized the need for a clear finding on the specific charge for imposing penalties.

Additionally, the ITAT noted that the revised returns were accepted by the AO, and the assessed incomes matched the revised returns, leaving no scope for penalties. The Tribunal relied on the Delhi Tribunal's decision in M/s OSE Infrastructure Ltd. and the Gujarat High Court's decision in Kirit Dahyabhai Patel, which held that no penalty could be levied when the revised returns were accepted and assessed as such.

The ITAT set aside the CIT(A)'s orders and directed the AO to delete the penalties for these years. The appeals for these years were allowed.

Conclusion:

The ITAT dismissed the appeals for assessment years 2010-2011 and 2011-2012, confirming the penalties under Section 271(1)(c). However, the appeals for assessment years 2012-2013 to 2015-2016 were allowed, and the penalties were deleted due to procedural lapses and acceptance of revised returns.

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