2020 (2) TMI 731 - HC - Income Tax

Penalty u/s 271(1)(c) - money receipts offered for taxation after being detected by the department as a result of survey action u/s.133A - Tribunal deleted the addition - HELD THAT - Tribunal proceeded on the principle of law that when the assessee disclosed the amount during the survey action u/s 133A and the same is honoured by filing the return of income, there cannot be any order of penalty u/s 271(1)(c) of the Act, 1961. The Tribunal took support of the decision of the Delhi High Court in the case of SAS Pharmaceuticals 2011 (4) TMI 888 - DELHI HIGH COURT Having heard the learned counsel appearing for the Revenue and having gone through the materials on record, we are of the view that no error, not to speak of any error of law could be said to have been committed by the Tribunal in passing the impugned order. The question proposed by the Revenue, in our opinion, cannot be termed as a substantial question of law involved in this appeal.

Summary

Issues:
1. Whether the Appellate Tribunal erred in upholding the deletion of penalty on on-money receipts offered for taxation after a survey action under section 133A?

Analysis:

1. The Tax Appeal under Section 260A of the Income Tax Act, 1961 was filed by the Revenue against the order of the Income Tax Appellate Tribunal. The Revenue challenged the deletion of penalty amounting to &8377;6,93,70,500 on on-money receipts disclosed by the assessee after a survey action under Section 133A. The assessee, engaged in construction business, had disclosed income of &8377;22.45 Crore during the survey. The Assessing Officer imposed the penalty under Section 271(1)(c) for alleged concealment of income.

2. The CIT(A) allowed the appeal of the assessee, emphasizing that there was no concealment or inaccurate particulars in the return of income filed by the appellant. The CIT(A) highlighted that the disclosed income was accepted without any addition or disallowance during assessment. The CIT(A) ruled out the applicability of Explanation 5A and held that the penalty under Section 271(1)(c) was not sustainable. The CIT(A) cited the Supreme Court decision in Reliance Petroproducts Pvt. Ltd. and concluded that the penalty was unjustified.

3. The Tribunal upheld the CIT(A)'s decision, stating that when an assessee discloses income during a survey action and includes it in the return of income, there is no basis for imposing a penalty under Section 271(1)(c). The Tribunal referred to the Delhi High Court judgment in CIT vs. SAS Pharmaceuticals to support its decision. The Tribunal emphasized that if the disclosed income is accepted in the return without any discrepancies, there is no concealment of income.

4. The High Court, after considering the arguments and records, found no error in the Tribunal's decision. The Court held that the Tribunal's order was legally sound, and the Revenue's proposed question did not raise any substantial legal issue. Consequently, the appeal by the Revenue was dismissed, affirming the decision to cancel the penalty on the on-money receipts disclosed by the assessee.