2020 (2) TMI 1217 - AT - Income Tax

Penalty levied u/s 271(1)(c) - return of income filed in response to the notice under section 153C - assessee admitted the additional income as received on sale of residential property in Jaipur and the cash component was paid towards purchase of five residential properties in Bangalore - HELD THAT - Explanation 5A is not applicable in the present case. As the case of assessee was not covered by search action, rather a survey action was carried out. We have noted that though the assessee has not challenged the issuance of notice under section 153C. On our specific question to the assessee since the return of income filed in response to the notice under section 153C was accepted without any variance and due to the ignorance the assessee has not challenged the validity of notice under section 153C. In our considered view, the assessee is not precluded from raising objection against the validity of notice under section 153C, if the same was not valid and warranted on the facts of the case. Present proceeding are related to the validity of penalty levied under section 271(1)(c). As noted above, the additional income offered by assessee in his return of income has been accepted by Assessing Officer. The fact of concealment of income and furnishing inaccurate particulars of income can be established with reference to the income declared in the return of income. In the present case, the income declared in the return of income has been accepted; therefore, it cannot be the case of concealment or furnishing inaccurate particulars of income. In our view there is no occasion for the assessee to evade the tax as the assessee offered the additional income declared during the survey action while filing the return in response to the notice under section 153C. When the income declared in the return of income was accepted without any variance. The assessee has neither concealed the income nor furnished any inaccurate particulars of income while filing return of income - Appeal of the assessee is allowed.

Summary

Issues:
- Appeal against penalty under section 271(1)(c) for Assessment Year 2008-09.

Analysis:
1. The appeal was filed against the penalty levied under section 271(1)(c) for the Assessment Year 2008-09. The appellant, an individual and Director in a company, had admitted additional income during a survey, which was accepted by the Assessing Officer. The penalty was initiated without specifying the charge or invoking Explanation 5A of section 271(1)(c).

2. The appellant argued that the notice under section 153C was not valid as no incriminating material was found against them in the search conducted on another company. The appellant maintained that they did not conceal income or furnish inaccurate particulars, as the additional income was disclosed during the survey and accepted by the Assessing Officer without variance.

3. The Tribunal noted that only a survey was conducted on the appellant, not a search, and the Assessing Officer incorrectly invoked Explanation 5A meant for search actions. The appellant's income declaration was accepted without variance, indicating no concealment or inaccurate particulars. The Tribunal found no grounds for tax evasion as the additional income was declared in response to the notice under section 153C.

4. The Tribunal held that since the income declared was accepted without variance, there was no concealment or inaccurate particulars. Consequently, the appeal was allowed, and the penalty was set aside.

This detailed analysis covers the issues involved in the legal judgment regarding the appeal against the penalty levied under section 271(1)(c) for the Assessment Year 2008-09.