2020 (4) TMI 791 - AT - Income Tax

Penalty u/s 271(1)(c) - disclosure of additional income in search under section 153A - HELD THAT - Explanation could be invoked if during the course of search any incriminating material representing any money, bullion, jewellery other valuables articles or things or entry in any books of accounts found during the course of search, based on such material, addition is being made. This Explanation cannot be invoked simply for the reason that, had the search not been carried out, the assessee would not have disclosed this additional income. Solely on the basis of declaration, addition is not possible. See SMT. LOPA PANKAJ DAVE 2019 (12) TMI 908 - ITAT AHMEDABAD - Delete the penalty imposed - Decided in favour of assessee.

Summary

Issues:
Penalty imposition under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appellant contested the penalty imposed by the ld.CIT(A) under section 271(1)(c) of the Income Tax Act, 1961. The case originated from a search conducted under section 153A of the Act at the premises of a specific group. The appellant disclosed additional income during the search proceedings, which led to penalty proceedings initiated by the Assessing Officer. The penalty was imposed after the appellant revised their claim related to capital gains and deduction under section 54F. The appellant argued that no material was found during the search to indicate excessive claims in the original return of income. They voluntarily withdrew part of the claim and disclosed additional income. The Tribunal considered Explanation 5A appended to section 271(1)(c), which states that penalty for concealment can be imposed based on incriminating material found during a search. However, in the absence of such material, the Tribunal held that mere admission of additional income does not warrant penalty imposition. Citing a precedent, the Tribunal ruled in favor of the appellant, concluding that the penalty was unjustified and deleted it.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that penalty imposition under section 271(1)(c) requires the existence of incriminating material found during a search. In this case, as no such material was discovered, the penalty was deemed unwarranted, and thus, deleted.