2020 (7) TMI 431 - AT - Income Tax

Penalty u/s 271(1)(c) - unaccounted sale - whether the assessee has concealed the particulars of income with respect to such business turnover not disclosed in the income tax return? - HELD THAT - The term concealment of particular of income has not been defined under the provisions of section 271(1)(c) or elsewhere in the Act the Act - meaning of the term concealed /inaccurate has been discussed in the case of Reliance Petroproducts (P) Ltd 2010 (3) TMI 80 - SUPREME COURT wherein it was held that the term inaccurate signifies deliberate act or omission on the part of the assessee. As such, the details/informations contained in the return of income /financial statements /audit report which are not correct according to truth, and were furnished by the assessee with the dishonest intent shall be treated as inaccurate particulars. There was no information available with the Revenue for the unaccounted sale made by the assessee. Thus it is transpired that there was no deliberate act, on the part of the assessee not to disclose the business receipts in the income tax return. The Revenue has also not brought any material suggesting that the assessee deliberately furnished the inaccurate particulars of income. Addition/disallowances made during the quantum proceedings does not automatically justify the levy of the penalty under section 271(1)(c) - Besides the element of income added in the quantum proceedings, there must be some material/circumstantial evidences leading to the reasonable conclusion that there was conscious concealment or the act of furnishing of inaccurate particulars on the part of the assessee. We are not convinced with the finding of the authorities below. Hence we set aside the order of the learned CIT (A) and direct the AO to delete the penalty levied by him under section 271(1)(c). - Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI

Summary

Issues:
Confirmation of penalty under section 271(1)(c) of the Act by the Commissioner of Income Tax (Appeals) for unaccounted sales.

Analysis:
The appeal was filed by the assessee against the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Act. The penalty was confirmed by the Commissioner of Income Tax (Appeals) based on unaccounted sales of &8377; 3,08,86,570 during the relevant assessment year. The AO initiated penalty proceedings after issuing a show cause notice under section 274 of the Act. The penalty was levied at &8377; 95,441, being 100% of the tax sought to be evaded. The Commissioner of Income Tax (Appeals) upheld the penalty, stating that the appellant concealed income by not disclosing the correct amount. The AO's decision was based on information received from the Central Excise Department, indicating unaccounted sales by the appellant. The Commissioner held that the appellant did not disclose the profit from the sales in its books of account until the assessment was reopened. The appellant argued that there was no deliberate concealment of income and accepted the addition under the excise Act to avoid disputes.

The Tribunal analyzed the definition of "concealment of particulars of income" under section 271(1)(c) of the Act. Referring to the Supreme Court's judgment in Reliance Petroproducts (P) Ltd, the Tribunal emphasized that deliberate acts or omissions by the assessee constitute concealment. The Tribunal highlighted that inaccurate particulars refer to details not accurate, correct, or according to truth, provided with dishonest intent. In this case, the Tribunal found no evidence of deliberate concealment by the assessee regarding unaccounted sales. The Tribunal noted that the Revenue did not prove that the assessee furnished inaccurate particulars intentionally. The Tribunal concluded that additions or disallowances during quantum proceedings do not automatically justify penalty under section 271(1)(c). It emphasized the need for material evidence indicating conscious concealment or furnishing of inaccurate particulars by the assessee.

The Tribunal set aside the Commissioner's order and directed the AO to delete the penalty. Additionally, the Tribunal addressed the delay in pronouncing the order due to the Covid-19 lockdown. Citing legal precedents and the exceptional circumstances, the Tribunal extended the time for pronouncing the order, considering the lockdown's impact on judicial proceedings. The Tribunal highlighted the pragmatic interpretation of rules in extraordinary situations and concluded by allowing the assessee's appeal and dismissing the Assessing Officer's appeal. The order was pronounced beyond the usual 90-day period, taking into account the exceptional circumstances.

In conclusion, the Tribunal allowed the assessee's appeal, emphasizing the lack of deliberate concealment of income and the need for concrete evidence to justify penalties under section 271(1)(c) of the Act. The Tribunal also addressed the delay in pronouncing the order due to the Covid-19 lockdown, extending the time frame in exceptional circumstances.