2021 (2) TMI 955 - AT - Income Tax

Penalty u/s.271(1)( c) - additional income offered to tax by the assessee pursuant to survey and which was also disclosed by him in the return of income filed - HELD THAT - As factual paper book filed by the assessee comprising of the profit and loss account for the year ended 31/03/2009 and the schedule for the other income thereon, the sum of ₹ 3 Crores has been disclosed by the assessee exclusively as income declared under survey under the head other income . This itself goes to prove that the assessee had duly recorded that income offered in the survey in its books of accounts. We find that this sum of ₹ 3 crores was also duly offered to tax by the assessee in the return of income filed. Moreover, we find that similar issue had been the subject matter of adjudication by the Hon ble Delhi High Court in the case of CIT vs. SAS Pharmaceuticals 2011 (4) TMI 888 - DELHI HIGH COURT wherein it was held that for the purpose of imposing penalty u/s.271(1)(c) of the Act, concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee has to be in the income tax return filed by the assessee. The Hon ble Delhi High Court held that no penalty would be exigible in such scenario. The facts of the case before us are exactly similar and identical to the facts before the Hon ble Delhi High Court. In the instant case also there is no dispute that assessee had indeed disclosed ₹ 3 Crores additional income in the income tax return filed by it. As decided in Shree Sai Developers 2019 (8) TMI 59 - GUJARAT HIGH COURT since there was no concealment in the return of income filed by the assessee which was ultimately accepted by the Revenue, there cannot be any levy of penalty u/s.271(1)(c) of the Act. Thus we hold that no penalty u/s.271(1)(c) would be exigible thereof in the hands of the assessee. Accordingly, the grounds raised by the assessee are allowed.

Summary

Issues involved:
1. Imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 on the assessee for additional income offered to tax following a survey.

Detailed Analysis:
The appellate tribunal heard the case concerning the imposition of a penalty under section 271(1)(c) of the Income Tax Act, 1961 on the assessee for additional income disclosed during a survey. The primary issue was whether the penalty should be levied on the additional income offered by the assessee. The assessee, a company engaged in manufacturing and marketing of plastic products, had purchased property in Hyderabad and offered a portion of the cash component as additional income in the return of income. The assessing officer made an addition based on a statement recorded during the survey. However, the Commissioner (Appeals) deleted a part of the addition, recognizing the amount disclosed by the assessee. Subsequently, the penalty was imposed on the disclosed amount, which was upheld by the Commissioner (Appeals) on the grounds of non-recording in regular books of accounts and voluntary disclosure due to the survey.

The tribunal analyzed the case in light of a similar judgment by the Delhi High Court, emphasizing that penalty under section 271(1)(c) is applicable only if there is concealment or furnishing of inaccurate particulars in the income tax return. The tribunal noted that the assessee had disclosed the additional income in the return filed, as supported by the profit and loss account. Referring to legal provisions and precedents, the tribunal highlighted that penalty cannot be imposed based on assumptions and that strict interpretation is required for penal provisions. The tribunal concluded that since the assessee had made a complete disclosure in the return and offered the surrendered amount for tax, there was no concealment or non-disclosure of income, thus ruling in favor of the assessee and dismissing the appeal.

Moreover, the tribunal cited a judgment by the Gujarat High Court, which held that if there is no concealment in the return of income accepted by the revenue authorities, penalty under section 271(1)(c) cannot be levied. Following this precedent, the tribunal held that no penalty would be applicable in the present case. Additionally, an additional ground raised by the assessee regarding the penalty show-cause notice was not adjudicated as the penalty was already directed to be deleted. Consequently, the tribunal allowed the appeal of the assessee, and the order was pronounced on 23/02/2021.