2021 (6) TMI 255 - AT - Income Tax

Penalty levied u/s.271(1)(c) - assessee disclosed unaccounted income during the survey action u/s.133A conducted on the assessee - CIT-A deleted the addition - As per revenue unaccounted income was never part of books of accounts of the assessee and had there been no survey action on the assessee, the income of would have escaped assessment - income declared in the return filed after the date of survey, cannot be considered as voluntary - HELD THAT - Taking guidance from the decisions of the Hon ble Supreme Court in the case of Reliance Petroproducts 2010 (3) TMI 80 - SUPREME COURT as well as the decision of the Hon ble Delhi High Court SAS PHARMACEUTICALS 2011 (4) TMI 888 - DELHI HIGH COURT andSMT. ANITA KUMARAN 2017 (3) TMI 390 - MADRAS HIGH COURT it is clearly evident that any concealment of income or furnishing of inaccurate particulars of income has to be determined from the return of income filed by the assessee. Further proceedings u/s.271(1)(c) of the Act, is a separate proceedings than from the assessment proceedings and the omission or error i.e. concealment of income or furnishing of inaccurate particulars of income should come out specifically from the return of income filed by the assessee before the Department. There is no scope for any guess work or surmises or any hypothetical situation for imposing penalty u/s.271(1)(c) of the Act. It is an undisputed fact that the amount was disclosed in the return of income by the assessee and it was accepted by the Department. Taking the totality of facts and circumstances, we are of the considered view that in this case of the assessee, it is not a fit case for imposing penalty u/s.271(1)(c) - the findings of the Ld. CIT(Appeals) does not call for any interference and relief provided to the assessee is hereby sustained. Appeal of the Revenue is dismissed.

Summary

Issues:
1. Deletion of penalty u/s.271(1)(c) for unaccounted income disclosure during survey action.
2. Interpretation of voluntary disclosure and concealment of income.
3. Application of judicial precedents in penalty proceedings.

Analysis:
1. The appeal pertained to the deletion of a penalty under section 271(1)(c) of the Income Tax Act for disclosing unaccounted income during a survey action. The assessee, engaged in the restaurant business, admitted to undisclosed income of ?2.50 crores during the survey. The Assessing Officer initiated penalty proceedings, contending that the disclosure was not voluntary and would have escaped assessment without the survey. The assessment was completed accepting the returned income. The CIT(A) deleted the penalty, prompting the Revenue's appeal.

2. During penalty proceedings, the assessee argued that the income was disclosed to buy peace of mind and should not attract penalty as it was included in the return filed. The CIT(A) noted the Supreme Court's decision in MAK Data Pvt. Ltd. case but distinguished it from the present case. The Delhi High Court's decision in CIT Vs. M/s. SAS Pharmaceuticals was cited, emphasizing the need for actual concealment or non-disclosure to impose a penalty. The Supreme Court's ruling in CIT Vs. Reliance Petroproducts highlighted that concealment should be determined from the filed return.

3. The Tribunal concurred with the CIT(A)'s findings, considering various judicial pronouncements. Emphasizing that concealment must be evident from the return filed, the Tribunal held that penalty proceedings are distinct from assessment proceedings. Citing the decisions of the Delhi and Madras High Courts, the Tribunal concluded that as the disclosed income was included in the return and accepted by the Department, there was no concealment or furnishing of inaccurate particulars. Therefore, the penalty under section 271(1)(c) was not justified in this case.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the deletion of the penalty for the disclosed unaccounted income. The decision reinforced the importance of actual concealment or non-disclosure being evident from the filed return to impose penalties under section 271(1)(c) of the Income Tax Act.