2021 (9) TMI 213 - AT - Income Tax

Penalty u/s 271(l)(c) - undisclosed income as accepted during survey operation - CIT-A deleted the penalty levy - HELD THAT - Survey proceeding dated 25-0302014 was conducted at the assessee premises the financial year was not ended and also there was plenty of time for filing the return of income under the provision of section 139(1). Assessee incorporated the amount of income which was admitted during survey in the computation of income. Further the AO also accepted the returned income while finalizing assessment proceeding under section 143(3) dated 23-12-2016. AO was satisfied for the income disclosed in the computation of income. AO was not justified in invoking the penalty proceeding for concealment of income or furnishing inaccurate particulars of income for the reason that there was no disallowance/ addition to the total income of the assessee during the assessment proceedings. The presumption of the AO that the assessee would not have disclosed the income in return in future is mere a suspicion having no any base. - Decided against revenue.

Summary

Issues:
1. Whether the penalty imposed under section 271(1)(c) of the Income Tax Act was justified.

Analysis:
The appeal pertains to the Revenue challenging the order of the Learned Commissioner of Income Tax (Appeals) concerning the penalty imposed under section 271(1)(c) of the Income Tax Act for the Assessment Year 2014-2015. The Revenue contended that the penalty was wrongly deleted by the CIT (A) and raised the issue of whether the penalty was correctly imposed.

The facts revealed that the assessee, a partnership firm, disclosed an undisclosed income of ?10 Crores during a survey conducted under section 133A. The AO accepted this undisclosed income during the assessment proceedings under section 143(3) but initiated penalty proceedings under section 271(1)(c) of the Act. The assessee argued that the disclosed income was already included in the return of income and there was no concealment or inaccurate particulars furnished.

The AO, however, imposed a penalty equivalent to 100% of the tax sought to be evaded, stating that the income was disclosed only after being detected during the survey operation. The CIT (A) deleted the penalty, emphasizing that the disclosed income was duly shown in the return of income and there was no concealment or furnishing of inaccurate particulars.

Upon hearing both parties, the Tribunal analyzed the provisions of section 271(1)(c) of the Act. It was noted that the AO's justification for imposing the penalty was based on a presumption that the income would not have been disclosed if not for the survey operation. However, since the disclosed income was accepted during assessment proceedings without any additions or disallowances, the Tribunal held that there was no basis for imposing the penalty.

The Tribunal concluded that the AO's presumption was merely a suspicion without any factual basis, and the penalty cannot be imposed solely on suspicion or presumption. Therefore, the Tribunal upheld the decision of the CIT (A) in deleting the penalty, dismissing the Revenue's appeal.

In summary, the Tribunal found that the penalty under section 271(1)(c) was not justified in this case as there was no concealment or furnishing of inaccurate particulars, and the disclosed income was accepted during assessment proceedings without any discrepancies.