2022 (11) TMI 961 - AT - Income Tax

Penalty u/s 271(1)(c) - income is assessed on the basis of material impounded in a survey action u/s 133A, in variation to original return filed - statements recorded on oath u/s 131(1) and declaration furnished with respect to re-computation of income, records etc . - disclosed additional business income or profit was estimated @25% on the business receipts for the purpose of assessment - As argued revised computation of income was accepted without variation - HELD THAT - The appellant did not file any revised return during the course of scrutiny assessment proceedings, but mere a revised computation of income incorporating the business profit earned at certain percentage of business receipts deciphered out of bank account statements, bank receipts, cash receipts, development charges received and transaction of sales purchases of lands, etc., which formed absolute basis for assessment and consequential imposition of penalty u/s 271(1)(c) for concealing the particulars of income and when this fact was brought to the notice of the assessee during the course of penalty proceedings, the assessee offered to pay tax on the sum without answering the question posed to him. Therefore, it is not a case wherein a disclosure was voluntarily made, indeed the assessee accepted the differential amount of business profit earned by him only after the same was brought to surface owing to survey action u/s 133A otherwise actual business profits would have remained un-assessed and untaxed, if survey action could not have taken place and in any case, so-called voluntary disclosure of business profit by furnishing re-computation cannot alter the consequences in the light of decision of the Hon ble Apex Court in the similar facts and circumstances in MAK Data Pvt Ltd Vs CIT 2013 (11) TMI 14 - SUPREME COURT Section 274 provides that, no order imposing a penalty shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. In the present case, a penalty SCN was issued u/s 274 r.w.s. 271 and upon failure to respond to first SCN, the appellant was put to further notice which remained unattended, ad-idem, it clearly indicates that, the due sufficient opportunity of being heard was provided to the appellant before proceeding to actual levy, ergo, the requirement of section 274 stands complied with and penal provisions being a civil liability calling no act of or ingredient for wilful concealment as laid in the case of UOI Vs Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT Re-computation of business income upon the survey action in the light of impounded material spoke loudly about the conduct of the assessee, which could not be said to be anything else than disingenuous and thus filing of said recomputation of income did not obliterate the fact of the earlier act of concealment of particulars with a view to suppress the income and therefore was liable to penal action as contemplated in section 271(1)(c) of the Act, and we note that the tax authorities below ceased such finding adverse to the appellant, and is not shown to be perverse or arbitrary in any manner warranting interference, ergo we hold that, the Ld. AO was justified in levying the minimum penalty, and we see that, our view has been rightly fortified by the decision of Hon ble jurisdictional High Court of Bombay, in the case of Jyoti Laxman Konkar Vs CIT 2006 (7) TMI 165 - BOMBAY HIGH COURT In the similar facts and circumstance, where the income of the appellant is assessed in variation to income returned in the case of MAK Data Pvt Ltd Vs CIT 2013 (11) TMI 14 - SUPREME COURT observed that, the explanation to section 271(1) raises a presumption of concealment when income is finally assessed in variation of returned income, and it was in this factual scenario where the income reported by the assessee in the return filed was lower than the income finally assessed and brought to tax, it is held that the penalty was rightly leviable. Grounds appealed stands adjudicated against the appellant assessee and in favour of revenue.

Summary

Issues involved:
- Challenge against the order of Commissioner of Income Tax (Appeals) regarding penalty under section 271(1)(c) of the Income-tax Act,1961 for the assessment year 2015-16 based on impounded material from a survey action.

Detailed Analysis:
1. The appeal addresses the dispute over the applicability of penal provision 271(1)(c) concerning undisclosed business income assessed based on impounded material from a survey action. The appellant contested the levy of penalty, arguing that it was not justified as the addition was made on an estimation basis, and penalties are not applicable in such cases. The appellant emphasized that the addition lacked precision in determining the actual income derived, thus penalty imposition was unwarranted.

2. The assessment revealed that the appellant, engaged in the business of buying and selling agricultural land, filed a return declaring a total income. A survey action under section 133A led to a significant addition to the income, triggering penalty proceedings under section 271(1)(c) for concealing income particulars. The appellant's failure to file a revised return during scrutiny, but only a revised computation based on impounded material, formed the basis for the penalty imposition.

3. The issue centered on the appellant's alleged concealment of income particulars by not maintaining proper accounts and filing returns on an estimation basis. The penalty was justified as the appellant's revised computation of income, based on the impounded material, revealed previously undisclosed profits. The appellant's failure to respond adequately during penalty proceedings and the subsequent imposition of penalty were deemed appropriate, considering the circumstances and legal precedents cited.

4. The Tribunal upheld the penalty imposition, citing the appellant's conduct as disingenuous and confirming that the penalty was justified under section 271(1)(c). The decision aligned with judicial precedents, including the Hon'ble Supreme Court's observations in similar cases. The Tribunal dismissed the appeal, emphasizing that the penalty was rightly levied based on the concealment of income particulars and the subsequent assessment variations.

5. The judgment highlighted the importance of providing the appellant with a reasonable opportunity to be heard before imposing a penalty. The Tribunal's decision was supported by legal provisions, factual analysis, and relevant case laws, ultimately affirming the penalty under section 271(1)(c) in the appellant's case.