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2023 (4) TMI 741 - AT - Income TaxPenalty u/s 271(l)(c) - AO completed the assessment u/s 143(3) r.w.s. 153A accepting the income declared by the assessee - CIT-A deleted the penalty - HELD THAT - Additional income offered by the assessee in the return filed in compliance to the notice u/s 153A of the Act which partakes the character of regular income filed u/s 139 of the Act and the said additional income being not offered on the basis of any incriminating material but is the voluntary disclosure made by the assessee and there being no other legal binding precedence referred to by ld. D/R, we fail to find any infirmity in the finding of ld. CIT(A) deleting the penalty levied u/s 271(1)(c) Penalty levied u/s 271AAB(1)(a) - CIT(A) deleted the impugned penalty adopting the same analogy that no incriminating material was found during the course of search - HELD THAT - We are inclined to hold that in the absence of incriminating material found during the course of search and the income surrendered by the assessee is voluntary in nature not having any nexus to any incriminating material found during the course of search and ld. AO has accepted the returned income filed by the assessee, therefore as relying on case Marvel Associates 2018 (3) TMI 946 - ITAT VISAKHAPATNAM and Mothukuri Somabrahmam 2018 (3) TMI 947 - ITAT VISAKHAPATNAM we fail to find any infirmity in the finding of ld. CIT(A) deleting the penalty levied u/s 271AAB(1)(a). Revenue appeal dismissed.
Issues Involved:
1. Deletion of penalty under Section 271(1)(c) of the Income Tax Act for AY 2014-15 and AY 2015-16. 2. Deletion of penalty under Section 271AAB(1)(a) of the Income Tax Act for AY 2016-17. Summary: Issue 1: Deletion of Penalty under Section 271(1)(c) for AY 2014-15 and AY 2015-16 The Revenue's appeal concerns the deletion of penalties levied under Section 271(1)(c) of the Income Tax Act for AY 2014-15 and AY 2015-16. The penalties were imposed following a search and seizure action under Section 132, where the assessee declared additional income in compliance with notices issued under Section 153A. The CIT(A) deleted the penalties, stating that no incriminating material was found during the search. The additional income was voluntarily disclosed by the assessee, who paid the due taxes and cooperated with the proceedings. The CIT(A) emphasized that penalty under Section 271(1)(c) is discretionary and should be imposed judicially, considering all relevant circumstances. The Tribunal upheld this view, noting that the additional income declared was not based on any incriminating material but was a voluntary disclosure. The Tribunal referenced similar cases, such as Guruprasad Infrastructure Pvt. Ltd. vs. DCIT and Rishabh Buildwell P. Ltd vs. DOT, where penalties were deleted under similar circumstances. Thus, the appeals by the Revenue for AY 2014-15 and AY 2015-16 were dismissed. Issue 2: Deletion of Penalty under Section 271AAB(1)(a) for AY 2016-17 For AY 2016-17, the penalty under Section 271AAB(1)(a) was deleted by the CIT(A), who observed that no incriminating material was found during the search. The additional income disclosed by the assessee was voluntary and not based on any undisclosed assets or incriminating documents. The CIT(A) noted that the penalty under Section 271AAB is discretionary and should be imposed judicially. The Tribunal supported this view, referencing decisions such as ACIT vs. Marvel Associates and ACIT vs. Mothukuri Somabrahmam, which held that penalties under Section 271AAB cannot be imposed without incriminating material found during the search. The Tribunal thus dismissed the Revenue's appeal for AY 2016-17. Conclusion: The Tribunal dismissed the Revenue's appeals for AY 2014-15, AY 2015-16, and AY 2016-17, upholding the CIT(A)'s deletion of penalties under Sections 271(1)(c) and 271AAB(1)(a) of the Income Tax Act, based on the absence of incriminating material and the voluntary nature of the income disclosures.
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