2023 (5) TMI 211 - AT - Income Tax

Penalty u/s. 271(1)(c) - Non specification of clear charge - revised returns filled in response to notice issued u/s. 153A - HELD THAT - There is no dispute that in response to notice issued u/s. 153A of the Act, the Assessee had filed revised returns of income declaring more income than what was declared in the original returns of income. It is further observed, in the course of assessment proceedings, AO made thorough verification of the returns of income and ultimately accepted the income declared by the Assessee. AO has not mentioned the exact charge for which he intends to impose penalty u/s. 271(1)(c) of the Act. Even, in the show cause notice issued u/s. 274 read with sec. 271 AO has not specified under which limb he intended to impose penalty. AO has not established on record that either there is concealment of income or furnishing of inaccurate particulars of income by the Assessee. This is so because, neither he has referred to any incriminating material found as a result of search indicating concealment of income by the Assessee nor there is any adverse inference drawn by the AO in the assessment orders resulting in variation in income declared by the Assessee. Thus, in our view, the Revenue has failed to establish either concealment of income or filing of inaccurate particulars of income by the Assessee - Decided in favour of assessee.

Summary

Issues:
The judgment involves the confirmation of penalties imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment years 2008-09 and 2011-12.

Assessment Year 2008-09:
The Assessee, a resident individual engaged in trading of auto parts, initially declared total income of Rs.4,70,590/-. Following a search and seizure operation, the Assessee revised the income to Rs.3,44,36,586/ in response to notices issued under section 153A. The Assessing Officer accepted the revised income but initiated penalty proceedings under section 271(1)(c) alleging concealment of income. The Assessee contended that the penalty order was invalid as the specific limb for penalty imposition was not mentioned in the notice. The Tribunal, noting the lack of incriminating material or adverse inference, deleted the penalty, consistent with a previous ruling in a similar case.

Assessment Year 2011-12:
For this assessment year, the Assessee originally declared a total income of Rs.11,96,610/-, which was later revised to Rs.82,90,606/- post the search and seizure operation. The Assessing Officer imposed a penalty of Rs.24,08,327/- under section 271(1)(c) without specifying the exact charge for penalty imposition. The Assessee argued that the charge of concealment of income or furnishing inaccurate particulars was not established, as there was no incriminating material or adverse findings. The Tribunal, finding no evidence of concealment or inaccurate particulars, deleted the penalty in line with its decision in a previous case.

Conclusion:
In both assessment years, the Tribunal allowed the appeals, deleting the penalties imposed under section 271(1)(c) due to the Revenue's failure to establish concealment of income or filing of inaccurate particulars by the Assessee. The Tribunal emphasized the importance of specifying the exact charge for penalty imposition and the necessity of evidence to support such charges.