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2024 (11) TMI 386 - AT - Income TaxPenalty u/s 271(1)(c) - Surrendered income as calculated on estimated basis on unrecorded sales - HELD THAT - We find that the above decisions of this Tribunal in Hitech Construction 2023 (4) TMI 741 - ITAT GUWAHATI is squarely applicable on the facts of the case of the assessee. DR has failed to bring forth any other binding precedence in its favour before us. Under the given facts of the case we observe that the surrendered income of ₹ 5 crore was calculated on estimated basis on unrecorded sales and there is no specific incriminating material indicating the alleged income surrendered by the assessee. Surrendered income stated in the statement recorded u/s 132(4) of the Act has been offered to tax in the income tax return and the same stands accepted by the Assessing Officer. It is also noticed that the assessee had declared loss of ₹ 54.99 crore in the original return filed on 30th April, 2019 and even after surrendering the undisclosed income of ₹ 5 crores, the ld. AO has accepted the income of the assessee at a loss of ₹ 44.99 crore. No infirmity in the finding of the CIT (A) deleting the impugned penalty u/s 271(1)(c) of the Act on duly examining the facts of the case in light of the settled judicial precedence. The sole ground of appeal raised by the Revenue is dismissed.
Issues Involved:
1. Whether the CIT(A) was correct in law and in fact in deleting the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Deletion of Penalty under Section 271(1)(c): The primary issue in this case was whether the CIT(A) correctly deleted the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. The Revenue's contention was that the penalty was justified as the assessee admitted to undisclosed income from unrecorded sales, which the assessee set off against declared losses, thereby avoiding tax. The Revenue argued that this constituted concealment of particulars of income. The Tribunal, however, upheld the CIT(A)'s decision to delete the penalty. It was noted that the penalty was levied on income admitted during a search and disclosed in compliance with a notice under Section 153A of the Act. The assessee's return, including the additional income, was accepted by the Assessing Officer without any additions. The Tribunal emphasized that the income declared in response to a notice under Section 153A should be treated as a return filed under Section 139, and if the assessed income matches the declared income, no penalty under Section 271(1)(c) is applicable. The Tribunal referenced several judicial precedents to support its decision. In the case of DCIT vs. Purti Sakhar Karkhana, it was held that if there is no variation between the income shown in the return filed under Section 153A and the assessed income, no penalty is leviable. Similarly, in Kirit Dahyabhai Patel vs. ACIT, the Gujarat High Court held that the return filed under Section 153A is considered as filed under Section 139 for penalty purposes, and penalty is only applicable on income assessed over and above the returned income. Additionally, the Tribunal noted that the penalty under Section 271(1)(c) is not automatic and requires specific conditions to be fulfilled. The Delhi High Court in Pr. CIT vs. Neeraj Jindal emphasized that the Assessing Officer must prove that the assessee consciously intended to conceal income. In this case, the revised return filed under Section 153A was accepted by the Assessing Officer, indicating no concealment. The Tribunal also referred to its previous decision in the case of Hitech Construction, where it was held that no penalty is justified if the income disclosed in response to a notice under Section 153A is accepted without any incriminating material found during the search. The Tribunal observed that the assessee's disclosure was voluntary, taxes were paid, and there was no incriminating material indicating concealment. In conclusion, the Tribunal found no infirmity in the CIT(A)'s decision to delete the penalty, as the assessee's income was accepted as declared without any evidence of concealment. The appeal by the Revenue was dismissed, affirming the CIT(A)'s order.
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