2012 (11) TMI 156 - AT - Income Tax

Penalty u/s.271(1)(c) - CIT(A) restricted the levy only to the extent of Rs.5,600/- - Held that - The undisputed facts that during the course of survey the assessee declared income of Rs.7,15,000/- and the same was included in the return of income filed by the assessee u/s. 139(1). The additions made by the A.O. during the course of assessment proceedings were substantially deleted by the appellate authorities except to the extent of Rs.16,642/- that was sustained. Penalty levied on the additions made by the A.O. were deleted by CIT (A) except for the penalty of Rs.5,600/- on the addition of Rs.16,642/-. The reason for levy of the penalty was that the assessee had included in the return of income the additional income only on account of survey u/s. 133A. Thus in the present case, it is not furnishing of inaccurate particulars of income as in the income tax return the particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the income tax return and therefore it cannot be said that the assessee has furnished inaccurate particulars of income - there cannot be any penalty only on surmises and possibilities - in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act for concealing income or furnishing inaccurate particulars.

Analysis:
The appeal was filed by the Revenue against the order of CIT (A)-III, Ahmedabad for the assessment year 2005-06. The main ground of appeal was regarding the penalty imposed under section 271(1)(c) of the Income Tax Act. The assessee had initially declared income of Rs. 9,56,220/-, which included Rs. 7,15,000/- disclosed during a survey under section 133A. The Assessing Officer (A.O.) assessed the income at Rs. 36,87,862/-, making additions for unaccounted investment/income/interest. The CIT (A) substantially deleted the additions, resulting in a total income of Rs. 9,72,220/-. The A.O. imposed a penalty of Rs. 2,19,493/-, considering the disclosed income of Rs. 7,15,000/- as concealed income. The assessee appealed against the penalty order before CIT (A).

Before CIT (A), the assessee argued that the disclosed income was included in the return filed within the prescribed time, and the additions made by the A.O. were substantially deleted by CIT (A). CIT (A) upheld the penalty of Rs. 5,600/- on an addition of Rs. 16,642/-, considering the minimum penalty that can be levied. The Revenue appealed this decision before the Appellate Tribunal ITAT, Ahmedabad.

During the appeal, the Revenue argued that the disclosed income of Rs. 7,15,000/- was only due to the survey under section 133A, supporting the A.O.'s order. The assessee contended that the disclosed income was included in the return filed under section 139(1) and relied on relevant case laws to support their position. The Tribunal noted that the disclosed income was included in the return, and the additions by the A.O. were substantially deleted, except for Rs. 16,642/-. The Tribunal emphasized that penalty under section 271(1)(c) can only be imposed if there is actual concealment or non-disclosure of income.

Referring to a decision by the Delhi High Court, the Tribunal highlighted that penalty cannot be levied based on surmises and possibilities. The Tribunal concluded that since the assessee made a complete disclosure in the return and offered the surrendered amount for tax, no penalty for concealment or non-disclosure should be imposed. Therefore, the Tribunal directed the A.O. to delete the penalty, dismissing the appeal of the Revenue.