2013 (7) TMI 9 - AT - Income Tax

Penalty u/s. 271(1)(C) - undisclosed income to tax - reopening of assessment - AO & CIT(A) while levying penalty has categorically mentioned that no reply was filed by the assessee in compliance to the notice dated 16.05.2011, which was served upon the assessee - Held that - However, since the copy of reply has been placed on record before us claiming the same being received by the office of the AO on 26.05.2011 as evidenced by the seal of AO s office of even date and penalty order was passed by the AO on 30.05.2011, the same cannot be ignored. Therefore, matter requires fresh adjudication at the end of AO - appeals of assessee allowed for statistical purpose.

Summary

Issues:
Appeal against penalty imposed under section 271(1)(C) of the Income Tax Act for A.Ys. 2003-04 to 2008-09.

Analysis:

1. Background and Facts:
The appeals were filed by the assessee against separate orders confirming the penalty imposed by the Assessing Officer under section 271(1)(C) of the Income Tax Act for A.Ys. 2003-04 to 2008-09. The Assessing Officer noted that the assessee did not file the return of income in the normal course and had made substantial investments using multiple folios to evade KYC norms. The assessee admitted undisclosed incomes for various assessment years.

2. Penalty Imposition:
The Assessing Officer levied a penalty for concealment of income as the assessee did not declare the taxable income of Rs. 7,30,789/- in the regular course. The penalty was imposed based on the undisclosed income admitted by the assessee during the investigation. The Assessing Officer observed that the assessee had concealed true particulars of income and willfully evaded tax, leading to a penalty of Rs. 2,19,236/-. The penalty proceedings were initiated alongside the assessment order.

3. Confirmation of Penalty by CIT(A):
The ld. CIT(A) confirmed the action of the Assessing Officer, stating that the penalty notices issued were not complied with by the assessee. The non-compliance of penalty notices remained uncontroverted during the proceedings, leading to the application of sub-clause A of explanation 1 to section 271(1)(C). The penalty for undeclared income was upheld based on the non-furnishing of replies by the assessee.

4. Appellate Tribunal Decision:
During the hearing before the Appellate Tribunal, the counsel for the assessee argued that the penalty notice issued was indeed replied to by the assessee, contrary to the findings of the lower authorities. The Tribunal noted that the reply dated 24.05.2011 was placed on record, indicating compliance with the penalty notice. As a result, the Tribunal felt that fresh adjudication by the Assessing Officer was necessary after considering the reply submitted by the assessee.

5. Conclusion:
The Appellate Tribunal allowed the appeals of the assessee for statistical purposes, directing a fresh adjudication by the Assessing Officer considering the reply submitted by the assessee in response to the penalty notice. The matter was restored back to the Assessing Officer for further proceedings.

This detailed analysis covers the issues involved in the appeal against the penalty imposed under section 271(1)(C) of the Income Tax Act for the relevant assessment years.