2013 (12) TMI 141 - HC - Income Tax

Penalty u/s 271(1)(c) Held that - Following CIT vs. Suresh Chand Mittal 2001 (6) TMI 63 - SUPREME Court - The return of income filed in response to notice under section 148 the assessee has already declared the income sought to be taxed - It does not amount to concealment of particulars of income. When the income itself is declared there is no concealment about it - Even though in the original return claim of long term capital gain was made yet the assessee much prior to the notice issued u/s 148 of the Act had surrendered the amount of such long term capital gain and paid tax amounting to Rs. 3 lakhs voluntarily Decided against Revenue.

Summary

Issues:
Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 1998-99.

Detailed Analysis:
The appeal was filed against the order of the Income Tax Appellate Tribunal, Agra, questioning the deletion of a penalty of Rs. 3,35,853/- imposed under Section 271(1)(c) of the Act. The key issues raised were whether the Tribunal was justified in law in deleting the penalty, if the Assessing Officer rightly invoked the penalty provisions, and if the filing of a revised return disclosing concealed income absolved the assessee of penal proceedings. The respondent-assessee initially declared income from long term capital gain but later voluntarily offered the amount as normal income to avoid pressure from the tax department. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) after the assessee filed a revised return in response to a notice under Section 148 of the Act. The penalty was imposed, leading to appeals and ultimately the Tribunal's decision.

The Tribunal, in its order, considered the voluntary surrender of income by the assessee before the notice under Section 148 was issued. It noted that the surrender was made in good faith and not after detection by revenue officers. Citing a relevant Supreme Court case, the Tribunal emphasized that voluntary surrender to avoid litigation could absolve the assessee from penalty. The Tribunal highlighted that since the income was declared in the return filed in response to the notice under Section 148, there was no concealment of income particulars. Therefore, it concluded that the penalty under Section 271(1)(c) was not applicable in this case.

During the hearing, the Revenue argued that the penalty was rightly levied as the original return had concealed income particulars, even though a revised return was filed later. However, the court noted that the assessee had voluntarily surrendered the income before the notice under Section 148 was issued, indicating a bona fide conduct. The court held that there was no concealment of income particulars justifying the penalty under Section 271(1)(c) of the Act. Consequently, the appeal was dismissed, affirming the Tribunal's decision and finding no legal infirmity in the order.