2015 (10) TMI 18 - AT - Income Tax

Penalty under section 271(1)(c) - un-disclosed house property income - rental income inadvertently omitted in the original return was voluntarily offered for taxation during the course of assessment proceedings - Held that - As during the course of assessment proceedings, the assessee realized its mistake and pointed out the same to the Assessing Officer. There was no detection of concealed income by the Revenue Authorities. The assessee voluntarily offered the rental income of ₹ 2,90,572/- for taxation and the same was accepted by the Assessing Officer in the assessment order dated 30.1.2013 passed under section 143(3) of the Act. Considering the entire facts and circumstances of the present case and also keeping in view the decision of the Hon ble Bombay High Court in the case of CIT v. Somany Evergree Knits Ltd. 2013 (4) TMI 154 - BOMBAY HIGH COURT in the facts and circumstances of the present case, no penalty under section 271(1)(c) of the Act can be validly levied. Therefore, cancel the penalty levied by the Assessing Officer and confirmed by the learned CIT (Appeals). - Decided ion favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2010-11.

Analysis:
The appeal was filed against the penalty imposed under section 271(1)(c) of the Act. The assessee declared a taxable income of &8377; 3,43,100/- but later, during scrutiny assessment, an additional income of &8377; 2,90,572/- was added due to un-disclosed house property income. The Assessing Officer initiated penalty proceedings based on the view that the assessee concealed income deliberately. The assessee contended that the omission was a bona fide mistake by the accountant, and the additional income was voluntarily declared during assessment proceedings. The CIT (Appeals) upheld the penalty, leading to the appeal before the Tribunal.

During the appeal, it was argued that the original return was filed on time but subsequently revised to include the omitted rental income. The Revenue Authorities did not detect the concealed income, and the assessee voluntarily disclosed it during assessment. The Revenue contended that the subsequent return was invalid as the original was filed late. The Tribunal noted that the return filed later could not be considered a revised return under section 139(5) but observed that the rental income was offered for taxation before detection by authorities, indicating no deliberate concealment.

The Tribunal referenced a similar case where a penalty was deleted for a claimed loss due to a bona fide mistake rectified during assessment. Similarly, in this case, the assessee voluntarily disclosed the omitted income during assessment proceedings, with no detection of concealment by authorities. Citing the decision of the Hon'ble Bombay High Court, the Tribunal concluded that no penalty under section 271(1)(c) was warranted. Consequently, the Tribunal canceled the penalty levied by the Assessing Officer and confirmed by the CIT (Appeals), allowing the appeal of the assessee.

In conclusion, the Tribunal found that the assessee's voluntary disclosure of omitted income during assessment proceedings, without detection by authorities, indicated a bona fide mistake rather than deliberate concealment. Citing legal precedents and considering the circumstances, the Tribunal canceled the penalty, allowing the appeal of the assessee.