2016 (3) TMI 968 - AT - Income Tax

Penalty under Sec.271(1)(c) - surrender of income in revised return - Held that - The assessee filed revised return in time offering the additional income voluntarily in good faith to purchase peace with the Department, though in the course of investigation and to avoid protracted litigation. Thus, we see that it is a case of simply accepting the additional income by the assessee in the course of investigation and filing the revised return in time and to avoid protracted litigation as to in whose hands the addition is to be made whether assessee or the AOP and in which the case, the ratio of the decision of Hon ble Supreme Court Zin the case of CIT Vs. Suresh Chandra Mittal reported in 2001 (6) TMI 63 - SUPREME Court will apply. Thus following the said decision, we hold that there is no concealment of income. Thus we direct the ld. Assessing Officer to delete the penalty levied under Sec.271(1)(c) of the Act.- Decided in favour of assessee

Summary

Issues:
Levy of penalty under Sec.271(1)(c) of the Act based on revised return filed by the assessee offering additional income after investigation.

Analysis:
The appeal was filed by the Assessee against the order confirming the penalty under Sec.271(1)(c) of the Act. The Assessee initially declared an income of &8377;14,09,950/-, later revised to &8377;42,63,990/-. The Assessing Officer initiated penalty proceedings as the Assessee declared additional income of &8377;28,34,240/- only after an investigation. The Assessee argued that the revised return was accepted without any addition, so no penalty should be levied. The Assessee claimed that the additional income should be taxed in the hands of an 'AOP' comprising multiple individuals, not solely the Assessee. The Departmental Representative supported the penalty, stating that without the investigation, the Assessee wouldn't have disclosed the additional income. The Tribunal analyzed the case law and held that unless the Assessee is proven to be guilty of concealment, penalty cannot be levied. The Tribunal referred to a similar case where penalty was not levied due to revised returns filed in good faith to avoid litigation. Ultimately, the Tribunal concluded that the Assessee voluntarily disclosed the additional income in good faith to avoid prolonged litigation, and thus, there was no concealment of income. Therefore, the penalty under Sec.271(1)(c) was directed to be deleted.

This judgment highlights the importance of establishing concealment of income before levying penalties under Sec.271(1)(c) of the Act. It emphasizes the significance of voluntary disclosure in good faith to avoid litigation and purchase peace with the Department. The Tribunal's decision was influenced by previous case law where penalties were not imposed in similar circumstances. The judgment underscores the need for a thorough examination of the facts and circumstances surrounding the revised return filing and the Assessee's intentions to determine the applicability of penalties. The case also clarifies the distinction between individual and collective ownership in tax assessments, emphasizing the need for accurate attribution of income.