2016 (10) TMI 364 - AT - Income Tax

Penalty u/s 271(1)(c) - assessment was made accepting the revised return - undisclosed income towards excess cash, excess stock and list of outstanding debtors was offered and tax was paid - Held that - The survey was conducted on 10.7.2008, more than 3 months have been completed for the financial year 2008-09 relevant to assessment year 2009-10. During the course of survey, excess cash, excess stock and list of outstanding debtors were found which has been admitted by the assessee, but previous year has not ended so far. The assessee filed return on 30th September, 2009 within time at ₹ 2,42,212/- and paid the tax on all the disclosures made, but in computation this disclosure has not been taken & it is directly credited in the capital account of the assessee. The assessee has co-operated during the survey proceedings as well as in assessment proceedings. The ld. AO had imposed penalty on the basis of finding given for the quantum proceedings in assessment. However, quantum proceedings and penalty proceedings are separate. No investigation or additional evidence had been brought on record to show that assessee has concealed the particulars of income and concealed the income. The AO only imposed the penalty on the basis of returned income. In the case of Suresh Mittal, 2001 (6) TMI 63 - SUPREME Court held that no penalty can be imposed if the revised return accepted by the AO as such. A number of decisions also on this issue has confirmed that for the assessment made on returned income, no penalty can be imposed under section 271(1)(c) of the Act. Therefore, we are of the considered view that penalty confirmed by ld. CIT (A) deserves to be deleted. Accordingly we delete the penalty imposed by the AO and confirmed by ld. CIT (A). - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) for undisclosed income detected during survey proceedings.

Analysis:
The appeal before the Appellate Tribunal ITAT Jaipur stemmed from the order passed by the CIT (A)-III, Jaipur for the assessment year 2009-10. The primary issue revolved around the levy of penalty under section 271(1)(c) amounting to ?14,28,950. The appellant contended that the penalty was unjustified as the disclosed income was already present in the books of accounts, and there was no concealment or furnishing of inaccurate particulars of income. The appellant also argued that the explanation provided for the discrepancies during the survey was genuine and should have been accepted. The survey conducted under section 133A revealed discrepancies in cash, stock valuation, and unaccounted income related to debtors. The appellant's son, managing the business, made statements during the survey which led to the disclosure of additional income by the appellant. The AO imposed the penalty based on the surrendered income during the survey, without establishing actual concealment or furnishing of inaccurate particulars post the return filing. The CIT (A) upheld the penalty, stating that the disclosure was not voluntary and that the appellant's conduct indicated guilt in furnishing inaccurate particulars of income.

The appellant argued before the Tribunal that the penalty was imposed solely based on observations from the quantum proceedings, without separate findings on concealment or inaccurate particulars. It was emphasized that the surrendered income was disclosed in the return, albeit credited directly to the capital account due to a clerical error. The Tribunal noted that the AO did not present any new evidence to prove concealment or inaccurate particulars beyond the returned income. Relying on precedents and the distinction between quantum and penalty proceedings, the Tribunal concluded that the penalty was unwarranted. Citing the Supreme Court's stance on penalties when revised returns are accepted, the Tribunal held that in the absence of evidence of concealment beyond the returned income, the penalty under section 271(1)(c) was unjustified. Consequently, the Tribunal allowed the appellant's appeal and deleted the penalty confirmed by the CIT (A).

In summary, the Tribunal's decision centered on the lack of concrete evidence establishing deliberate concealment or furnishing of inaccurate particulars of income beyond the disclosed amount during the survey. The Tribunal emphasized the distinction between quantum and penalty proceedings, highlighting the necessity for separate findings on concealment or inaccuracies. Ultimately, the penalty under section 271(1)(c) was deemed unjustified and was consequently deleted.