2017 (2) TMI 580 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - As per provisions of Section 271(l)(c) of the Income-tax Act, penalty can be imposed if the assessee has concealed the particulars of income or furnishing the inaccurate particulars of such income. In the case under consideration, there is no dispute with regard to the fact that the particulars of income are reflected in the Return of Income and it is not the case of the Revenue that the return of income filed was invalid, it was accepted by the AO. Even the assessee has accepted and disclosed the method of earning such income and paid the tax accordingly. Hence, it cannot be held that assessee had concealed the income or filed inaccurate particulars before the AO. - Decided in favour of assessee

Summary

Issues Involved:
Penalty under section 271(1)(c) for concealing income and furnishing inaccurate particulars of income after a survey conducted on the premises of the assessee.

Analysis:

1. Facts of the Case:
The appeal was filed by the assessee against the order of CIT(A) for AY 2009-10. The assessee, a doctor running a nursing home, had a survey conducted on their premises, revealing discrepancies in the maintenance of books and unaccounted receipts. The assessee voluntarily admitted additional income during the survey proceedings and filed a return of income accordingly.

2. Initiation of Penalty Proceedings:
The AO initiated penalty proceedings under section 271(1)(c) based on the alleged concealment of income and furnishing inaccurate particulars. The AO held that the assessee had not fully disclosed information and had concealed income, levying a penalty of ?4,01,150 on the additional income declared during the survey.

3. Arguments Before CIT(A):
The assessee contended before the CIT(A) that the voluntary admission of income and payment of taxes precluded the imposition of a penalty. However, the CIT(A) upheld the penalty, citing that the income declared post-survey could not be considered a voluntary disclosure, relying on legal precedents.

4. Appellate Tribunal's Decision:
The assessee appealed to the Appellate Tribunal, arguing that the income was disclosed voluntarily and in compliance with tax rules. The Tribunal noted that the income was declared after the survey, but as the return was accepted by the AO, it indicated no concealment. Citing legal cases, the Tribunal ruled in favor of the assessee.

5. Legal Precedents Considered:
The Tribunal referred to the case of Godavari Township Pvt. Ltd. where it was held that income detected during a survey cannot be automatically deemed as concealed income. Additionally, the Tribunal cited the case of Suresh Chandra Mittal, where voluntary disclosure post regularisation by the Revenue was considered bona fide, exempting the assessee from penalty.

6. Tribunal's Verdict:
Based on the legal principles and the facts of the case, the Tribunal set aside the penalty imposed under section 271(1)(c), stating that there was no concealment of income or inaccurate particulars filed by the assessee. The Tribunal directed the AO to delete the penalty levied, ultimately allowing the appeal of the assessee.

In conclusion, the Appellate Tribunal ruled in favor of the assessee, emphasizing that the voluntary disclosure of income post-survey, accepted by the AO, did not warrant the imposition of a penalty under section 271(1)(c) for concealing income or furnishing inaccurate particulars.