2017 (3) TMI 1260 - HC - Income Tax

Penalty levied u/s 271(1)(c) - revised computation filed during proceedings under Section 153A - Held that - At the time the return of income in response to notices under Section 153A of the Act was filed, the respondent assessee continued to declare its estimated income for the subject assessment years at the same rate / quantum as shown in the return of income filed during the regular assessment proceedings in Assessment Years 2002-03 and 2003-04. It was only on the order dated 30th July, 2009 of the Tribunal, the respondent assessee filed revised computation of income during the assessment proceedings. Moreover, all concerned were aware that at all times the income offered for tax was only on estimated basis. In the above view, the view taken by the impugned order of the Tribunal in the facts of this case is a reasonable view. The respondent assessee could not forecast the result of its appeal before the Tribunal and filed its return of income on the basis of determination of income by the Tribunal in the future. Both the CIT(A) and the Tribunal have came to a concurrent finding of fact that there was no furnishing of inaccurate particulars and / or concealment of income on the part of the respondent assessee. - Decided in favour of assessee

Summary

Issues:
Challenge to order under Section 260A of the Income Tax Act, 1961 regarding penalty under Section 271(1)(c) for Assessment Years 2002-03 and 2003-04.

Analysis:
The respondent assessee, engaged in the business of constructing and selling flats, initially declared losses for the two assessment years. The Assessing Officer later determined higher incomes, leading to appeals to the Commissioner of Income Tax (Appeals) and subsequently to the Tribunal. During this process, a search action was initiated against the respondent assessee, resulting in revised computations of income based on the Tribunal's direction to estimate profits at 5% of recoveries for the assessment years. The Assessing Officer then initiated penalty proceedings under Section 271(1)(c) alleging inaccurate particulars of income, which the respondent contested by explaining that the revised computations were based on the Tribunal's order and not concealment of income.

The Commissioner of Income Tax (Appeals) allowed the respondent's appeals, emphasizing that the estimated income was in line with the Tribunal's order issued after the original return filings. The Tribunal upheld this decision, noting that the income was determined on an estimated basis known to all parties, hence dismissing the Revenue's appeal. The High Court observed that the Revenue's grievance overlooked the timeline of events, highlighting that the revised computations were made post the original return filings and based on the Tribunal's subsequent order. The Court agreed with the concurrent findings of the lower authorities that there was no concealment or furnishing of inaccurate particulars by the respondent assessee, as the income was consistently declared on an estimated basis.

Ultimately, the High Court concluded that the question raised by the Revenue did not present a substantial question of law, leading to the dismissal of the appeal without costs. The judgment emphasized the reasonableness of the respondent's actions in filing returns based on the Tribunal's future determination of income, thereby supporting the decisions of the lower authorities regarding the penalty under Section 271(1)(c) for the assessment years in question.