2017 (12) TMI 878 - AT - Income Tax

Penalty u/s 271(1)(c) - additional income on account of forfeiture of earnest money prior to the filing of revised return - Held that - The Income Tax Department or Investigation Wing never asked the assessee about the alleged additional income on account of forfeiture of earnest money prior to the filing of revised return. Thus, the observation and the finding of the ld. CIT(A) while deleting the said additions are upheld, because at no point of time assessee was cornered by the Department which would compelled the assessee for filing of revised return. It was purely a voluntarily act and that to be it was a business income which was accounted for in the books of account for the subsequent year and assessee has merely shifted the taxability in this year; and hence; there could not be a remotest case for levy of penalty either for concealment of income or for furnishing of any inaccurate particulars. Accordingly, the appeal of the Revenue is dismissed.

Summary

Issues Involved:
1. Deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961.
2. Determination of whether the revised return of income was filed voluntarily or under compulsion due to a search operation.

Issue-Wise Detailed Analysis:

1. Deletion of Penalty under Section 271(1)(c):

The Revenue challenged the deletion of a penalty amounting to ?3,59,84,728/- by the CIT (Appeals), which was declared by the assessee in a revised return of income. The assessee initially filed a return declaring an income of ?69,26,801/- and later revised it to ?11,38,33,301/-, showing an additional income of ?10,69,06,500/-. The Assessing Officer (AO) accepted the revised return but initiated penalty proceedings under Section 271(1)(c) for concealing income, which led to the levy of the penalty. The CIT(A) deleted the penalty, noting that the revised return was filed voluntarily before any notice under Section 143(2) was issued and before the case was selected for scrutiny. The CIT(A) also observed that no search or survey was conducted in the assessee's case, and the additional income was already accounted for in the subsequent assessment year as business income.

2. Voluntariness of the Revised Return:

The Revenue argued that the revised return was not voluntary but was filed due to a search operation in the N. Suryanarayan Group of cases, which revealed documents related to the assessee's business transactions. The assessee contended that the additional income was already recorded in the books for the subsequent year and that the revised return was filed voluntarily before any scrutiny notice was issued. The Tribunal noted the sequence of events: the original return was filed on 30.09.2009, the search in the N. Suryanarayan Group occurred on 09.10.2009, and the revised return was filed on 18.01.2010. The Tribunal found that the revised return was filed voluntarily and not under compulsion, as no inquiry or notice was issued to the assessee before the filing of the revised return. The Tribunal upheld the CIT(A)'s finding that the revised return was voluntary and that the additional income was already accounted for in the subsequent year.

Conclusion:

The Tribunal concluded that the revised return was filed voluntarily and that the additional income was already accounted for in the books of the subsequent year. The Tribunal upheld the CIT(A)'s decision to delete the penalty, as there was no concealment of income or furnishing of inaccurate particulars. The appeal of the Revenue was dismissed, and the order was pronounced in the open court on 14th December 2017.