2019 (4) TMI 1521 - AT - Income Tax

Penalty u/s 271(1)(c) - survey u/s 133A was carried out at the premises of the assessee on 28.3.2012 i.e. much prior to the closing dates of accounts and date of filing of return u/s 139(1) - assessee discloses amount during action under section 133A, and the same is honoured by filing return of income subsequent thereto - HELD THAT - Admitted during survey u/s.133A when disclosed in the return of income furnished on or before due date and the same is accepted by the AO, there cannot be a case for levy of penalty. When the due date for filing return of income was not expired, then how the AO could infer that the assessee would not disclose the income in its return. The assessee has disclosed this income in its return and the AO has accepted the same without any addition or disallowance. AO has simply carried away by the surmise that had the survey not taken place, the assessee would not have disclosed this income. This assumption and surmises of facts are without any basis. AO cannot anticipate that assessee will not disclose a particular income. There are number of judgments available on this issue where it is held that when an assessee has made a complete disclosure in the return of income and offered the admitted amount for taxation, then there is no question of concealment of income or furnishing inaccurate particulars of income so as to attract provisions of section 271(1)(c). In the case of SAS Pharmaceuticals 2011 (4) TMI 888 - DELHI HIGH COURT has held that when the assessee discloses amount during action under section 133A, and the same is honoured by filing return of income subsequent thereto, no penalty u/s.271(1)(c) is sustainable. CIT(A) has made detailed analysis of the issue in the light of the of various judgments and rightly come to the conclusion that levy of impugned penalty is neither sustainable on facts nor in law. CIT(A) and reject the ground of appeal of the Revenue

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the ld.CIT(A)-12, Ahmedabad for the Asstt.Year 2012-13 in the cases of Mann Corporation and Yamunaji Corporation.

Detailed Analysis:

1. Facts and Background:
The appeals by the Revenue were against the orders of the ld.CIT(A)-12, Ahmedabad regarding the deletion of penalties imposed under section 271(1)(c) of the Income Tax Act, 1961 for the Asstt.Year 2012-13 in the cases of Mann Corporation and Yamunaji Corporation. The disclosure of on-money receipts was made during a search and survey action, leading to scrutiny of the cases by the Assessing Officer.

2. Contentions of the Parties:
The Revenue argued that the disclosures were not voluntary and were made only after detection by the department during the survey. The assessee contended that the disclosed income was already included in the returns filed, taxes were paid on the disclosed income, and the AO accepted the returned income without any discrepancies. The assessee emphasized that penalty under section 271(1)(c) is applicable only if additional undisclosed income is found upon scrutiny.

3. Legal Precedents and Arguments:
The assessee cited various judgments to support their case, highlighting that complete disclosure in the return of income and offering the admitted amount for taxation precludes the imposition of penalty under section 271(1)(c) of the Act. The Hon’ble Delhi High Court's decision in SAS Pharmaceuticals case was particularly referenced to establish that when disclosed amounts during a survey are included in subsequent returns, no penalty is sustainable.

4. Judgment and Analysis:
The Tribunal considered the facts, noting that the disclosed amounts were included in the returns filed before the due date and accepted by the AO without any adjustments. The Tribunal emphasized that the AO's assumption that the assessee would not have disclosed the income without the survey was unfounded. Relying on legal precedents, the Tribunal upheld the ld.CIT(A)'s decision, concluding that the penalty was not sustainable on factual or legal grounds. Consequently, both appeals by the Revenue were dismissed.

5. Conclusion:
The Tribunal's order, pronounced on 24th April 2019, upheld the deletion of penalties imposed under section 271(1)(c) of the Income Tax Act, 1961 for the Asstt.Year 2012-13 in the cases of Mann Corporation and Yamunaji Corporation, based on the grounds that the disclosures were made in the returns filed before the due date and accepted by the AO without discrepancies.