2019 (9) TMI 629 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - levy penalty u/s. 271AAA - assessee not admitted any undisclosed income u/s. 132(4) - HELD THAT - Income disclosed by the assessee in the Return of Income which is not part of Regular Accounts is liable for levy of penalty u/s.271(1)(c) and (ii) the order of the CIT(A) directing the AO to levy penalty u/s. 271AAA of the Income Tax Act on the undisclosed income cannot be sustained. Hence the action of the Assessing Officer to sustain the penalty u/s 271(1)(c) levied vide order dt 27/6/2011 in the revision order dt 13/1/2017 is upheld. is justified and hence, we do not find any merit in the assessee s appeal. - Decided against assessee

Summary

Issues Involved:
1. Legitimacy of the penalty levied under Section 271(1)(c) of the Income Tax Act.
2. Interpretation and application of the ITAT order dated 25.11.2016.
3. Jurisdiction and authority of the CIT(A) in directing the AO to levy penalty under Section 271AAA.
4. Adequacy of the opportunity provided to the assessee for representation.
5. Accuracy of the CIT(A)'s interpretation of the ITAT order.
6. Consideration of detailed submissions by the CIT(A).

Detailed Analysis:

1. Legitimacy of the Penalty Levied under Section 271(1)(c):
The main contention revolves around whether the penalty levied under Section 271(1)(c) by the Assessing Officer (AO) is justified. The AO initially levied a penalty of ?78,30,787/- on the concealed income of ?2,52,88,500/- as the assessee had admitted to on-money receipts post a search and seizure operation. The AO's action was upheld by the CIT(A). The Tribunal confirmed that the income disclosed by the assessee, which was not part of regular accounts, is liable for levy of penalty under Section 271(1)(c).

2. Interpretation and Application of the ITAT Order Dated 25.11.2016:
The assessee argued that the ITAT, in its order dated 25.11.2016, allowed the assessee's appeal and dismissed the Revenue's appeal, implying that the penalty under Section 271(1)(c) should not be reinstated. However, the Tribunal clarified that the ITAT order did not negate the penalty under Section 271(1)(c) but rather confirmed it by stating that the disclosed income, not part of regular accounts, is liable for such penalty.

3. Jurisdiction and Authority of the CIT(A) in Directing the AO to Levy Penalty under Section 271AAA:
The CIT(A) initially directed the AO to levy penalty under Section 271AAA instead of Section 271(1)(c). The Tribunal found this direction unsustainable as the search operation and the due date for filing the return of income did not align with the applicability of Section 271AAA. The Tribunal emphasized that the CIT(A) does not have the power to direct levy of penalty under Section 271AAA when the conditions for its applicability are not met.

4. Adequacy of the Opportunity Provided to the Assessee for Representation:
The Tribunal noted that the CIT(A) should have provided a reasonable opportunity to the assessee before directing the levy of penalty under Section 271AAA. The lack of specific opportunity was highlighted as a procedural lapse.

5. Accuracy of the CIT(A)'s Interpretation of the ITAT Order:
The assessee contended that the CIT(A) misinterpreted the ITAT order dated 25.11.2016. The Tribunal, however, upheld the CIT(A)'s reasoning that the ITAT had indeed confirmed the penalty under Section 271(1)(c) and that the CIT(A)'s direction to levy penalty under Section 271AAA was incorrect.

6. Consideration of Detailed Submissions by the CIT(A):
The assessee argued that the CIT(A) disposed of the appeal in a casual and summary manner without considering detailed submissions. The Tribunal, after reviewing the case, found that the CIT(A)'s order was justified and in line with the ITAT's directions, thereby dismissing the assessee's appeal.

Conclusion:
The Tribunal concluded that the penalty levied under Section 271(1)(c) was justified and upheld the CIT(A)'s decision. The appeal filed by the assessee was dismissed, affirming the AO's action to sustain the penalty. The Tribunal emphasized that the CIT(A) does not have the authority to direct the levy of penalty under Section 271AAA when the conditions for its applicability are not met. The order was pronounced on 10th September 2019 at Chennai.