2020 (9) TMI 27 - AT - Income Tax

Penalty u/s 271(1)(c) - income disclosed by the assessee for the investment made in the insurance policies under the charge concealment of income - undisclosed investment in the insurance policies - whether the summon issued under section 131(1A) can be equated as proceeding as envisaged u/s 271(1)(c)? - HELD THAT - The answer certainly stand in negative. It is because, the summon was issued under section 131(1A) of the Act by the ADIT much before the initiation of the proceedings initiated under section 148. Similarly, the assessee disclosed the income much before the initiation of the proceedings initiated under section 148 of the Act. Admittedly, the income disclosed by the assessee in response to the notice issued under section 148 of the Act was accepted by the revenue without any further addition. As such the return income was accepted by the revenue. Accordingly, the revenue has to find out the concealment of income with reference to the income declared by the assessee in the return of income filed under section 148 viz a viz the income as assessed by the AO. As, there was no difference between the return and the assessed income, then in our considered view, the question of penalty does not arise merely on the basis of the income admitted during the survey proceedings. There cannot be a penalty merely on the basis that the assessee has disclosed income after receiving the notice from the ADIT and the income was accepted during survey proceedings as discussed above. No incriminating documents discovered during the course of survey at the premises of the assessee. Similarly, the additional income offered by the assessee in return filed in response to notice under section 148 of the Act admitted as it is by the AO. Accordingly, we conclude that the principles laid down in the case MAK Data 2013 (11) TMI 14 - SUPREME COURT are not applicable on the case in hand. Hence, the penalty in the instant case cannot be attracted under the provisions of section 271(1)(c) in the present facts and circumstances. - Decided in favour of assessee.

Summary

Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961.
2. Specification of the charge in the penalty notice (whether for inaccurate particulars of income or concealment of income).

Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c):
The primary issue was whether the penalty of ?17,19,850 levied on the assessee for the assessment year 2009-10 under Section 271(1)(c) of the Income Tax Act, 1961 was justified. The penalty was imposed for the alleged concealment of income related to investments in insurance policies.

The facts reveal that the assessee, engaged in real estate and a partner/director in various firms/companies, filed a return of income on 26th September 2009, which was accepted by the AO. However, a subsequent summon under Section 131(1A) led to the disclosure of ?5.30 crore as investments in insurance policies over different years.

The AO issued a notice under Section 148, and the assessee disclosed an additional income, which was accepted. The AO contended that the disclosure was not voluntary but a result of the survey conducted under Section 133A. Consequently, the AO levied a penalty for concealment of income.

The CIT(A) upheld the penalty, observing that the disclosure was made only after receiving the notice under Section 131(1A) and that the assessee had opportunities to disclose the income earlier but failed to do so.

The Tribunal, however, noted that the penalty under Section 271(1)(c) requires the revenue to prove that the concealment was in the return of income filed by the assessee. The Tribunal relied on the Delhi High Court's judgment in CIT vs. SAS Pharmaceuticals, which held that penalty cannot be imposed unless there is actual concealment or non-disclosure in the income tax return filed by the assessee.

The Tribunal concluded that since the income was disclosed in response to the notice under Section 148 and accepted without further addition, there was no concealment in the return of income. Thus, the penalty under Section 271(1)(c) was not justified.

2. Specification of the Charge in the Penalty Notice:
The assessee argued that the penalty notice did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income. The Tribunal did not address this contention in detail, as the primary ground of appeal was allowed, rendering this issue moot.

Conclusion:
The Tribunal allowed the appeal, holding that the penalty under Section 271(1)(c) was not sustainable as there was no concealment in the return of income filed in response to the notice under Section 148. The Tribunal's decision was based on the principle that penalty cannot be imposed unless there is actual concealment or non-disclosure in the income tax return.

Other Appeals:
The Tribunal followed the same reasoning for other appeals (ITA Nos. 1853 & 1061/Ahd/2016 for A.Ys. 2010-11 & 2011-12) and allowed the appeals, as the issues were identical to those in ITA No. 563/Ahd/2016 for A.Y. 2009-10.

Combined Results:
The appeals filed by the different assessees were partly allowed, with the Tribunal concluding that the penalty under Section 271(1)(c) was not justified in the absence of concealment in the income tax returns filed in response to the notices under Section 148.