2022 (4) TMI 692 - HC - Income Tax

Penalty u/s 271(1) (c) - concealment of income and filing of inaccurate particulars of income pertaining to the amounts in the HSBC, Zurich accounts - ITAT deleted penalty levy - assessee has suo-moto and voluntarily offered additional income to tax and that the income which was offered for tax by the assessee in the revised returns of income was in any case, not chargeable to tax in India - whether ITAT erred taking cognizance of the non-est revised returns of income filed beyond the time allowed u/s 139(5) of the Act to hold that the assessee voluntarily disclosed the impugned income and then proceeding on that incorrect premise to delete the aforesaid penalty? - HELD THAT - Indisputable fact is that during the period when the assessee was non resident, from Assessment Year 2000-2001 to the year in question, the assessee was in employment with a U.S. Company and was resident of United States of America. In the year 2011 the assessee decided to settle down in India and after returning to India, filed an affidavit dated 07.09.2011 offering to tax income of ₹ 73,18,600/- being peak balance lying in the accounts of these two entities JWL and SF and for this purpose filed revised return on 20.9.2011. Immediately thereafter, assessee realized that he had committed a mistake in calculating peak balance lying in bank accounts held by these two entities JWL and SF and therefore, made supplementary affidavit on 7.11.2011 offering to tax additional income of ₹ 1,03,49,908/-. Consequent thereto, second revised return dated 15.11.2011 was filed showing total additional income of ₹ 1,76,68,508/- on account of funds lying in the bank accounts held by JWL and SF with HSBC Bank, Zurich. Tribunal found that second affidavit of 7.11.2011 declaring additional amount due to mistake in calculating bank peak balance was filed not because of any issue of summons and declaration was purely because of the mistake committed in earlier calculation. The Tribunal came to a finding of fact that Revenue had no information of any undisclosed income in the hands of the assessee except the declarations made by the assessee. What also impressed the Tribunal was at no stage it was the case of the Revenue that the funds that were lying in the bank accounts held by the two entities JWL and SF with HSBC Bank, Zurich could have been brought to tax in India. These monies have been offered to tax in India because the assessee made voluntary declarations and considering that aspect the Tribunal felt that levy of penalty u/s 271 (1)(c ) of the Act, was not justified. Revenue as relied on Mak Data P.Ltd. 2013 (11) TMI 14 - SUPREME COURT to submit that just because the assessee voluntarily disclosed his income, it can not be said that there was no concealment. Facts in the case at hand, are different in as much as in Mak Data Pvt. Ltd. (supra), the Apex Court came to conclusion that the surrender in that case was not voluntary. In the case at hand, the Tribunal has correctly come to a conclusion that the declaration was voluntary. Tribunal has not committed any perversity or applied incorrect principles to the given facts - No substantial question of law.

Summary

Issues:
1. Whether the ITAT erred in deleting the penalty for concealment of income and inaccurate particulars?
2. Whether the ITAT erred in considering the revised returns of income and voluntary disclosure for penalty deletion?

Analysis:
1. The assessee, a non-resident individual, filed a return of income for the assessment year 2007-2008, later revising it to declare additional income. The Assessing Officer imposed a penalty under Section 271(1)(c) of the Income Tax Act for concealment of income. The CIT(A) deleted the penalty, stating that the additional income offered was not chargeable to tax in India. The Revenue appealed to the Tribunal.

2. Subsequently, the CIT(A) issued a notice for amending the earlier order based on a supplementary affidavit by the assessee declaring more income. The CIT(A) amended the order, upholding the penalty related to the additional income disclosed. Both the assessee and the Revenue appealed to the Tribunal, which dismissed the Revenue's appeal and upheld the assessee's appeal.

3. The Tribunal found that the additional income was declared due to a mistake in calculation, not because of any summons. It noted that the Revenue had no information on undisclosed income except the declarations made by the assessee. The Tribunal concluded that the funds in question were offered to tax in India voluntarily by the assessee, and thus, the penalty under Section 271(1)(c) was unjustified.

4. The appellant cited a case to argue that voluntary disclosure does not negate concealment. However, the Court found that the Tribunal correctly determined the disclosure in this case as voluntary. It held that the Tribunal's decision was not erroneous, and the appeal lacked merit. The Court dismissed the appeal with no costs.