2022 (12) TMI 1001 - AT - Income Tax

Penalty u/s 271(1)(c) - addition was made on basis of undeclared short term capital gain for sale of property - observation made by the revenue during search - revised return was submitted and income was declared before issuance of notice u/s 153A - HELD THAT - In annexure A-21 in search documents, the said property was not in the list. So it cannot be said the incriminating documents. The assessee revised its return and took the benefit of rectification is mistake apparent from the record. The revised return was submitted and income was declared before issuance of notice u/s 153A. As submitted by assessee the whole issue is depicted in a manner that the said income was declared during revised return before finding by the revenue. So, considering the revised return of the assessee there is no concealment of inaccurate particular of income. He relied on the order of the Coordinate Bench of the ITAT Jaipur. 2019 (3) TMI 2008 - ITAT JAIPUR - Further the ld. Sr. DR has not able to produce any contrary judgment related to the submission of the ld. Counsel. Accordingly, the penalty levied by the ld. is quashed. - Decided in favour of assessee.

Summary

Issues:
Penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for A.Y. 2016-17.

Detailed Analysis:

1. Grounds of Appeal: The appellant contested the penalty imposed by the ld. AO amounting to Rs.3,56,768 under section 271(1)(c) of the Income Tax Act, 1961. The revised return filed by the assessee after a search was a key point of contention.

2. Factual Background: The assessment was completed under sections 153A/143(3) based on undeclared short-term capital gain from property sale. The search conducted under section 132(1) revealed additional income, prompting the revised return by the assessee. The penalty was levied by the ld. AO, which was upheld by the ld. CIT(A).

3. Appellate Proceedings: The assessee appealed the decision, presenting arguments supported by relevant case laws. The ld. Counsel highlighted discrepancies in the assessment order and the revised return, emphasizing the rectification of errors made in the original return.

4. Legal Arguments: The ld. Sr. DR relied on Explanation 5A of section 271, emphasizing the concealment of income in search cases. The argument revolved around whether the revised return rectified the initial non-disclosure adequately.

5. Judicial Precedents: The appellant cited various judgments, including M/s NSE IT Ltd. and D. Prasad cases, to support the contention that penalty under section 271(1)(c) cannot be imposed in the absence of incriminating documents found during the search.

6. Final Decision: After considering the arguments and case laws presented, the Tribunal found in favor of the assessee. The revised return, filed before the issuance of notice under section 153A, rectified the initial non-disclosure. The penalty imposed by the ld. AO was quashed based on the lack of incriminating evidence and the rectification made by the assessee.

7. Conclusion: The Tribunal allowed the appeal, emphasizing the importance of rectification through revised returns and the absence of incriminating evidence to support the penalty under section 271(1)(c). The decision was pronounced on 08.12.2022, in favor of the assessee.