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2023 (1) TMI 620 - AT - Income TaxPenalty u/s 271(1)(C) - revised return of income was filed declaring total income wherein additional income was declared being income from house property, interest from FDRs and consultancy fee - As per department it was not a case of voluntary disclosure but it was only after issuance of notice u/s 143(2), the assessee came forward and declared the additional income - HELD THAT - We did not find ourselves in agreement with such contentions raised by the department in as much as the notice u/s 142(1) along with query letters were issued on 06.09.2011 whereas the revised return was already filed on 31.03.2011,showing the additional income. The notice u/s 143(2) is normally a formal notice showing the selection of the case for scrutiny and to comply with the limitation provision. Nothing was brought on record by the revenue if the assessee was specifically asked or investigation was made with reference to all the three items of income additionally declared. Otherwise also, the revenue may be technically correct in not considering the later return of income as a revised return but it cannot be denied that additional income was shown by the assessee himself and it is not the case of the revenue that they unearthed the additional income by carrying out investigations. In addition, we find force in the contention by the Ld. AR that there were justified reasons behind delayed declaration of additional income from these sources. The contention of the revenue that additional income suffered TDS and, therefore, the assessee should have declared for the income in the original return itself, is far from the ground realities which prevailed at the relevant point of time. It was a quite usual practice for the deductor to issue certificate in form 16A or to upload the same in form 26AS lately. It cannot be denied that the assessee must have been under a bona fide impression that all such incomes were subjected to TDS and therefore, he is not concealing any income from the department. The decisions cited in the penalty order do not help the revenue being rendered in different factual context. In the past also, the income from all the three sources have never been to this extent. The consultancy income was for the first time. Also it is evident that there as chances of incorrect reporting by the deductor and therefore, the assessee cannot be held responsible for not showing income correctly and timely. There is no difference between the assessed income and the income declared in the revised return. It is not denied that the additional income from all the three sources, was subjected to TDS and we find force in the contention of the ld. AR that once the additional income has suffered TDS it cannot be said to be undisclosed income of the assessee. We have gone through the decisions cited by the ld. AR and find that they support the case of the assessee. A cumulative consideration of all the facts and circumstances clearly establish that it was not a case of concealment of income with respect to the declaration of the additional income - It is well settled principle of interpretation of penal provisions that the same has to be construed strictly and no penalty cannot be imposed unless the case strictly fall within the legal parameters. We, therefore, direct the AO to delete the penalty imposed u/s 271(1)(c) under challenge. Decided in favour of assessee.
Issues Involved:
1. Validity of the penalty order under section 271(1)(c) of the Income Tax Act. 2. Justification for the penalty imposed by the Assessing Officer (AO) for concealment of income. 3. Legitimacy of the revised return filed by the assessee. 4. Whether the additional income declared by the assessee was voluntary or prompted by the issuance of notice under section 143(2). 5. Whether the income declared in the revised return was indeed concealed or inaccurately reported initially. Issue-wise Detailed Analysis: 1. Validity of the Penalty Order under Section 271(1)(c): The assessee challenged the penalty order dated 26-06-2019, arguing it was bad in law and on facts for want of jurisdiction. The penalty order was based on the AO's findings that the assessee had concealed income by not declaring it in the original return filed under section 139(1). The penalty imposed was Rs. 7,93,130/-. The Tribunal noted that the AO initiated the penalty proceedings after the assessee filed a revised return declaring additional income. 2. Justification for the Penalty Imposed by the AO: The AO contended that the revised return filed by the assessee was not valid as the original return was not filed under section 139(1). The AO treated the additional income declared in the revised return as concealed income and imposed the penalty accordingly. The Tribunal observed that the AO relied on various case laws to justify the penalty, including "Samson Maritime Ltd. vs CIT," "Mak Data 258 ITR 593 (SC)," and others. 3. Legitimacy of the Revised Return Filed by the Assessee: The Tribunal noted that the revised return was filed on 31-03-2011, declaring additional income of Rs. 23,33,440/-. The AO rejected this revised return on the grounds that the original return was not filed under section 139(1). The Tribunal found that the revised return was filed before the issuance of the notice under section 142(1) on 06-09-2011, indicating that the additional income was declared voluntarily by the assessee. 4. Voluntariness of the Additional Income Declaration: The Tribunal found that the additional income declared in the revised return was voluntary and not prompted by the notice under section 143(2). The notice under section 143(2) was issued on 18-08-2010, and the revised return was filed after a gap of five months, suggesting that the declaration was not a result of the notice. The Tribunal also considered the assessee's age, location, and the operational difficulties in obtaining complete and correct information at the time. 5. Concealment or Inaccurate Reporting of Income: The Tribunal found that the additional income declared by the assessee was subjected to TDS, and there was no difference between the assessed income and the income declared in the revised return. The Tribunal noted that the assessee had a bona fide belief that the income subjected to TDS was not concealed. The Tribunal also considered the past history of the assessee's income from similar sources and found no significant discrepancies. The Tribunal concluded that the penalty under section 271(1)(c) was not justified as the case did not strictly fall within the legal parameters for imposing such a penalty. Conclusion: The Tribunal directed the AO to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, concluding that the additional income declared by the assessee was not concealed and the penalty was not justified. The appeal of the assessee was partly allowed. Order Pronounced on 12-01-2023.
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