2024 (2) TMI 1111 - AT - Income Tax

Penalty u/sec. 271(1)(c) - income disclosed in search action - only contention that has been submitted by the assessee in his defence on merits is that he has declared the suppressed receipts amount in his return of income filed u/sec. 153A - HELD THAT - In the case of CIT v. Prasanna Duga 2015 (5) TMI 317 - CALCUTTA HIGH COURT has held that even subsequent to search, if the assessee voluntarily discloses a sum and offers the same to tax, since the said amount was not disclosed in original return, penalty levied u/sec. 271(1)(c) was justified. SLP against the same decision was dismissed in Prasanna Dugar 2015 (8) TMI 477 - SC ORDER holding that even if assessee voluntarily disclosed a sum subsequent to search and offered said sum to tax, penalty levied under sec. 271(1)(c) r.w. Explanation 5A was justified. Reverting to the present fact situation, it is evident that due to search action, it was disclosed that there had been suppression of receipts by the assessee. This suppression of receipts was also later on admitted by the assessee vide his statement u/sec.132(4). The suppress receipts were even disclosed as additional income in the return filed u/sec. 153A of the Act by the assessee. But the fact remains that if search had not taken place, then these suppressed receipts would not have been discovered and would have escaped being taxed. This is a definite case of concealment of income. Thus even on merits also, we do not find any infirmity in the findings of the ld. CIT(A) in upholding the levy of penalty u/sec. 271(1)(c) of the Act. All the grounds, in both the appeals, raised by the assessee stands dismissed.

Summary

Issues involved: Appeal against penalty u/sec. 271(1)(c) of the Act for A.Y. 2014-15 & 2016-17 due to non-prosecution and suppression of receipts.

Issue 1: Non-prosecution
The assessee failed to respond to multiple hearing opportunities given by the ld. CIT(A) and also did not comply with the notices. Despite being provided with several chances, the assessee did not appear or provide any submissions before the Tribunal, indicating a casual approach towards the legal proceedings. The Tribunal found the assessee's behavior evasive and not interested in pursuing the appeals, leading to the dismissal of both appeals on the ground of non-prosecution.

Issue 2: Suppression of Receipts
The assessee admitted to suppressing receipts, as confirmed in the statement recorded u/sec. 132(4) of the Act. No response or explanation was provided during the penalty proceedings, and the assessee failed to respond to hearing notices even before the ld. CIT(A) and the Tribunal. The only defense put forth was declaring the suppressed receipts in the return filed u/sec. 153A of the Act. However, legal precedence established that voluntary disclosure post-search does not absolve the penalty under sec. 271(1)(c) r.w. Explanation 5A. The Tribunal noted that the suppressed receipts would not have been discovered if not for the search action, constituting a clear case of concealment of income. Consequently, the Tribunal upheld the levy of penalty u/sec. 271(1)(c) of the Act based on the admitted suppression of receipts and lack of cooperation from the assessee.

Conclusion:
The Tribunal dismissed the appeals of the assessee on the grounds of non-prosecution and upheld the penalty u/sec. 271(1)(c) for the suppression of receipts, emphasizing the importance of active participation and compliance in legal proceedings to ensure a fair and just outcome.