2024 (11) TMI 1113 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - concealment of income - Difference of income returned in the original return vis- -vis that of the revised return after survey filed pursuant to notice u/s. 148 - HELD THAT - After having gone through the Assessment Order as well as the penalty order, we couldn t find as to what amount has been concealed by the assessee. AO has not bothered to at least bring on record the original returned income filed by the assessee for AY 2009-10 for AY 2010-11 u/s 139 - AO has merely made a bald statement to the effect that the assessee has understated her turnover and thus, concealed her income and that the assessee s original return failed to reflect the true state of affairs. We find that neither the impugned order of the Ld.CIT(A) nor the Assessment Order/penalty order of the AO, doesn t even spell out as to what amount assessee returned in the original return in both the years. AO/Ld.CIT(A) didn t bother to even point out how much amount the assessee has concealed. Neither the Assessment Order nor the penalty order spells out as to what was the original returned income as well as the revised returned income. Therefore, merely based on projected financials contained in the hard disc found during survey and the statement which would have been recorded u/s. 133A of the Act, can t be the ground for levy of penalty , because, the AO failed to show that the assessee had deliberately under estimated her income. Survey team found the turnover not matching with books maintained by the assessee. Only the profit embedded in turnover can be brought to tax. Unless the assessee while estimating her income has deliberately suppressed her income by under estimating her income, an inference of concealment couldn t have been drawn. Penalty deleted - Decided in favour of assessee.

Summary

Issues:
- Delay in filing of appeals
- Penalty under section 271(1)(c) of the Income Tax Act, 1961 for concealment of income
- Assessment of penalty for AY 2009-10 and AY 2010-11
- Justification for penalty imposition
- Lack of clarity on concealed income amount
- Consideration of estimated basis for quantum addition
- Decision on penalty imposition

Analysis:
The judgment involves appeals by the assessee against the penalty imposed for concealment of income for AY 2009-10 and AY 2010-11. The delay in filing the appeals was condoned due to reasons provided by the assessee, including a family emergency. The main issue pertained to the penalty levied under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer (AO) imposed penalties of Rs. 16 lakhs for AY 2009-10 and Rs. 11 lakhs for AY 2010-11 based on the concealment of income. The AO found discrepancies in the turnover reported by the assessee, leading to the initiation of penalty proceedings. The assessee's submissions regarding cooperation and tax payments were considered but did not absolve her from penalty.

The judgment highlighted that the AO did not specify the exact amount of concealed income in the original returns filed by the assessee. The lack of clarity on the concealed amount raised questions about the justification for imposing penalties. The Tribunal noted that the AO failed to demonstrate deliberate underestimation of income by the assessee, which is essential for establishing concealment. The Tribunal emphasized that penalties cannot be imposed solely based on projected financials or discrepancies found during a survey unless intentional income suppression is proven.

Considering the subjective nature of the quantum addition and the absence of concrete evidence of deliberate concealment, the Tribunal concluded that no penalty was warranted in both appeals. The decision to allow the appeals was based on the insufficiency of evidence supporting the imposition of penalties for concealment of income. The judgment was pronounced in Chennai on the 22nd day of November, 2024.