2012 (5) TMI 610 - AT - Income Tax

Tribunal upholds deletion of penalty for appellant disclosing surrendered income

ITO, Ward-63), Surat Versus Nevil R. Jokhi

The Tribunal confirmed the deletion of the penalty under Section 271(1)(c) of the Income Tax Act for the appellant. The appellant disclosed surrendered ... - Issues:The judgment involves the deletion of penalty u/s 271(1)(c) of the Income Tax Act for concealment of income and furnishing inaccurate particulars.Deletion of Penalty u/s 271(1)(c) of the Income Tax Act:The appeal arose from the order of CIT(A)-II, Ahmedabad for assessment year 2007-08. The AO imposed a penalty of Rs. 13,82,732/- u/s 271(1)(c) as the assessee did not disclose the payment and transaction of surrendered income in the books of accounts. The AO considered the assessee an offender under explanation 5 to Section 271(1)(c) as there was no disclosure based on any valuable article found during the search u/s 132 of the Act. The CIT(A) allowed the appeal, noting that the appellant had surrendered undisclosed income during the search, offered it as income in the return, and paid tax. The CIT(A) referred to relevant case laws and held that the appellant was entitled to exemption under Explanation 5 to Section 271(1)(c). The Tribunal upheld the CIT(A)'s decision, emphasizing that the return of income was accepted by the AO, and no addition was made based on incriminating documents found during the search. The Tribunal confirmed the CIT(A)'s order, citing the disclosure of income u/s 132(4) and the decisions of the High Courts in similar cases.Conclusion:The Tribunal confirmed the deletion of the penalty u/s 271(1)(c) of the Income Tax Act, as the appellant had disclosed the surrendered income during the search, offered it in the return, and the return of income was accepted by the AO. The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision based on the facts and legal interpretations presented during the proceedings.