2014 (3) TMI 1045 - AT - Income Tax

Tribunal cancels penalties for voluntary income disclosure, no concealment found

Shri Ajit Kumar Surana Versus Assistant Commissioner of Income Tax Central Circle-XVI II, Kolkata

The Tribunal allowed the appeals and deleted the penalties imposed under sections 271(1)(c) and 271AAA for the respective assessment years. It was ... Penalty levied under section 271(1)(c) - addition on account of credits appearing Bank accounts of six persons - Held that:- No doubt here in of the assessee’s case, what was finally assessed, except for assessment year 2006-07 was higher than the income returned in the return filed pursuant to notice under section 153A of the Act. For assessment year 2007-08, such difference was only due to correction of mistakes in calculation of deposits and credits in the Bank accounts, which was offered by the assessee himself. For assessment year 2009-10, the difference was due to the addition of deposits in the account of Mrs. Rina Sinha, for undisclosed share application money, for alleged sale of shares of M/s. Bangla Entertainment Pvt. Ltd., and clubbing of minor’s income. Of these. credits in the bank account of Mrs. Rina Sinha, was voluntarily offered by the assessee during the course of assessment proceedings. In the case before us there was no survey or search at any place, prior to the disclosure of the bank accounts in the name of five persons as his own by the assessee on 28.01.2010. There was only an enquiry in progress on such accounts by the Department. Well before any notice was issued by the Department, assessee had come up with his disclosure and filed an affidavit before DDI(Investigation). Even Explanation (1) to Section 271(1)(c) could not have been applied on the assessee since assessee had offered explanation and furnished all particulars of the income disclosed by him. As already mentioned by us, particulars of every item of income offered by the assessee and added by the Assessing Officer is clearly available in the assessment order for assessment year 2009-10, wherein Assessing Officer has elaborately analyzed the information and particulars given by the assessee, as to how the credits in various bank accounts had come in. None of such explanation given by the assessee were found to be untrue or incorrect.- Decided in favour of assessee Penalty under section 271AAA - Held that:- The income finally computed by the Assessing Officer was less than the sum of ₹ 3,00,00,000/- declared by the assessee prior to the search in his letter dated 28.01.2010addressed to the DDIT(Investigation). In the notice issued under section 271AAA for levy of penalty, (paper book page no.22) Assessing Officer stated that assessee had not satisfied the conditions mentioned in sub-section 2 of Section 271AAA of the Act. However, in the penalty order he stated that assessee had concealed his income knowingly and intentionally in the return of income filed before the search. However, for assessment year 2010-11, the return was filed by the assessee on 02.10.2010, which was after the date of search. Levy of penalty under section 271AAA was for a different reason than the one mentioned in the notice. Ld. CIT(Appeals) on the other hand observed that assessee did not satisfy the condition mentioned in sub-section 2 of Section 271AAA. None of the lower authorities could point out which condition assessee had not satisfied. Assessee had in the statement taken from him under section 132(4) of the Act admitted the undisclosed income arising out of the deposits in the Bank accounts of five persons. In the assessment order for assessment year 2009-10, Assessing Officer himself has clearly mentioned elaborately at pages 2 to 14 of his order as to how the amounts came into the accounts of the benamis of the assessee. That the detailed information with regard to these transactions resulting in the credits in the Bank accounts were given by the assessee himself, is mentioned by the Assessing Officer. Thus levy of penalty under section 271AAA could not have been fastened on the assessee - Decided in favour of assessee Issues Involved:1. Penalty levied under section 271(1)(c) for assessment years 2006-07, 2007-08, 2009-10.2. Penalty levied under section 271(1)(c) and section 271AAA for assessment year 2010-11.Detailed Analysis:1. Penalty under Section 271(1)(c) for Assessment Years 2006-07, 2007-08, and 2009-10:The assessee appealed against the penalty levied under section 271(1)(c) for these years. The penalties were confirmed by the Commissioner of Income Tax (Appeals), Central-II, Kolkata. The penalties were based on the concealment of income related to deposits in bank accounts held in the names of five individuals but owned by the assessee. The assessee had disclosed these accounts and offered to pay taxes on them before the search was conducted.The Tribunal observed that the disclosure of the bank accounts was made voluntarily by the assessee before the search. The disclosure was made through a letter dated 28.01.2010, where the assessee admitted the ownership of the bank accounts and offered to pay taxes on the undisclosed income. The Tribunal noted that the disclosure was not made due to any compulsion or detection by the Department during the search, but rather voluntarily before the search.The Tribunal referred to the case of Kiran Shah vs. ACIT, where it was held that for the purpose of imposing penalty under section 271(1)(c) in cases of search assessments under section 153A, the concealment of income should be determined with reference to the return filed in response to the notice under section 153A. The Tribunal noted that the income disclosed by the assessee in the returns filed under section 153A was accepted by the Assessing Officer, and there was no variation between the returned income and the assessed income for these years.The Tribunal concluded that the penalty under section 271(1)(c) could not be imposed as there was no concealment of income or furnishing of inaccurate particulars by the assessee in the returns filed under section 153A. The Tribunal also noted that Explanation 5A to section 271(1)(c) was not applicable as the disclosure was made voluntarily before the search.2. Penalty under Section 271(1)(c) and Section 271AAA for Assessment Year 2010-11:For the assessment year 2010-11, the assessee filed the return on 02.10.2010, before the due date, and revised it thrice, with the final revised return being accepted. The penalty proceedings were initiated under both sections 271(1)(c) and 271AAA.The Tribunal observed that the income disclosed by the assessee in the returns filed under section 153A was higher than the income finally assessed. The Tribunal noted that the disclosure was made voluntarily by the assessee before the search, and the income disclosed was accepted by the Assessing Officer.The Tribunal referred to the case of Pioneer Marble & Interiors Pvt. Ltd., where it was held that for the purpose of penalty under section 271AAA, the assessee should satisfy the conditions mentioned in sub-section 2 of section 271AAA. The Tribunal noted that the assessee had satisfied all the conditions specified in sub-section 2 of section 271AAA, as the assessee had admitted the undisclosed income in the statement under section 132(4), specified the manner in which the income was derived, and paid the taxes along with interest.The Tribunal concluded that the penalty under section 271AAA could not be imposed as the assessee had satisfied all the conditions specified in sub-section 2 of section 271AAA. The Tribunal also noted that the penalty under section 271(1)(c) could not be imposed as there was no concealment of income or furnishing of inaccurate particulars by the assessee in the returns filed under section 153A.Conclusion:The Tribunal allowed the appeals filed by the assessee and deleted the penalties levied under sections 271(1)(c) and 271AAA for the respective assessment years. The Tribunal concluded that the disclosure of income was made voluntarily by the assessee before the search, and there was no concealment of income or furnishing of inaccurate particulars in the returns filed under section 153A. The Tribunal also noted that the conditions specified in sub-section 2 of section 271AAA were satisfied by the assessee, and therefore, the penalty under section 271AAA could not be imposed.