Assessee not penalized for disclosure, Tribunal directs deletion of penalty under section 271(1)(c)

The Tribunal held that since the assessee made a complete disclosure in the return and offered the surrendered amount for tax, no penalty for concealment or non-disclosure should be imposed. The Tribunal directed the Assessing Officer to delete the penalty, dismissing the Revenue's appeal against the penalty order imposed under section 271(1)(c) of the Income Tax Act.

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Issues:
Penalty under section 271(1)(c) of the Income Tax Act for concealing income or furnishing inaccurate particulars.

Analysis:
The appeal was filed by the Revenue against the order of CIT (A)-III, Ahmedabad for the assessment year 2005-06. The main ground of appeal was regarding the penalty imposed under section 271(1)(c) of the Income Tax Act. The assessee had initially declared income of Rs. 9,56,220/-, which included Rs. 7,15,000/- disclosed during a survey under section 133A. The Assessing Officer (A.O.) assessed the income at Rs. 36,87,862/-, making additions for unaccounted investment/income/interest. The CIT (A) substantially deleted the additions, resulting in a total income of Rs. 9,72,220/-. The A.O. imposed a penalty of Rs. 2,19,493/-, considering the disclosed income of Rs. 7,15,000/- as concealed income. The assessee appealed against the penalty order before CIT (A).

Before CIT (A), the assessee argued that the disclosed income was included in the return filed within the prescribed time, and the additions made by the A.O. were substantially deleted by CIT (A). CIT (A) upheld the penalty of Rs. 5,600/- on an addition of Rs. 16,642/-, considering the minimum penalty that can be levied. The Revenue appealed this decision before the Appellate Tribunal ITAT, Ahmedabad.

During the appeal, the Revenue argued that the disclosed income of Rs. 7,15,000/- was only due to the survey under section 133A, supporting the A.O.'s order. The assessee contended that the disclosed income was included in the return filed under section 139(1) and relied on relevant case laws to support their position. The Tribunal noted that the disclosed income was included in the return, and the additions by the A.O. were substantially deleted, except for Rs. 16,642/-. The Tribunal emphasized that penalty under section 271(1)(c) can only be imposed if there is actual concealment or non-disclosure of income.

Referring to a decision by the Delhi High Court, the Tribunal highlighted that penalty cannot be levied based on surmises and possibilities. The Tribunal concluded that since the assessee made a complete disclosure in the return and offered the surrendered amount for tax, no penalty for concealment or non-disclosure should be imposed. Therefore, the Tribunal directed the A.O. to delete the penalty, dismissing the appeal of the Revenue.

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