2016 (1) TMI 404 - AT - Income Tax

Tribunal overturns penalty for unreported income, citing Assessee's voluntary disclosure and good faith

The Tribunal allowed the appeal filed by the Assessee against the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment ... Penalty u/s 271(1)(c) - undisclosed sales/purchase figures - Held that:- The only facts that the assessee could not produce all sales/purchase bills, does not mean that the detail furnished is in accurate in any manner. These facts were also told to CIT, Appeal during the penalty proceedings. In spite of not having any shortcomings/discrepancies and to end the proceeding amicably, she had offered to surrender a sum of ₹ 5,00,000/- on agreed basis.as additional income to buy peace with the department and the Id., A.O. accepted the said offer and made addition of ₹ 5,00,000/- only. However the penalty proceeding was still initiated which is uncalled for as no specific defect was found while making the addition of ₹ 5,00,000/- This figure was based on the voluntary amount offerto tax to end the prolonged litigation by the assessee and the A.O. has only reproduced the submission of surrender in the penalty order. Hence the penalty imposed on account of concealment of Income and furnishing inaccurate particular u/s 271(1)© is not justified and needs to be deleted. Levy of penalty in this case is not justified. Accordingly, set aside the orders of the authorities below and delete the levy of penalty in dispute as section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. On the facts and circumstances of this case the assessee’s conduct cannot be said to be contumacious so as to warrant levy of penalty. - Decided in favour of assessee Issues:- Appeal against penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.- Justification for penalty imposition based on concealment of income and furnishing inaccurate particulars.- Assessee's argument of voluntary disclosure and surrender of additional income.- Comparison of facts with relevant case laws to support the appeal.Analysis:1. The appeal was filed against the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961, upheld by the CIT(A)-XXX, New Delhi, regarding the assessment year 2008-09. The penalty of &8377; 1,58,050/- was imposed due to additions made during assessment proceedings, including unreported cash deposits and savings bank interest. The Assessee argued that the voluntary disclosure of additional income and payment of due tax before assessment proceedings started demonstrated good faith and no intention to conceal income.2. The Assessee contended that being a school teacher near retirement, she started a part-time cloth retail business from her residence. Despite not maintaining formal accounts, she maintained necessary records like sales, purchase bills, and bank statements. The Assessee disclosed the income from the business after realizing the mistake and paid the due tax. The Assessee argued that the penalty imposition was unwarranted as all relevant details were provided during assessment proceedings, and the additional income was voluntarily offered to avoid prolonged litigation.3. The Ld. Counsel of the Assessee relied on various case laws to support the contention that the Assessee's conduct did not amount to deliberate concealment of income or furnishing inaccurate particulars. The case laws cited emphasized that voluntary surrender of income in good faith, without evidence of deliberate concealment, should not warrant penalty imposition. The Tribunal, after considering the arguments and case laws, concluded that the levy of penalty was not justified in the present case.4. The Tribunal found that the facts and circumstances of the case aligned with the principles laid down in the cited case laws, where voluntary disclosure and surrender of income were considered in good faith. The Tribunal set aside the orders of the authorities below and deleted the penalty, thereby allowing the appeal filed by the Assessee. The judgment was pronounced in the open court on 17/11/2015 by the Tribunal.