2019 (1) TMI 1601 - AT - Income Tax

Tribunal Upholds CIT(A)'s Decision on Penalty Proceedings under Income Tax Act

The Tribunal upheld the CIT(A)'s decision to quash penalty proceedings under Section 271(1)(c) of the Income Tax Act. It was found that the assessee had ... Penalty u/s 271(1)(c) - items only which are discovered by the AO on the scrutiny of return of income or after carrying out investigation and discovering some more items of income not found declared or mentioned in the return of income - HELD THAT:- It is not a case of furnishing inaccurate particulars of income, as in the Income Tax Return, particulars of income have been duly furnished and the surrendered amount of income was duly reflected in the Income Tax Return nor there is a tax sought to be evaded on the basis of return of income as the assessee has not evaded any tax on the return income. The Hon'ble Delhi High Court in the case of SAS Pharmaceuticals [2011 (4) TMI 888 - DELHI HIGH COURT] has considered the expression in the course of any proceedings under this Act appearing in section 271 of the Act and held that the said expression cannot have reference to the survey proceedings. It has also held that penalty proceedings would depend upon the return of income filed by the assessee. - Decided in favour of assessee. Issues Involved:1. Quashing of penalty proceedings under Section 271(1)(c) of the Income Tax Act.2. Disclosure of income during survey and its treatment.3. Justification for penalty imposition.4. Change of head of income by the Assessing Officer (AO).5. Legal precedents and their applicability.Detailed Analysis:1. Quashing of Penalty Proceedings under Section 271(1)(c):The appeals filed by the Revenue pertain to the quashing of penalty proceedings under Section 271(1)(c) of the Income Tax Act by the CIT(A)-4, Surat. The penalty was initially levied due to the assessee's alleged failure to provide details of on-money receipts and subsequent disclosure of income during a survey.2. Disclosure of Income During Survey and Its Treatment:The assessee disclosed an income of Rs. 8,03,40,000/- during a survey conducted on 17.07.2012, which was included in the income under the head of business and profession. However, due to the absence of relevant details, the AO taxed it under Section 68 as income from other sources. The CIT(A) noted that the income was disclosed in the return and the AO only changed the head of income without making any addition.3. Justification for Penalty Imposition:The AO levied the penalty on the grounds that the assessee failed to justify or provide acceptable explanations for furnishing inaccurate particulars of income and did not appeal against the assessment order. However, the CIT(A) observed that the penalty could not be levied merely because of a change in the head of income, especially when the income was disclosed in the return filed.4. Change of Head of Income by the Assessing Officer:The CIT(A) and Tribunal noted that the AO changed the head of income from business income to income from other sources without making any additional income assessment. The total income returned and assessed was the same, and the penalty under Section 271(1)(c) is applicable only when there is an addition to the returned income.5. Legal Precedents and Their Applicability:- CIT v. Unique Precured Retraders (2008): Penalty cannot be levied when the particulars of income disclosed during the survey are reflected in the return.- Principal CIT Vs. Valibhai Khanbhai Mankad (2015): No penalty if the income disclosed in the return is accepted without any addition.- CIT Vs. SAS Pharmaceuticals (2011): Penalty proceedings depend on the return filed, not on survey findings.- CIT Vs. Amit Jain (2013): Change of head of income does not amount to furnishing inaccurate particulars.The Tribunal found that the assessee disclosed the income in the return and paid taxes accordingly. The AO's reliance on the Supreme Court's decision in Mak Data Pvt. Ltd. was deemed misplaced as the facts differed significantly.Conclusion:The Tribunal upheld the CIT(A)'s decision to quash the penalty proceedings under Section 271(1)(c), emphasizing that the income was disclosed in the return, and there was no concealment or furnishing of inaccurate particulars. The appeals filed by the Revenue were dismissed, affirming that no penalty is leviable when there is no addition to the returned income and the income is duly reflected in the return filed.