2016 (4) TMI 859 - AT - Income Tax

Penalties Upheld for Concealed Income: Section 271(1)(c)

The Tribunal upheld the penalties levied under section 271(1)(c) at 100% for the assessment years 2006-07 and 2007-08. The assessee's appeals were ... Penalty levied under section 271(1)(c) - Held that:- It is a clear case of concealment of income. The assessee has admitted an income of ₹.1,46,232/- in the return filed on 15.09.2009 for the assessment year 2007-08. But the profit and loss account shows the income at ₹.2,17,794/-. In view of the above, the submission of the ld. Counsel for the assessee that the assessee has filed the return in time for the assessment year 2007-08 and no penalty should be levied is not acceptable since filing of return under section 139(1) or 139(4) are not subject matter under section 271(1)(c) of the Act. Whether the assessee has concealed the particulars of income and furnished inaccurate particulars of income is the subject matter under section 271(1)(c) of the Act. In this case, the assessee is not regularly assessed to income tax. But for survey under section 133A of the Act, the assessee would not have filed the return of income, therefore, the question of filing the return of income in time or not does not arise and moreover, penalty under section 271(1)(c) of the Act was levied by the Assessing Officer for a clear case of concealment of income and furnishing of inaccurate particulars of income. Under the above facts and circumstances, the penalty levied under section 271(1)(c) and restricted to the extent of 100% by the ld. CIT(A) for the assessment year 2007-08 stands confirmed - Decided against assessee. Issues Involved:1. Confirmation of penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for the assessment years 2006-07 and 2007-08.Issue-wise Detailed Analysis:1. Confirmation of Penalty under Section 271(1)(c) for Assessment Year 2006-07:The assessee, an Association of Persons (AOP), filed its return of income for the assessment year 2006-07 belatedly on 15.09.2009, admitting a total income of Rs. 1,46,232/-. A survey under section 133A of the Income Tax Act was conducted on 12.01.2007 at the business premises of M/s. Raj & Co., where diaries and vouchers related to JCB hire charges were found. In a sworn statement, Shri S.V. Natarajan, one of the AOPs, admitted the business was done in the name of M/s Om Muruga Earth Movers and agreed to offer Rs. 2,50,000/- per annum as his share of income. However, he did not file his return in his individual capacity but instead filed it in the status of AOP.During assessment proceedings, the assessee furnished a profit & loss account and balance sheet, claiming depreciation and bank interest. The net JCB income was estimated at Rs. 7,50,000/- per annum during the survey, but the taxable income was worked out to Rs. 5,14,640/- after considering depreciation and interest. The assessment was completed under section 143(3) r.w.s. 147, and a total demand of Rs. 2,07,559/- was raised.Penalty proceedings under section 271(1)(c) were initiated, and the assessee did not provide any explanation, leading the Assessing Officer to levy a penalty at 200% of the tax sought to be evaded. The Commissioner of Income Tax (Appeals) [CIT(A)] reduced the penalty to 100%.The Tribunal noted that the assessee did not file any return of income until the survey was conducted and failed to prove the expenses claimed in the profit & loss account. The net JCB income estimated during the survey was adopted in the assessment. The Tribunal held that the estimation of income was correct and fit for levy of penalty, as supported by the Hon'ble Gujarat High Court in A.M. Shah Vs. CIT and the Hon'ble Madras High Court in CIT Vs. S. Krishnaswamy & Sons. The Tribunal found no infirmity in the order of the CIT(A) and dismissed the appeal for the assessment year 2006-07.2. Confirmation of Penalty under Section 271(1)(c) for Assessment Year 2007-08:For the assessment year 2007-08, the assessee argued that the return of income was filed in time and pleaded for the deletion of the penalty. The return was filed on 15.09.2009, admitting an income of Rs. 1,46,232/-, but the profit & loss account showed an income of Rs. 2,17,794/-. The Tribunal observed that the assessee was engaged in the JCB hire business and did not file any return until the survey. Despite opportunities given during penalty proceedings, the assessee did not provide any explanation.The Tribunal held that the assessee had concealed income and furnished inaccurate particulars. The filing of the return in time was not relevant under section 271(1)(c); rather, the concealment of income was the issue. The penalty levied by the Assessing Officer at 200% was restricted to 100% by the CIT(A), and the Tribunal confirmed this decision, dismissing the appeal for the assessment year 2007-08.Conclusion:The Tribunal dismissed both appeals filed by the assessee for the assessment years 2006-07 and 2007-08, confirming the penalties levied under section 271(1)(c) at 100% as determined by the CIT(A). The Tribunal upheld that the assessee had concealed income and furnished inaccurate particulars, justifying the penalties imposed.