Tribunal upholds penalty for undisclosed income despite late disclosure

The Tribunal upheld the penalty of &8377; 6,09,370 imposed under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2005-06. The penalty was confirmed based on Explanation-5A as the surrendered income was not disclosed in the original return, despite being declared in a revised return filed after a search. The Tribunal rejected the argument that disclosing income later should negate penalty imposition, emphasizing that Explanation-5A applies even if income is disclosed subsequently. Therefore, the appeal was dismissed, affirming the penalty imposition.

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Issues:
Imposition of penalty u/s 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order confirming the levy of penalty u/s 271(1)(c) of the Act for the assessment year 2005-06. The assessee raised grounds of appeal challenging the dismissal of the appeal by the CIT(Appeals) and sought deletion of the penalty. The key issue revolved around the imposition of penalty on additional income not included in the original return filed under section 139(1) of the Act.

The facts revealed that the assessee filed the original return declaring income of &8377; 1,52,180, but after a search, a revised return was filed declaring income of &8377; 19,52,180, including a sum of &8377; 18 lacs as miscellaneous income surrendered. The Assessing Officer imposed a penalty of &8377; 6,09,370 based on Explanation-5A to section 271(1)(c) as the surrendered income was not disclosed in the original return.

The CIT(Appeals) upheld the penalty, stating that the surrendered income was not declared in the original return, thus falling under Explanation-5A. The assessee contended that since the surrendered income was disclosed in the return filed under section 153A, no penalty should be levied. However, the Tribunal noted that Explanation-5A deems concealment of income even if disclosed later, as long as it was not in the original return.

The Tribunal analyzed the relevant provisions of section 271(1)(c) and Explanation-5A, emphasizing that the assessee's actions aligned with the conditions for penalty imposition. The assessee's reliance on case laws was dismissed as those cases were based on Explanation-5, applicable to searches before June 1, 2007, while Explanation-5A applied in this case. The Tribunal concluded that the assessee concealed income as per Explanation-5A, rejecting the argument that disclosing income later should negate penalty imposition.

In light of the above, the Tribunal upheld the CIT(Appeals) order confirming the penalty of &8377; 6,09,370. Consequently, the appeal of the assessee was dismissed.

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