2018 (12) TMI 192 - AT - Income Tax

Tribunal upholds penalty for undisclosed income under Income-tax Act

Manoj S. Gugale Versus The Income Tax Officer, Ward 3, Ahmednagar

Manoj S. Gugale Versus The Income Tax Officer, Ward 3, Ahmednagar - TMI Issues Involved:1. Levy of penalty under section 271(1)(c) of the Income-tax Act, 1961.2. Whether the additional income offered by the assessee was voluntary and bona fide.3. The impact of TDS on the penalty proceedings.4. Applicability of the Supreme Court's decision in MAK Data (P.) Ltd. Vs. CIT.Issue-wise Detailed Analysis:1. Levy of Penalty under Section 271(1)(c):The primary issue is the levy of penalty amounting to Rs. 4,39,162/- under section 271(1)(c) of the Income-tax Act, 1961. The assessee had declared a total income of Rs. 4,52,640/- for the assessment year 2011-12. During scrutiny, the Assessing Officer (AO) found discrepancies between the TDS as per Form 26AS and the TDS declared in the return. The AO noted that the assessee had not declared business income, interest, dividend income, and short-term capital gains in the return. Consequently, the AO initiated penalty proceedings for concealing particulars of income.2. Voluntary and Bona Fide Nature of Additional Income:The assessee argued that the additional income was offered voluntarily and bona fide during the assessment proceedings. The assessee contended that the omission was due to an inadvertent mistake and not with an intention to evade tax. However, the AO and CIT(A) held that the additional income was disclosed only after being confronted by the AO, and thus, it was not a voluntary disclosure. The Tribunal upheld this view, stating that the onus was on the assessee to declare the income in the return or a revised return within the stipulated time. The declaration during assessment proceedings, after being confronted, was not considered voluntary.3. Impact of TDS on Penalty Proceedings:The assessee claimed that no further tax was payable after adjusting the TDS, and hence, there was no tax evasion. The Tribunal rejected this argument, stating that the deduction of TDS does not absolve the assessee from the obligation to declare the total income earned. The Tribunal emphasized that the plea of no tax due after including the concealed income cannot absolve the assessee from the levy of penalty for concealment.4. Applicability of Supreme Court's Decision in MAK Data (P.) Ltd. Vs. CIT:The CIT(A) and the Tribunal relied on the Supreme Court's decision in MAK Data (P.) Ltd. Vs. CIT, which held that voluntary disclosure does not release the assessee from the mischief of penal proceedings under section 271(1)(c). The Supreme Court emphasized that the Assessing Officer should not be swayed by the plea of voluntary disclosure, buy peace, avoid litigation, or amicable settlement to explain away the assessee's conduct. Applying this ratio, the Tribunal held that the assessee's disclosure during the assessment proceedings, after being confronted, was not voluntary and upheld the penalty.Conclusion:The Tribunal dismissed the appeal of the assessee, upholding the penalty of Rs. 4,39,162/- levied under section 271(1)(c) of the Income-tax Act, 1961. The Tribunal concluded that the additional income was not voluntarily disclosed, and the plea of no tax due after TDS adjustment did not absolve the assessee from the penalty for concealment. The reliance on the Supreme Court's decision in MAK Data (P.) Ltd. Vs. CIT was deemed appropriate, reinforcing the penalty's validity.