2019 (2) TMI 281 - AT - Income Tax

Penalties revoked for concealment of income; upheld for 2010-11.

Shri Rahul Shantaram Sawale Versus The Assistant Commissioner of Income Tax, Central Circle – 1, Nashik

Shri Rahul Shantaram Sawale Versus The Assistant Commissioner of Income Tax, Central Circle – 1, Nashik - TMI Issues Involved1. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for the assessment years 2004-05 and 2005-06.2. Levy of penalty under Section 271AAA of the Income Tax Act, 1961 for the assessment year 2010-11.Detailed Analysis1. Levy of Penalty under Section 271(1)(c) for Assessment Years 2004-05 and 2005-06Background:The assessee filed appeals against the orders of the Commissioner of Income Tax (Appeals)-I, Nashik, confirming the levy of penalty under Section 271(1)(c) for the assessment years 2004-05 and 2005-06. The penalties were based on additions resulting from a search and seizure action under Section 132(1) of the Act.Facts:- The search and seizure action led to the discovery of certain books of account and documents.- The assessee declared additional income in the return filed under Section 153A.- The Assessing Officer initiated penalty proceedings for 'concealing the particulars' of income under Explanation 5A to Section 271(1)(c).Assessee's Argument:- The penalty was levied on the wrong charge of 'concealment of particulars of income.'- The amounts were already reflected in the Balance Sheet as 'Advances from Customers' and 'Gifts from Relatives.'- The correct charge should have been 'furnishing inaccurate particulars of income.'Tribunal's Findings:- The Tribunal admitted the additional ground raised by the assessee, citing the Supreme Court's decision in NTPC Vs. Commissioner of Income Tax.- The amounts were already reflected in the Balance Sheet, thus it was not a case of concealment.- The Tribunal referenced the Supreme Court's decision in T. Ashok Pai Vs. Commissioner of Income Tax, which distinguishes between 'concealment of income' and 'furnishing inaccurate particulars of income.'- The Tribunal found that the penalty was levied on the wrong charge and thus was unsustainable.Conclusion:- The penalty on the addition of Rs. 10,35,950/- for the assessment year 2004-05 was deleted.- Similarly, for the assessment year 2005-06, the penalty on the additional income of Rs. 11,53,000/- was deleted.2. Levy of Penalty under Section 271AAA for Assessment Year 2010-11Background:The assessee appealed against the order confirming the levy of penalty under Section 271AAA for the assessment year 2010-11.Facts:- The Assessing Officer levied a penalty of Rs. 1,91,815/- on a total undisclosed income of Rs. 19,18,149/-.- The Commissioner of Income Tax (Appeals) restricted the penalty to Rs. 56,120/- on an addition of Rs. 5,61,199/-.Assessee's Argument:- The assessee reiterated the submissions made before the Commissioner of Income Tax (Appeals).Department's Argument:- The Department supported the impugned order, stating that the Commissioner of Income Tax (Appeals) had already been considerate in restricting the penalty.Tribunal's Findings:- The Tribunal did not find any reason to interfere with the well-reasoned order of the Commissioner of Income Tax (Appeals).Conclusion:- The penalty under Section 271AAA of Rs. 56,120/- was upheld, and the appeal of the assessee was dismissed.Summary- The appeals of the assessee for the assessment years 2004-05 and 2005-06 (ITA Nos. 1162 & 1163/PUN/2015) were allowed, resulting in the deletion of penalties under Section 271(1)(c).- The appeal for the assessment year 2010-11 (ITA No. 1164/PUN/2015) was dismissed, upholding the penalty under Section 271AAA.