2019 (2) TMI 812 - AT - Income Tax

Appellate Tribunal revokes penalty under Income-tax Act citing assessee's good faith

Shri Devang R. Shah Versus Asst. CIT, Central Circle 47, Mumbai

Shri Devang R. Shah Versus Asst. CIT, Central Circle 47, Mumbai - TMI Issues:- Appeal against penalty under section 271AAA of the Income-tax Act, 1961.Detailed Analysis:1. Background: The appeal was directed against the order of the Commissioner of Income Tax (Appeals) dated 26.12.2016 for the assessment year 2012-13.2. Facts of the Case: A search and seizure action was conducted under section 132 of the Income Tax Act in the case of the assessee. The assessee initially declared undisclosed investment but did not offer it for taxation in the return filed under section 139 of the Act. Later, a revised return was filed declaring the undisclosed income. Penalty proceedings under section 271AAA were initiated.3. Assessee's Contentions: The assessee argued that the case falls under section 271AAA(2) providing immunity from penalty. The assessee claimed to have paid taxes on the undisclosed income to avoid litigation and that the undisclosed income was offered in good faith.4. Assessing Officer's Decision: The Assessing Officer levied a penalty under section 271AAA despite the assessee's explanations.5. Commissioner's Decision: The Commissioner noted that the assessee failed to substantiate the manner in which the undisclosed income was derived, a condition for immunity under section 271AAA(2). The Commissioner upheld the penalty.6. Appellate Tribunal's Decision: The Tribunal considered the bonafide conduct of the assessee, who disclosed the undisclosed income and paid taxes before filing the return. Citing legal precedents, the Tribunal held that the penalty should not be imposed for a technical breach when there is no contumacious conduct. The Tribunal set aside the penalty and allowed the appeal.7. Conclusion: The Tribunal, based on the bonafide conduct of the assessee and legal precedents, deleted the penalty imposed under section 271AAA. The appeal was allowed, and the penalty was revoked.This detailed analysis covers the background, facts of the case, contentions of the parties, decisions of the Assessing Officer and Commissioner, the Tribunal's reasoning, and the final conclusion of setting aside the penalty.