2019 (6) TMI 1053 - AT - Income Tax

Income Tax Penalty Upheld for Failure to File Returns

The Tribunal upheld the penalty of &8377; 4,04,660 imposed under section 271(1) of the Income Tax Act for the Asstt. Year 1994-95, based on the ... Penalty 271(1) (c) - assessment order was ex parte - AO has made addition on 4% of the total turnover on an estimate basis which has been reduced to 2% by the ITAT - HELD THAT:- Material exhibiting non-disclosure of profit on turnover unearthed during the search. The assessee has not offered any explanation about the income for which it has furnished inaccurate particulars. Estimation of income is by compulsion at the end of the AO and not by choice. It is not case that the AO was not satisfied with the details maintained by the assessee or explanation given by the assessee. Thereafter, he estimated profit at a different rate. Here estimation of profit is a mode of computation of income under compelling circumstance, when the assessee failed to give requite details. Considering concurrent finding of the both the authorities we do not find any merit in this appeal. - Decided against assessee. Issues:- Appeal against penalty under section 271(1) of the Income Tax Act for Asstt.Year 1994-95.Analysis:1. The appellant contested the penalty of &8377; 4,04,660 imposed by the Assessing Officer (AO) under section 271(1) of the Income Tax Act. The AO's decision was upheld by the ld.CIT(A), leading to the appeal before the Tribunal.2. The facts revealed that the appellant failed to file the income tax return for the Asstt.Year 1994-95 within the due date, and subsequent notices were disregarded. The AO conducted an assessment under section 144 due to the appellant's non-appearance, making various additions to the income. The ld.CIT(A) deleted some additions but upheld others, resulting in a penalty imposition by the AO.3. The AO's penalty calculation was based on the ITAT's decision to reduce the estimated profit percentage from 4% to 2%. The penalty of &8377; 4,04,660 was imposed on the appellant, and the appeal to the CIT(A) did not provide relief.4. The Tribunal analyzed section 271(1)(c) of the Income Tax Act, emphasizing the conditions for penalty imposition related to concealing income or furnishing inaccurate particulars. The penalty amount can range from 100% to 300% of the tax evaded due to such actions.5. The Tribunal noted that the appellant's assessment was ex parte, and no explanation was provided for the undisclosed income discovered during the search. The AO estimated income due to the appellant's lack of cooperation, not due to dissatisfaction with the provided details. The Tribunal upheld the penalty based on the concurrent findings of the authorities.6. Considering the above, the Tribunal found no merit in the appeal and dismissed it. The order was pronounced on 20th June 2019.