2019 (12) TMI 746 - AT - Income Tax

Income Tax Penalty Ruling: Declared vs Detected Income Distinction upheld

The Tribunal confirmed the penalty under Section 271(1)(c) of the Income Tax Act, 1961, but distinguished between the penalty on income declared in the ... Penalty u/s 271 (1)(c) - Surrender of income in the revised return - difference of amount received from share profits and the amount declared in the revised return - HELD THAT:- DR has not pointed out any distinguishing fact in the present case, hence, following the decision of the Tribunal in the case of ‘Gajjan Singh Thind vs ACIT’ [2019 (9) TMI 934 - ITAT CHANDIGARH] for sake of consistency, the penalty levied by the Assessing Officer declared in the revised return is ordered to be deleted, whereas, the penalty @ 100% of the tax amount sought to be evaded in respect of the difference of amount received from share profits and the amount declared in the revised return i.e. on the income of ₹ 40,015/- is hereby confirmed. In the result, the appeal of the assessee is treated as partly allowed. Issues Involved:1. Confirmation of penalty under Section 271(1)(c) of the Income Tax Act, 1961.2. Validity of revised return filed within the stipulated period.3. Distinction between declared income and income detected during assessment.Issue-wise Detailed Analysis:1. Confirmation of Penalty Under Section 271(1)(c) of the Income Tax Act, 1961:The primary issue in this case revolves around the confirmation of the penalty of Rs. 7,46,000/- levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal noted that the provisions of Section 271(1)(c) are penal in nature and must be strictly construed. The Tribunal referenced a similar case, 'Gajjan Singh Thind vs ACIT,' where it was held that if the income declared in a valid revised return filed within the limitation period, the penalty under Section 271(1)(c) is not leviable.2. Validity of Revised Return Filed Within the Stipulated Period:The Tribunal examined the sequence of events provided by the assessee, which showed that the revised return was filed within the prescribed period under Section 139(5) of the Act. The Tribunal emphasized that as per Section 139(5), an assessee is entitled to file a revised return if any omission or wrong statement is discovered in the original return, provided it is filed within one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. The Tribunal concluded that the revised return filed by the assessee was valid and should be considered as the base return for assessment. Consequently, no penalty could be levied for the income declared in the revised return.3. Distinction Between Declared Income and Income Detected During Assessment:The Tribunal also addressed the difference between the income declared in the revised return and the income detected during the assessment. In the case of 'Gajjan Singh Thind vs ACIT,' it was held that the penalty should be confirmed only for the difference between the income shown in the revised return and the amount actually received. In the present case, the Tribunal noted that the difference of Rs. 40,015/- between the income declared in the revised return and the amount detected during the assessment was not convincingly addressed by the assessee. Therefore, the Tribunal confirmed the penalty at 100% of the tax amount sought to be evaded on the detected income of Rs. 40,015/-.Conclusion:The Tribunal followed the decision in 'Gajjan Singh Thind vs ACIT' for consistency and ordered the deletion of the penalty levied on the income declared in the revised return. However, the penalty on the difference of Rs. 40,015/- detected during the assessment was confirmed. The appeal of the assessee was thus partly allowed.Order Pronounced:The order was pronounced in the Open Court on 30.09.2019. The appeal of the assessee was treated as partly allowed.