2020 (1) TMI 352 - AT - Income Tax

ITAT upholds penalties for non-disclosure, but cancels penalties for procedural reasons

Dr. Subash Chandra Jena Versus ACIT, Central Circle, Cuttack

Dr. Subash Chandra Jena Versus ACIT, Central Circle, Cuttack - TMI Issues Involved:1. Confirming the penalty levied under Section 271(1)(c) of the Income Tax Act for assessment years 2010-2011 and 2011-2012.2. Confirming the penalty levied under Section 271(1)(c) of the Income Tax Act for assessment years 2012-2013 to 2015-2016.Issue-wise Detailed Analysis:1. Confirming the penalty levied under Section 271(1)(c) for assessment years 2010-2011 and 2011-2012:The assessee, a doctor employed by the Government of Odisha and engaged in private practice, filed his original returns for the assessment years 2010-2011 and 2011-2012. A search and seizure action under Section 132 of the Income Tax Act was conducted on 03.09.2015, leading to the issuance of notices under Section 153A. The assessee subsequently filed revised returns disclosing higher incomes. During the assessment proceedings, the AO discovered additional income and unexplained investments, leading to the completion of assessments and initiation of penalty proceedings under Section 271(1)(c) for concealment of income. The CIT(A) upheld the penalties, leading to the appeals before the ITAT.The assessee argued that the additional income disclosed in the revised returns filed under Section 153A should not automatically lead to penalties, relying on the decision in Neeraj Jindal (2017) 393 ITR 1 (Del). The Revenue contended that the additional income was not disclosed in the original returns, invoking the provisions of Section 271(1)(c) read with Explanation 5A.The ITAT found that the assessee had indeed disclosed additional income only after the search and could not provide a reasonable cause for not disclosing it earlier. The Tribunal upheld the CIT(A)'s decision, confirming that the conditions under Explanation 5A to Section 271(1)(c) were met, thus justifying the penalties. The appeals for these years were dismissed.2. Confirming the penalty levied under Section 271(1)(c) for assessment years 2012-2013 to 2015-2016:The facts and issues for these years were similar, with the assessee disclosing additional income in revised returns filed under Section 153A following the search. The AO added the differential amounts as undisclosed income and levied penalties under Section 271(1)(c). The CIT(A) upheld these penalties, leading to further appeals.The assessee argued that the AO did not specify whether the penalties were for concealment of income or furnishing inaccurate particulars, thus vitiating the penalty orders. The ITAT agreed, noting that neither the assessment nor the penalty orders specified the exact charge, rendering the penalties unsustainable. The Tribunal cited the Gujarat High Court's decision in Snita Transport Pvt. Ltd., which emphasized the need for a clear finding on the specific charge for imposing penalties.Additionally, the ITAT noted that the revised returns were accepted by the AO, and the assessed incomes matched the revised returns, leaving no scope for penalties. The Tribunal relied on the Delhi Tribunal's decision in M/s OSE Infrastructure Ltd. and the Gujarat High Court's decision in Kirit Dahyabhai Patel, which held that no penalty could be levied when the revised returns were accepted and assessed as such.The ITAT set aside the CIT(A)'s orders and directed the AO to delete the penalties for these years. The appeals for these years were allowed.Conclusion:The ITAT dismissed the appeals for assessment years 2010-2011 and 2011-2012, confirming the penalties under Section 271(1)(c). However, the appeals for assessment years 2012-2013 to 2015-2016 were allowed, and the penalties were deleted due to procedural lapses and acceptance of revised returns.