Court upholds Assessee's appeal, rejects Revenue's penalty claim.

The court dismissed the Revenue's appeal, affirming the decisions of the CIT(A) and ITAT. It held that no penalty could be imposed under Section 271(1)(c) as the Assessee had disclosed the additional income in the return filed within the statutory period, and the books of account were not closed at the time of the survey. The court reiterated that the principles laid down in the case of PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R UMEDBHAI JEWELLERS PVT. LTD were applicable to the present case, and thus, the penalty was rightly deleted.

---

---

Issues Involved:
1. Whether the ITAT erred in law and on facts by deleting the penalty levied under Section 271(1)(c) of the Income Tax Act.
2. Whether the amount of Rs. 3.80 crore, disclosed as "on money" during survey proceedings, constituted concealed income.
3. Applicability of the decision in PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R UMEDBHAI JEWELLERS PVT. LTD to the present case.

Issue-wise Detailed Analysis:

1. Deletion of Penalty under Section 271(1)(c):
The Revenue challenged the ITAT's decision to delete the penalty of Rs. 1,18,00,000/- levied under Section 271(1)(c) of the Income Tax Act. The penalty was initially imposed by the Assessing Officer on the grounds of concealment of income, specifically Rs. 3.80 crore received as "on money" which was not accounted for in the regular books of account at the time of the survey. However, the ITAT upheld the CIT(A)'s decision to delete the penalty, noting that the Assessee had disclosed the additional income in its return filed for the Assessment Year 2013-2014 and had paid the due taxes.

2. Concealed Income:
The Assessee, a Partnership Firm engaged in real estate development, was subjected to a survey under Section 133(A) of the Income Tax Act on 09.01.2013. During this survey, a total disclosure of Rs. 20 crore was made, of which Rs. 3.80 crore pertained to the respondent firm. This amount was included in the return filed by the Assessee for the Assessment Year 2013-2014. The Assessing Officer accepted the return without any additions but initiated penalty proceedings for concealment of income. The Assessee argued that the amount of Rs. 3.80 crore could not be treated as concealed income since it was declared in the return filed before the closure of the books and the end of the financial year.

3. Applicability of PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R UMEDBHAI JEWELLERS PVT. LTD:
Both the CIT(A) and ITAT relied on the decision in PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R UMEDBHAI JEWELLERS PVT. LTD, where it was held that penalty under Section 271(1)(c) could not be imposed if the income was disclosed before the due date for filing the return and was included in the return filed. The court noted that in the present case, the Assessee disclosed the additional income in the return filed within the statutory period, and the books of account were not closed at the time of the survey. Therefore, the conditions for imposing a penalty under Section 271(1)(c) were not met.

Conclusion:
The court dismissed the Revenue's appeal, affirming the decisions of the CIT(A) and ITAT. It held that no penalty could be imposed under Section 271(1)(c) as the Assessee had disclosed the additional income in the return filed within the statutory period, and the books of account were not closed at the time of the survey. The court reiterated that the principles laid down in the case of PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R UMEDBHAI JEWELLERS PVT. LTD were applicable to the present case, and thus, the penalty was rightly deleted.

---