2022 (3) TMI 569 - HC - Income Tax

Dismissal of Penalty Appeal under Income Tax Act Upheld; Importance of Valid Grounds Emphasized

The appeal under Section 260A of the Income Tax Act, 1961, regarding the deletion of penalty under Section 271(1)(c), was dismissed by the Court. The ... Penalty u/s 271(1)(c) - additional income surrendered by the assessee - true nature of disclosure made by the assessee - revised return consequent to scrutiny assessment - HELD THAT:- The questions of law as proposed by the revenue referred to above are no longer res-integra in view of the order passed by a Co-ordinate Bench of this Court in the case of Principal Commissioner of Income Tax-3 Vs. R. Umedbhai Jewellers Pvt. Ltd [2016 (9) TMI 9 - GUJARAT HIGH COURT] wherein concerned with the similar situation where the assessee revised his return pursuant to the search operation during which he had admitted to have concealed the income. The Court held that such revised return could not be treated as voluntary return and penalty under Section 271(1)(a) of the Act would be leviable. - Decided in favour of assessee. Issues Involved:Appeal under Section-260A of the Income Tax Act, 1961 against the order passed by the Income Tax Appellate Tribunal for the A.Y. 2014-15. The main questions of law proposed for consideration were related to the deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961.Analysis:1. Deletion of Penalty under Section 271(1)(c):The primary issue before the Court was whether the CIT(A) was justified in deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act. The Tribunal, in dismissing the appeal of the revenue, emphasized that the provision allows for penalty if the assessee conceals or furnishes inaccurate particulars of income. However, in this case, the AO accepted the returned income during assessment proceedings, indicating satisfaction with the disclosed income. The Tribunal noted that there was no disallowance or addition to the total income during assessment, and the AO's presumption of non-disclosure in the future was mere suspicion without a valid basis. Therefore, the Tribunal found no justification for imposing a penalty based on suspicion alone.2. Precedent and Legal Interpretation:The Court referred to a previous judgment in the case of Principal Commissioner of Income Tax-3 Vs. R. Umedbhai Jewellers Pvt. Ltd. to support its decision. The Court highlighted the importance of distinguishing cases where additional disclosure or revised returns were made by the assessee, as opposed to situations where no such actions were taken. The judgment emphasized that penalty under Section 271(1)(c) could be levied when an assessee files a revised return after detection of concealment of income. The Court also cited other cases to illustrate the legal principles surrounding penalty imposition based on revised returns and voluntary disclosures.3. Conclusion and Dismissal of Appeal:Based on the above analysis and legal interpretation, the Court found no reason to interfere with the Tribunal's order. Consequently, the appeal failed, and the Court dismissed it. The decision was in line with established legal principles and precedents, emphasizing the importance of valid grounds for imposing penalties under the Income Tax Act.This detailed analysis of the judgment highlights the key issues, legal interpretations, and the Court's reasoning behind dismissing the appeal in the context of penalty imposition under Section 271(1)(c) of the Income Tax Act, 1961 for the relevant assessment year.