Tribunal Cancels Penalty for Disclosed Income

The Tribunal affirmed the decision of the CIT(A)-8, Pune, by deleting the penalty of Rs.1,99,19,766/- imposed under section 271(1)(c) of the Income-tax Act, 1961. The penalty was related to additional income voluntarily declared by the assessee during a survey under section 133A, which was already included in the return of income. As no additions were made by the Assessing Officer and the disclosed income formed the basis for assessment, the penalty was deemed unjustified. The judgment emphasizes that penalties cannot be imposed on income already disclosed in the return without any additional amounts.

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Issues:
Penalty under section 271(1)(c) of the Income-tax Act, 1961 for additional income declared during survey u/s.133A.

Analysis:
The appeal pertains to the deletion of a penalty of Rs.1,99,19,766/- imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961, in relation to the assessment year 2013-14. The assessee declared additional income of Rs.6.44 crore during a survey conducted under section 133A, which was included in the return of income. The Assessing Officer accepted the returned income but imposed a penalty on the surrendered income, leading to the question of whether the penalty was justified.

Explanation 1 to section 271(1) states that if the assessee fails to offer an explanation or offers a false explanation regarding material facts related to income computation, the added or disallowed amount shall be deemed as concealed income. However, this penalty provision applies when income is not offered in the return. In this case, the additional income was voluntarily declared in the return after the survey, and no addition was made by the Assessing Officer. Therefore, the penalty under section 271(1)(c) cannot be imposed on income already disclosed in the return.

The judgment in MAK Data Pvt. Ltd. Vs. CIT (2013) 358 ITR 593 (SC) is referenced, where the Supreme Court upheld a penalty when the reported income was lower than the assessed income due to non-disclosure during survey. However, in the present case, the reported and assessed income remained the same, and the penalty was imposed solely on the voluntarily declared income. As the disclosed income formed the basis for assessment without any addition, the penalty was deemed unwarranted. Thus, the penalty was deleted, affirming the decision of the CIT(A)-8, Pune.

In conclusion, the Tribunal dismissed the appeal, emphasizing that the penalty under section 271(1)(c) cannot be levied on income already declared in the return, especially when no additions are made by the Assessing Officer. The judgment highlights the importance of voluntary disclosure and its impact on penalty imposition, distinguishing cases where undisclosed income leads to penalties.

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