2023 (5) TMI 837 - AT - Income Tax

Tribunal rules complete income disclosure prevents penalty imposition on disputed income

The Tribunal upheld the CIT(A)'s decision, ruling that the assessee's disclosure of Rs. 1,80,00,000 during the survey and in the return of income within ... Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Survey under section 133A and voluntary declaration followed by return filed under section 139(1) - Explanation 5A to section 271(1)(c) - no penalty where surrendered income is declared in return and tax paid - Penalty not automatic on mere confirmation of addition by appellate authoritySurvey under section 133A and voluntary declaration followed by return filed under section 139(1) - Explanation 5A to section 271(1)(c) - no penalty where surrendered income is declared in return and tax paid - Deletion of penalty insofar as it related to the sum declared during survey and subsequently disclosed in the return of income. - HELD THAT: - The Tribunal found as an undisputed fact that the director declared Rs.1,80,00,000 during the course of the survey on 12.01.2010 and the assessee filed its return under section 139(1) for A.Y. 2010-11 disclosing the same amount and paying tax thereon. The filing of the return occurred before the expiry of the time for filing and thus amounted to a bona fide disclosure. Applying Explanation 5A to section 271(1)(c), and following coordinate Benches and relevant High Court authority cited in the order, the Tribunal held that penalty could not be levied on the surrendered amount which was duly declared and taxed in the return. The Tribunal also noted that penalty is not automatic merely because an addition was later confirmed; the Assessing Officer had not recorded specific findings of furnishing inaccurate particulars in relation to the declared sum. [Paras 6, 7]Penalty levied on the declared sum of Rs.1,80,00,000 is deleted.Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Penalty not automatic on mere confirmation of addition by appellate authority - Sustenance of penalty in respect of the remaining addition confirmed by the CIT(A). - HELD THAT: - The Tribunal examined the CIT(A)'s order which, while deleting penalty on the surrendered and declared amount, confirmed the levy of penalty in respect of the balance amount of Rs.4,08,097. The Tribunal found no infirmity in the CIT(A)'s conclusion to the extent it upheld penalty on that remaining disputed income and therefore affirmed the confirmation of penalty on that portion. [Paras 3, 6, 7]Penalty levied on the remaining addition of Rs.4,08,097 is confirmed.Final Conclusion: The Revenue's appeal is dismissed. The Tribunal affirms deletion of penalty in respect of the income declared during survey and disclosed in the return for A.Y. 2010-11, while upholding the penalty on the remaining disputed income. Issues involved:The appeal concerns the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2010-11.Summary of Judgment:Issue 1:The Revenue challenged the penalty imposed by the Assessing Officer on the additions confirmed by the CIT(A), specifically on the income of Rs. 1,80,00,000 declared during a survey. The CIT(A) partly allowed the appeal, deleting the penalty on the declared income but confirming it on the remaining disputed income of Rs. 4,08,097.The CIT(A) held that the assessee did not furnish inaccurate particulars of income for the declared amount of Rs. 1,80,00,000, as it was disclosed during the survey and in the return of income filed within the prescribed time. The CIT(A) relied on legal precedents to support this decision, emphasizing that penalty cannot be imposed where there is a complete disclosure of income.Issue 2:The Revenue appealed the CIT(A)'s decision, arguing that the assessee's adhoc disclosure of Rs. 1,80,00,000 during the survey amounted to furnishing inaccurate particulars of income under section 271(1)(c) of the Act. The Revenue contended that the CIT(A) should have upheld the Assessing Officer's order imposing the penalty.During the appeal hearing, the Revenue's representative supported the penalty order, while the assessee's counsel reiterated that there was no inaccurate disclosure of income, as the declared amount was promptly included in the return of income and taxes were paid accordingly.Judgment:The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee's disclosure of Rs. 1,80,00,000 during the survey and in the return of income within the stipulated time did not constitute inaccurate particulars of income. The Tribunal cited legal provisions and previous rulings to support this conclusion, highlighting that penalty cannot be imposed when there is full disclosure of income.The Tribunal dismissed the Revenue's appeal, affirming the partial deletion of the penalty by the CIT(A) and upholding the decision regarding the disputed income of Rs. 4,08,097. The Tribunal found no merit in the Revenue's grounds of appeal and upheld the CIT(A)'s order.This summary provides a detailed overview of the judgment, highlighting the issues involved, the arguments presented, and the Tribunal's decision in each case.