2008 (4) TMI 336 - AT - Income Tax

Tribunal cancels penalty for voluntary income disclosure under section 271(1)(c) for 1992-93

The Tribunal canceled the penalty under section 271(1)(c) for the assessment year 1992-93 as the assessee voluntarily declared additional income following ... For Concealment Of Income Issues: Penalty under section 271(1)(c) for assessment year 1992-93.Analysis:1. The appeal was filed by the assessee against the order of CIT(A) regarding the penalty levied under section 271(1)(c). The assessee contended that all relevant facts were disclosed to the Assessing Officer, thus no case for penalty existed. The Department, however, argued that a search action revealed undisclosed jewellery, silver articles, and investments in electronic items, leading to additional income declaration by the assessee.2. Upon review of submissions and orders, it was found that a search action in 1992 led to the seizure of undisclosed items, with the assessee voluntarily declaring additional income of Rs. 21,64,800 for the relevant year. The assessee claimed the income was earned from gambling and requested the auction of seized items to pay the due tax. The CIT(A) rejected this claim, stating the request letter from the Chartered Accountant was invalid without specific authorization from the assessee. However, the Tribunal held that the conditions of Explanation 5 of section 271(1)(c) were met, as the basis of penalty was the voluntary declaration of additional income by the assessee.3. The Tribunal concluded that no concealment or inaccurate particulars of income were evident, as the assessee had proactively disclosed the additional income and sought to pay the tax through auctioning seized items. Therefore, the penalty under section 271(1)(c) was canceled, and the appeal of the assessee was allowed.