The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) has overturned an order regarding Concealment of Income, passed by the Commissioner of Income Taxes (Appeals) ( CIT(A) ) pertaining to Assessment Year 2015-16. The ITAT in its judgment stated that the CIT(A) had erred in upholding the decision of the Assessing Officer ( AO ) under Section 271(1)(c), which in itself was passed on unsubstantiated grounds.
The Appellant, Sarat Gopal Bopanna is an individual who has stated to be deriving income from capital gains and from other sources. The Appellant had filed his original return of income under Section 139(1) of the Income Tax Act declaring a total income of Rs.4,41,180/-. The Appellant and his allied premises were subject to a search and seizure operation under Section 132 of the Income Tax Act
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Subsequent to the search and seizure operation, the Assessee was issued with a notice under Section 153A of the Income Tax Act, requiring the Assessee to furnish his previous returns of income. The Assessee proceeded to file his return of income on 19.02.2021 declaring an income of Rs.1,88,29,210/-, in stark contrast to the amount of Rs.4,41,180/- that had been declared by the Assessee previously. The newly declared total income of the Assessee was accepted by the Department without any further additions.
It was noted that during the previously conducted operation at the premises of the Assessee, a document indicating that the Assessee had sold a property for a consideration of Rs.2,15,49,330/- and received a sum of Rs.98,69,330/- had been seized. The Appellant Assessee further went on to admit an undisclosed income of Rs.1,83,88,030/- and declared the same in his Income Returns as Short-Term Capital Gain derived from the sale of property.
The Additional Income thus declared by the Assessee after issuance of the notice under Section 153 of the Income Tax Act was deemed by the AO as concealment of income as per Explanation 5A of Section 271(1)(c). The AO levied a penalty of 100% tax that was to be received under Section 271(1)(c) of the Income Tax Act.
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The Counsel for the Assessee in the course of proceedings argued that the refurbished return of income produced by the Assessee was accepted by the Department without any modification, and that there has been no mismatch between the returned and assessed income. The Counsel further relied on the decisions in Kirit Dahayabhai Patel vs. ACIT (2017) by the Gujarat High Court to assert that “return of income filed in response to notice u/s 153A is to be considered as return filed u/s 139 of the Act and penalty has to be levied on income assessed over and above income returned u/s 153A, if any”; CIT vs. Suresh Chandra Mittal (2001) pronounced by the Supreme Courtheld that “voluntary surrender of income in good faith cannot be considered as concealment of income”.
The Hyderabad Bench of ITAT comprising of Laliet Kumar, Judicial Member and Manjunatha G., Accountant Member after assessing the facts on record, held that none of the facts at hand indicate that the Assessee has partaken in any incriminating activity that would suggest that there has been concealment of income. The Bench further stated that the Appellant has further surrendered income in good faith, which does not fall under concealment of income.
The Bench tangentially dismissed a stay application filed by the Assessee seeking a stay on the proceedings that were to be undertaken by the CIT; since the order passed by the CIT(A) was already dismissed by the Bench, the Stay Application becomes infructuous.
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