No Penalty can be Imposed u/s 271(1) when Income Surrendered by Assessee During Survey is Shown in a Regular Income Tax Return Filed within the Prescribed Time: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that no penalty under section 271 (1) can be imposed when income surrendered by the assessee during the survey is shown in the regular income tax return filed within the prescribed time. The aforesaid observation was made by the Ahmedabad ITAT, when an appeal was filed before it by the Revenue, against the appellate order passed by the Commissioner of Income Tax (Appeals), Ahmedabad, for partly deleting the penalty levied under Section 271(1)(c) of the Income Tax Act 1961, relating to the Assessment Year (A.Y) 2010-11. The brief facts of the case were that the assessee was engaged in the business of Ship Breaking, and there was a survey action under Section 133A of the Income Tax Act in the business premises of the assessee as well as a search action under Section 132 of the Income Tax Act in the residential premises of the Director of the assessee company. During the course of the search, the Director of the assessee company declared an income of Rs. 1,80,00,000/- in the hands of the assessee company and Rs. 20,00,000/- in his individual capacity. Thus, the assessee company filed its Return of Income, declaring a total income of Rs. 3,27,20,120/- which was inclusive of a declared income of Rs. 1,80,00,000/-. Also, a regular assessment under Section. 143(3) was completed, assessing the income at Rs. 4,17,26,360/-. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A), who had given partial relief to the assessee. And subsequently, the Revenue challenged the same before ITAT and the ITAT restored the issue back to the file of the CIT(A) for a fresh hearing. Thus, in the fresh hearing, the CIT(A) confirmed the addition of Rs. 1,84,08,097/- on the merits of the case. And thereafter the Assessing officer issued a notice under Section. 271(1)(c) r.w.s. 274 of the Income Tax Act, seeking as to why, not to levy a penalty on the additions of Rs. 1,87,70,733/- confirmed by the CIT(A) and that the minimum penalty of Rs. 62,56,911/- be levied. The assessee filed its reply and the same was found to be not acceptable by the Assessing Officer, who thereby levied a minimum penalty of Rs. 62,56,911/-. Aggrieved by the Penalty order, the assessee filed an appeal before the CIT(A), who after considering the case of the assessee, the declaration made by the Director of the assessee company of Rs. 1,80,00,000/- and the Return of Income filed with taxes paid by the assessee, therefore held that the assessee has not furnished inaccurate particulars of income to the extent of Rs. 1,80,00,000/-. However, for the remaining income of Rs. 4,08,097/-, the CIT(A) confirmed the addition, thereby partly allowing the appeal filed by the Assessee. And it is being aggrieved by the same, that the Revenue has presently filed the current appeal before the Ahmedabad ITAT. Hearing the opposing contentions of both sides as submitted by Shri Sarju Mehta, the A.R. for the assessee, and by Shri Atul Pandy, the Sr.D.R. of the Revenue, the ITAT coram of Annapurna Gupta, the Accountant Member and Shri T.R. Senthil Kumar, the Judicial Member, thus held: “The Hon’ble Delhi High Court in the case of CIT vs. SAS had held that where income surrendered by the assessee during survey had been shown by it in its regular income tax return filed within the prescribed time, the penalty could be imposed. Thus, the CIT(A) has followed the above decisions and deleted the penalty on the declared income of Rs. 1,80,00,000/-. However, the CIT(A) had confirmed the levy of penalty on the balance disputed income of Rs. 4,08,097/-. Thus, we do not find any infirmity in the order passed by the CIT(A), which partly deleted the penalty levied under Section. 271(1)(c) of the Act. Thus, the grounds raised by the Revenue is devoid of merits and the same is dismissed.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

No Penalty can be Imposed u/s 271(1) when Income Surrendered by Assessee During Survey is Shown in a Regular Income Tax Return Filed within the Prescribed Time: ITAT [Read Order]

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