Penalty can be Imposed when Income Surrendered During Survey Shown in Regular Income Tax Return filed Within Prescribed Time: ITAT

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the penalty could be imposed when the income surrendered during the survey had shown in the regular income-tax return which was filed within the prescribed time.

The assessee, NBM Iron & Steel, Trading Pvt. Ltd was engaged in the business of Ship Breaking. There was a survey action under Section 133A of the Income Tax Act, 1961 in the business premises of the assessee and search action in the residential premises of the Director of the assessee company on 12.01.2010. 

During the course of search, the Director of the assessee company declared an income in the hands of the assessee company and in his individual capacity. Thus, the assessee company filed its Return of Income on 07.10.2010 declaring total income which was inclusive of declared income and regular assessment was completed.

It is thereafter the Assessing officer issued a notice under Section 271(1)(c) r.w.s. 274 why not to levy penalty on the additions confirmed by the Commissioner of Income Tax Appeals (CIT(A)) and on which minimum penalty to be levied.

Sarju Mehta, on behalf of the assessee submitted that the survey action in the present case was held on 12.01.2010, before the completion of the financial year relevant to the assessment year 2010-11 and the Director of the assessee company declared income of the assessee company.

The assessee company filed its Return of Income and also paid appropriate taxes on the declared income. Thus, there was no furnishing of inaccurate particulars of income by the assessee. He submitted that the deletion of declared income for the purpose of levy of penalty under Section 271(1)(c) of the Income Tax Act did not require any interference.

Atul Pandy,appearing on behalf of the  revenue, supported the penalty order passed by the Assessing Officer and requested to uphold the same.

The two-member Bench of Annapurna Gupta, (Accountant Member) and T.R. Senthil Kumar, (Judicial Member) dismissed the appeal filed by the revenue citing the decision of Delhi High Court in CIT vs. SAS Pharmaceuticals wherein it was held where income surrendered by assessee during survey had been shown by it in its regular income-tax return filed within prescribed time, penalty could be imposed. The Bench upheld the decision of CIT(A), who partly deleted the penalty levied under Section 271(1)(c) of the Income Tax Act.

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