2018 (8) TMI 1918 - AT - Income Tax

Penalty u/s 271(1)(c) - non inclusion of surrendered income in the return of income - inadvertence and bonafide mistake - HELD THAT - In the case in hand the assessee has paid the due tax on the said income prior to the filing of the return of income and further this amount was duly reflected in the books of account of the assessee. Once the assessee has considered the additional income surrendered during the survey in the books of accounts and also paid the tax on the same then mere non inclusion of the said income in the return of income due to inadvertence and bonafide mistake would not lead to the conclusion that the assessee has concealed particulars of income or furnishing inaccurate particulars of income particularly when the assessee did not claim any refund of the advance tax paid on such income. Assessee made the payment of tax before filing of the return and not claimed refund of the same. The non-inclusion of the said income was explained as due to inadvertent omission and Bonafide mistake. Therefore the explanation tendered by the assessee with the supporting facts and details falls in the Clause-B of Explanation-2 to section 271(1)(c) of the Act. Hence we do not find any error or illegality in the impugned order of the ld. CIT (A). - Decided against revenue

Summary

Issues:
Penalty under section 271(1)(c) for concealment of income.

Analysis:
1. The appeal by the revenue challenged the deletion of penalty of Rs. 51,49,485/- by the ld. CIT (A) for the assessment year 2011-12.
2. The assessee, engaged in the business of contract, surrendered undisclosed income of Rs. 1,51,50,000/- during a survey but did not declare it in the return of income filed later.
3. The AO initiated penalty proceedings under section 271(1)(c) as the income was not disclosed, and eventually levied the penalty.
4. The ld. CIT (A) deleted the penalty, considering the inadvertent omission of income in the return and the fact that tax was already paid on the surrendered income.
5. The revenue argued that non-declaration of surrendered income in the return constituted concealment, relying on the AO's order.
6. The assessee contended that the payment of due tax on the surrendered income, reflected in the books, showed bonafide intent despite the omission in the return.
7. The Tribunal noted that the assessee's payment of tax, non-claiming of refund, and inadvertent omission of income did not amount to concealment or furnishing inaccurate particulars.
8. The ld. CIT (A) based the decision on the principle that penalty under section 271(1)(c) applies only when conditions are met, and concealment implies active hiding of income.
9. The Tribunal upheld the ld. CIT (A)'s decision, finding the assessee's explanation falling under Explanation-2 to section 271(1)(c) and no deliberate intent behind the omission.
10. Consequently, the appeal by the revenue was dismissed, affirming the deletion of the penalty.

This detailed analysis of the legal judgment highlights the key arguments, considerations, and conclusions regarding the penalty for concealment of income under section 271(1)(c) in the given case.