2015 (12) TMI 1888 - AT - Income Tax

Penalty proceedings u/s 271(1)(c) - revised return showing higher income was filed on the basis of which notice for reopening was issued - undisclosed agricultural income - assessee in his statement recorded u/s 131 on oath by the ADIT (Investigation) Nashik had confessed that the agricultural income shown by him during the assessment year 2005-06 from sale of agricultural produce did not match with the agricultural crops shown in the 7/12 extracts - HELD THAT - Assessee had no plausible explanation towards the source of Rs.3, 00, 000/- which he had introduced in his business as agricultural income. Although the assessee has filed the revised return by disclosing the additional income of Rs.3, 00, 000/- the same cannot be said to be voluntary because the return was filed only after the enquiries were conducted by the Department and the assessee was unable to substantiate the source of the same for which he declared the additional income. As per the provisions of section 271(1)(c) of the Act penalty is leviable if the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. In the instant case the assessee by declaring business income as agricultural income in the return of income has concealed the particulars of his income and furnished inaccurate particulars of such income. Provisions of section 271(1)(c) are clearly attracted. Various decisions relied upon by the assessee before the CIT(A) are distinguishable and are not applicable to the facts of the present case. Grounds raised by the assessee are dismissed.

Summary

Issues:
Penalty under section 271(1)(c) of the I.T. Act for furnishing inaccurate particulars of income.

Detailed Analysis:

1. Background and Assessment Process:
The appeal was against the confirmation of a penalty of Rs.99,329 imposed by the Assessing Officer under section 271(1)(c) of the I.T. Act for the assessment year 2005-06. The assessee, an individual deriving income from country liquor and cinema theatre, initially declared a total income of Rs.77,862 and agricultural income of Rs.3,07,300. Subsequently, after an investigation, the assessee admitted unexplained income of Rs.3,00,000, which was then declared in a revised return.

2. Explanation and Dispute:
The assessee claimed that the additional income was declared to avoid prolonged litigation and that the Assessing Officer had discretion regarding penalty imposition. However, the Assessing Officer found discrepancies in the declared agricultural income and concluded that the assessee had concealed regular income as agricultural income to evade tax liability.

3. CIT(A) Decision and Arguments:
The CIT(A) upheld the penalty, stating that the assessee intentionally furnished inaccurate particulars of income to evade tax. The CIT(A) rejected the argument that the revised return was voluntary, emphasizing that the assessee revised the return only after being confronted with discrepancies during the investigation.

4. Judgment and Conclusion:
The Tribunal upheld the CIT(A) decision, emphasizing that the assessee failed to provide a satisfactory explanation for the additional income declared. The Tribunal found that the assessee had concealed income by misrepresenting business income as agricultural income. Consequently, the penalty under section 271(1)(c) was deemed applicable as the assessee had furnished inaccurate particulars of income. The Tribunal dismissed the appeal, affirming the penalty imposed by the Assessing Officer.

In conclusion, the Tribunal upheld the penalty under section 271(1)(c) of the I.T. Act, emphasizing the intentional misrepresentation of income by the assessee. The decision highlighted the importance of accurate income disclosure and the consequences of concealing income to evade tax liability.