2012 (11) TMI 928 - HC - Income Tax

Penalty u/s.217(1)(c) of the Act on disclosure made by the assessee during the course of survey Held that - There was no variation in the returned income and therefore, there was no basis for levying of penalty - only reason why the Assessing Officer had justified in levying of penalty was the material found during the course of survey indicating unaccounted receivables - neither explanation 5 to section 271(1)(c) was applicable nor was it a case where the assessee had not declared the surrendered income in the returned income within the due date penalty deleted

Summary

Issues:
Challenge to deletion of penalty under section 217(1)(c) of the Income Tax Act on disclosure of income during survey action.

Analysis:
The High Court considered the challenge by the Revenue against the deletion of a penalty under section 217(1)(c) of the Income Tax Act related to the disclosure of income during a survey action. The Tribunal's decision was questioned, focusing on whether the Appellate Tribunal was correct in law and fact in deleting the penalty of Rs.31,97,700. The assessee had filed its income tax return, which was scrutinized, and penalty proceedings were initiated by the Assessing Officer resulting in the levying of the penalty amount. The CIT(Appeals) subsequently deleted the penalty, a decision that was upheld by the Tribunal. The Tribunal's decision was based on a previous case where a similar question had been addressed, emphasizing that there was no discrepancy in the returned income to justify the penalty. The Tribunal highlighted that there was no concealment of income particulars and no valid basis for imposing the penalty beyond the material found during the survey. It was noted that the provisions of explanation 5 to section 271(1)(c) were not applicable, and the surrendered income was declared within the due date.

The High Court found no flaws in the Tribunal's reasoning and concluded that the issue did not warrant further consideration. Therefore, the Tax Appeal was dismissed, affirming the decision to delete the penalty under section 217(1)(c) of the Income Tax Act.