No concealment if income returned and accepted is same and amount was surrendered before the end of financial year – ITAT 

No concealment if income returned and accepted is same where assessee surrenders income at survey action before the end of the financial year – ITAT 

ABCAUS Case Law Citation:
ABCAUS 2390 (2018) 07 ITAT

The instant appeal was preferred by the Revenue against the order of Commissioner of Income Tax (Appeals) in in connection with levy of penalty u/s.271(1)(c) of the Income tax Act, 1961 (the Act).

There was survey action u/s 133A of the Act on the assessee which resulted in detection/discovery of excess stock. The assessee offered to tax Rs. 25 lakhs to cover up the said discrepancies in the stock and paid the dues taxes on the said additional income. The assessment u/s 143(3) of the Act was completed by the AO with no other addition.

However, the AO initiated the penalty proceedings for concealment of income and eventually the penalty was imposed.

In the First Appellate proceedings, the CIT(A) upheld the penalty levied by the AO.

The Tribunal observed that the assessee had filed the return of income incorporating the additional income subsequent to the survey action and the said return had been accepted without making any addition. Assessee offered the additional income and subjected the same to tax. Survey action took place before end of the financial year.

It was observed that the issue was squarely covered by the judgment of Hon’ble Delhi High Court where under the identical facts, it was held that it was not the case of furnishing inaccurate particular of income, as in the income tax return, particulars of income had been duly furnished and the surrendered amount of income was duly reflected in the income tax return. The question whether the particulars of income were concealed by the assessee or not, would depend upon the issue as to whether concealment has reference to the income tax return filed by the assessee, viz., whether concealment is to be found in the income tax return. In other words, the concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income tax return filed by it.

The Tribunal observed that the survey action gave rise to the disclosure of Rs. 25 lakhs before the end of the financial year and due date for filing of return of income was still not expired. Therefore, the penalty u/s 271(1)(c) of the Act was not sustainable in law.

The UTAT opined that the return of income filed by the assessee based on the complete books of account including the transactions relating to the said Rs. 25 lakhs, was not alleged to contain any concealed income or furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act.

Therefore following the settled law, the tribunal set aside the order of CIT(A)

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