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Facts
The assessee, a liquidated company, failed to file income tax returns. The Assessing Officer initiated reassessment proceedings under Section 147 read with Section 148, estimating income based on significant transactions and subsequently imposed a penalty under Section 271(1)(c) for concealment, which was upheld by the CIT(A). The assessee argued that the penalty was improperly levied as the additions were estimated, and the estimated undisclosed income was below the threshold for Section 148 action.
Held
The Tribunal condoned a 14-day delay in filing the appeals, accepting the assessee's justification. It ruled that a penalty under Section 271(1)(c) cannot be imposed when additions to income are based on estimates, as concealment requires a willful mens rea. Consequently, the Tribunal set aside the orders of the lower authorities and directed the deletion of the penalty for all assessment years.
Key Issues
Whether penalty under Section 271(1)(c) can be imposed on estimated additions to income; Whether reassessment proceedings initiated under Section 147 are valid if the estimated undisclosed income is below the statutory threshold.
Sections Cited
147, 148, 144, 271(1)(c)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI AMITABH SHUKLA
अपीलार्थी की ओर से/ Assessee by : Mr.Y.Sridhar, F.C.A. प्रत्यर्थी की ओर से / Revenue by : Ms.R.Anita, Addl. CIT सुनवाई की तारीख/Date of Hearing : 17.02.2025 घोषणा की तारीख /Date of : 26.03.2025 Pronouncement आदेश / O R D E R PER AMITABH SHUKLA, A.M : S. Appeal AYs Appellant CIT(A) Order Details Respondent No. Nos. A B C D E F DIN & Order Power Security Corp Pvt Ltd, No.ITBA / NFAC / S / ITA-1863 / 1 2013-14 250 / 2024-25 New No.18, Chny / 2024 Old No.22, /1064270562(1) Income Tax dated 22.04.2025 Officer, Lake Area, 1st Cross Street, DIN & Order Corp Ward-5(2), Chennai. Nungambakkam, No.ITBA / NFAC / S / ITA-1851 / 2 2014-15 Chennai–34. 250 / 2024-25 Chny / 2024 [PAN: AAGCP2703C] /1064270777(1) dated 22.04.2025 Page - 1 - of 8 DIN & Order No.ITBA / NFAC / S / ITA-1864 / 3 2015-16 250 / 2024-25 Chny / 2024 /1064271009(1) dated 22.04.2025 DIN & Order No.ITBA / ITA-1865 / NFAC / S / 250 / 2024- 4 2016-17 Chny / 2024 25 / 1064271181(1) dated 22.04.2025 2.0 It has been noted that there is a delay of 14 days in all the four appeals, in filing before the tribunal. In its affidavit the assesse has pleaded that the assesse is small organization providing security services and has no qualified accounting professionals to handle its tax matters as also that it has to travel frequently outstations for business needs. All these activities contributed to the delay which was neither willful nor wanton. The assesse submitted that there will not be case of any non- compliance now. We have considered the justification put forth by the assesse and we are satisfied with their adequacy. We are also conscious of the fact that no litigant gains by intentionally delaying its own matters. The Ld. DR did not pose any serious objections to the delay. Accordingly, we hereby condone the delay and proceed to adjudicate this appeal. 3.0 We have noted that imposition of penalty u/s 271(1)(c) is seminal to all the above four appeals and hence they are adjudicated by this common order for the purposes of convenience. The facts and figures for AY-2013-14 are being taken as lead year for adjudication. As Page - 2 - of 8 admittedly facts are identical for all the years, and hence the decision for AY-2013-14 shall apply to AY-2014-15 to AY-2016-17 mutatis mutandis.
4.0 The Ld. Counsel for the assessee informed that the company under consideration is now liquidated and formaly closed. The Ld. AO was in receipt of information that the assessee had transacted amounts of money aggregating to Rs. 5,00,39,970/- on account of contractor payments, professional technical fees and rent. No return of income was filed and hence action u/s 147 r.w.s. 148 was taken. In response to notice of the Ld.AO the assessee had submitted that it has discontinued its operations and was not in the possession of adequate records to file return of income or any further information. Reference was also made to assessee’s contemporaneous adverse health issues. The Ld. AO recorded that department has initiated action for restoration of company’s name in the