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Facts
A search action was conducted on the assessee, Ashoka Tubewell Boring Engineering & Construction, after which the assessee filed a return under Section 153A, declaring a significantly higher income than originally filed, including ₹2.00 crores as undisclosed income and ₹1,83,640/- under Section 68. The Assessing Officer imposed a penalty of ₹69,85,155/- under Section 271(1)(c), which was confirmed by the CIT(A), despite the assessee arguing that the income was voluntarily declared and no incriminating material was found during the search.
Held
The Tribunal observed that no incriminating material was found during the search related to the disclosed income, and the income was voluntarily declared in the return filed under Section 153A and accepted by the AO. Citing various judicial precedents, the Tribunal held that no penalty is leviable under Section 271(1)(c) when income is voluntarily declared without any incriminating evidence being discovered during a search. Therefore, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the penalty.
Key Issues
Whether a penalty under Section 271(1)(c) of the Income-tax Act, 1961, can be imposed when additional income is voluntarily declared in a return filed under Section 153A, without any incriminating material being found during a search operation.
Sections Cited
132(1), 153A, 139(1), 271(1)(c), 132(4), 68, 143(3), 153C, Explanation 5A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PATNA BENCH, PATNA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
O R D E R Per Rajesh Kumar, AM:
This appeal preferred by the assessee against the order of the Commissioner of Income Tax, Appeal (hereinafter referred to as the “Ld. CIT(A)”] dated 30.12.2024 for the AY 2016-17.
The only issue raised by the assessee in the various grounds of appeal is against the confirmation of penalty by the ld. CIT (A) as imposed by the ld. AO u/s 271(1)(c) of the Act.
The facts in brief are that there was a search action on the assessee u/s 132(1) of the Income-tax Act, 1961 (the Act) on 29.10.2010. The assessee is engaged in the business of executing government contracts like roads, water tanks and over bridges, etc. Accordingly,
In the appellate proceedings, the ld. CIT (A) confirmed the said order by holding that there is no perversity in the order passed by the ld. AO as the ld. AO has made out a specific case for concealment of income and imposed the penalty accordingly.
The ld. AR vehemently submitted before us that the penalty order passed by the ld. AO is erroneous and may be deleted. The ld. AR
The ld. DR on the other had relied heavily on the authorities below by stating that the disclosure was made specifically in relation to the unpaid liabilities in the books of accounts and therefore, there was no question of any incriminating material being seized during the search. The ld. DR stated that these are sufficient reasons and grounds for
After hearing the rival contentions and perusing the materials available on record, we find that in this case undoubtedly there was no incriminating material found during the course of search qua this income. The assessee made disclosure in respect of outstanding liabilities which were outstanding in the books of accounts of the assessee. We have noticed that in the assessment order there was no discussion by the ld. AO apart from the fact that these disclosures were made in respect of outstanding liabilities for which no bills/ vouchers were available with the assessee. We further note that the income has been disclosed by the assessee in the return filed in response to notice u/s 153A of the Act which has also been accepted by the ld. AO. Then there is no question of concealment of income or/ furnishing of inaccurate particulars of income as has been held by the co-ordinate Bench in the case of Brahmaputra metallics Limited (supra). For the sake of ready reference, we reproduce the operative part of the said decision as under: - “5. We have heard the rival contentions and perused the records available on record. We notice that the assessee which is a limited company disclosed loss of ₹54.99 crore (approx.) in the return filed u/s 139(1) of the Act for A.Y. 2015-16 on 13th September, 2015. Thereafter, the assessee which is a part of the Lohia Group of companies was subjected to search and seizure proceedings u/s 132 of the Act carried out on 24th October, 2017. On the basis of the data backup found at the assessee premises, the assessee surrendered additional business income of ₹5 crore. Thereafter, in compliance to notice issued u/s 153A of the Act, assessee after including the additional business income of ₹5 crore, declared the loss in the return at ₹4,99,90,0346/-. The return of income has been accepted by the ld. AO as the assessed income and no additions have been made in the assessment order. However, the ld. AO initiated the penalty proceedings u/s 271(1)(c) of the Act on the surrendered income of ₹5 crore and levied the impugned penalty vide its order dated 25th March, 2022. When the
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 18.07.2025.