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Facts
The assessee, engaged in the business of builders, had undisclosed bank accounts which led to reassessment proceedings under section 148. The Assessing Officer (AO) made additions for credits in these accounts and earned interest. Penalty proceedings under section 271(1)(C) were initiated for concealment of income.
Held
The Tribunal held that when income is assessed under section 148, penalty under section 271(1)(C) is automatic. The proposition that no penalty is leviable for income assessed on an estimate basis is not applicable in cases assessed under section 148. The assessee is deemed to have concealed particulars of income or furnished inaccurate particulars.
Key Issues
Whether the AO was justified in levying penalty u/s 271(1)(C) when the income was assessed under section 148, and whether concealment of particulars or inaccurate particulars of income were present.
Sections Cited
271(1)(C), 148, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: HON’BLE SHRI INTURI RAMA RAO & SHRI SS VISWANETHRA RAVI
BEFORE HON’BLE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER Assessment Years: 2006- Assessment Years: 2007- Assessment Years: 2008- Assessment Years: 2009- Assessment Years: 2010-11 M.Jayaprakash Deputy Commissioner of Income Tax, No.15/78 SBI Colony Non-Corporate Circle-8(1) 3rd Street, Baskar Colony, Chennai. Saligramam, Chennai-600 093. [PAN: AECPJ2867E] Appellant Respondent Assessee by : None Revenue by : Mr.SBR Kumar Laghimsetti, Addl.CIT Date of Hearing : 20.01.2026 Date of Pronouncement : 27.01.2026 O R D E R PER INTURI RAMA RAO, A.M :
These five appeals filed by the assessee are directed against the order of the NFAC, Delhi (herein after called CIT(A)’ in short], dated 30.09.2025 for the Assessment Years 2006-07, 2007-08, 2008-09, 2009-10 and 2010- 11 respectively confirming the levy of penalty u/s 271(1)(C) of the Income Tax Act 1961.
2.0 Since identical facts and issues are involved in five of these appeals, these appeals were heard together and disposed of vide this common order.
3.0 For the sake of convenience and clarity, the facts relevant to the appeal bearing for the Assessment Year 2006-07 are stated herein.
4.0 Briefly, the facts of the case are that the appellant is an individual engaged in the business of builders under the name and Style Arvind Builders. The original return of income for the Assessment Year 2006-07 was filed on 28.06.2006 disclosing total income of Rs.8,11,789/- and there was no scrutiny assessment. Subsequently, during the course of assessment proceedings for the AY-2010-11, the AO had unearthed that the appellant maintained bank accounts with HDFC and Bank of India Banks, which were not disclosed. Based on this information, the AO formed an opinion that income got escapement of assessment to tax. Accordingly, the AO issued notice u/s 148 on 07.03.2013. The appellant had not complied with the notice issued u/s 148. In the circumstances, the AO proceeded with framing of the assessment order vide order dated 26.03.2014 by making addition of credits of Rs.1,07,17,871/- in the undisclosed bank account and interest earned from the undisclosed bank account of Rs.14,866/-.
Page - 2 - of 6 5.0 Being aggrieved by the above assessment order, an appeal was preferred before the CIT(A) who had confirmed the action of the assessing officer. However, on further appeal before this tribunal, in vide order dated 01.01.2020, remanded the matter to the file of assessing officer with a direction to complete the assessment proceedings by taking into consideration the revised profit and loss account and balance sheet including the credits in the undisclosed bank account.
6.0 Pursuant to the order of this tribunal, the AO passed the consequential order vide order dated 30.03.2022 by treating the credits in the undisclosed bank accounts as business turnover of the appellant estimated the profit thereon at 5% thereof, the AO also made addition of Rs.14,866/- being the interest earned from the undisclosed bank accounts. The AO also initiated the penalty proceeding u/s 271(1)(C) for concealment of particulars of income. In response to the show cause notice, the appellant submitted that income was assessed to tax on estimate basis and therefore no penalty was leviable, placing reliance on certain judicial precedents. However, the AO rejecting the above explanation, proceeded with levy of penalty of Rs.2,80,740/- u/s 271(1)(C) vide order dated 14.09.2022.
7.0 Being aggrieved by the levy of penalty, an appeal was preferred before the CIT(A), who vide impugned order confirmed the action of the assessing
Page - 3 - of 6 officer. Being aggrieved, the appellant is in appeal before us in the present appeal.
8.0 When appeal was called on, none appeared on behalf of the appellant despite the due service of notice of hearing. Therefore, after hearing the learned Sr.DR, we proceed to dispose of these appeals.
9.0 On mere perusal of the grounds of appeal raised by the appellant, it would reveal that the appellant is challenging the very levy of penalty only on the ground that when the income was assessed to tax, no penalty for concealment of particulars of income can be levied. On the other hand, learned Sr.SD opposed the above proposition as the income was assessed to tax u/s 148 of the Act.
10.0 We heard the learned Sr.DR and perused the material on record. The issue that arises for our consideration is whether the AO was justified in levying penalty u/s 271(1)(C) of the Act, in the facts of the case. Admittedly, in the present case, the appellant was assessed to tax at higher income than the income assessed pursuant to the return of income filed u/s 139(1) of the Act. The assessment made pursuant to the notice u/s 148, attained finality, as the appellant chosen not to contest the addition made in the reassessment proceeding. By virtue of the explanation-3 to section 271(1)(C) of the Act the assessee is deemed to have concealed the particulars of income or furnished inaccurate particulars of income. Page - 4 - of 6 Therefore, levy of penalty u/s 271(1)(C) is automatic as the penalty is levied with reference to the original return of income. The proposition of law that in the case of income assessed on estimate basis, no penalty is leviable is not applicable in the case of income assessed u/s 148. Therefore, we do not find any merit in the grounds of appeal filed by the assessee. Therefore, the appeal filed by the assessee is dismissed.
11.0 Since the facts and issues involved in the present appeal of the assessee are identical, therefore, our decision in for A.Y. 2006-07 shall apply mutatis mutandis to the appeal nos. in for A.Y. 2007-08, for A.Y. 2008-09, for the A.Y. 2010-11 also.
12.0 In the result, all the five appeals filed by the assessee are stands dismissed. Order pronounced on 27th , January-2026 at Chennai.