Budnar Jayakar Shetty Vs DCIT (ITAT Bangalore)
Deletion of One Addition Will Not Wipe Out Penalty Levied on Another Surviving Income: ITAT Bangalore Upholds Section 271(1)(c) Penalty
Summary: The Bangalore Bench of the Income Tax Appellate Tribunal has held that the deletion of a particular quantum addition does not automatically invalidate the entire penalty order where the penalty sustained by the appellate authority was not computed with reference to the deleted addition.
The Tribunal also held that income disclosed only after detection during search proceedings cannot be regarded as a voluntary disclosure so as to grant immunity from penalty under Section 271(1)(c).
Facts of the case
The assessee was the General Manager of Badagabettu Credit Co-operative Society Limited, Udupi. He filed his original return of income for Assessment Year 2016-17 on 5 August 2016, declaring total income of ₹8,26,030. The return was processed under Section 143(1).
A search under Section 132 was subsequently conducted on 1 February 2017 at the business premises of the co-operative society. Certain documents were seized from the assessee’s chamber. The assessee’s residence was also searched, and his statement was recorded under Section 132(4).
During the search proceedings, the assessee agreed to offer an additional amount of ₹83 lakh. The amount was subsequently disclosed in the return filed in response to proceedings under Section 153C. Against this income, the assessee claimed deduction of ₹23,83,069 under Section 57, representing interest paid on loans.
