Case Law Details
Kapilaben Mahendrabha Patel Vs DCIT (ITAT Ahmedabad)
Introduction: In a significant ruling by the Income Tax Appellate Tribunal (ITAT) Ahmedabad, the case of Kapilaben Mahendrabha Patel vs. Deputy Commissioner of Income Tax stands out for its critical examination of penalty levied under section 271(1)(c) of the Income Tax Act, 1961. The appeal by the assessee against the order of the Commissioner of Income Tax (Appeals)-12, Ahmedabad, brings to light the nuances of penalty levies for undisclosed income and the pivotal role of voluntary disclosure.
Detailed Analysis
The crux of the matter lies in the penalty imposed by the Assessing Officer (AO) for the concealment of particulars of income amounting to Rs. 6 lakhs, which was disclosed in the return filed in response to the notice under section 148 of the Act for the Assessment Year 2012-13. The AO’s decision was based on the premise that the disclosure was made only after the Department issued a notice for reopening under section 148, upon discovering the investment of Rs.6.00 lakhs in Kotak Mahindra Insurance, the source of which was not explained by the assessee.
The Commissioner of Income Tax (Appeals) upheld the AO’s penalty levy, referencing the Supreme Court’s judgment in the case of MAK Data P.Ltd., which dealt with the nature of voluntary disclosures post-detection by the Department. However, the ITAT Ahmedabad, in its wisdom, delved deeper into the circumstances under which the disclosure was made by the assessee, highlighting a crucial distinction – the absence of evidence that the assessee was aware of the Department’s knowledge about the escapement of income.
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