DCIT Vs L. Javerchand Jewellers Pvt. Ltd. (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal and upheld the order of the Commissioner of Income Tax (Appeals) deleting the penalty of ₹1,79,27,172 levied under Section 270A of the Income Tax Act, 1961.
The assessee, a closely held private limited company engaged in wholesale trading of gold jewellery, filed its original return of income for Assessment Year 2019-20 declaring total income of ₹1,08,17,950, which was processed under Section 143(1). Subsequently, search proceedings were conducted in connection with another group, during which incriminating documents were found relating to the assessee. During the search, the Managing Director stated under Section 132(4) that invoices were generally raised for only 70–75% of the value received through banking channels, while the balance was received in cash or old/damaged gold and remained unrecorded. Based on this, the assessee voluntarily admitted additional income by estimating undisclosed turnover at approximately 30% of the regular turnover and applying a gross profit rate of 3%, resulting in additional income of ₹2.88 crore.
After receipt of notice under Section 153C, the assessee filed a revised return declaring total income of ₹3,96,17,950, including the admitted additional income. The Assessing Officer completed the assessment under Sections 143(3) read with 153C by accepting the returned income without making any further additions. Simultaneously, the Assessing Officer initiated penalty proceedings under Section 270A for under-reporting of income in consequence of misreporting and later imposed penalty at 200% of the tax payable on the alleged under-reported income, amounting to ₹1,79,27,172. The Assessing Officer held that the assessee had suppressed facts, failed to disclose income voluntarily, and misreported income discovered only because of the search proceedings.
