Puthan Purayil Abdurahiman Vs ACIT (ITAT Cochin)
The case of Puthan Purayil Abdurahiman vs. ACIT, heard by the Income Tax Appellate Tribunal (ITAT) in Cochin, addresses the levy of a penalty under Section 271(1)(c) of the Income-tax Act, 1961. The appellant, an individual, initially filed a return for the 2013-2014 assessment year. Following a search and seizure operation on the Malabar Group of Companies, which purportedly found incriminating material, the Assessing Officer (AO) issued a notice under Section 153C. In response, the appellant disclosed an additional income, but argued that this was a voluntary act and not an admission of concealing income.
The AO, however, levied a penalty, citing the Hon’ble Supreme Court’s decision in MAK Data Private Limited v. CIT. The AO’s position was that the voluntary disclosure, made in response to the notice and without any prior admission of concealment, was a basis for the penalty. The Commissioner of Income-tax (Appeals) upheld this penalty.
The ITAT, after hearing the appellant’s appeal, noted that the lower authorities had failed to establish a direct link between the seized material from the third party and the appellant’s undisclosed income. The tribunal clarified that merely agreeing to an additional income in response to a notice does not automatically prove concealment. The ITAT placed more emphasis on the principle established in Sir Shadilal Sugar & General Mills Ltd. v. CIT, which suggests that accepting additional income voluntarily does not automatically warrant a penalty. Consequently, the tribunal set aside the lower authorities’ decision and remitted the matter back to the CIT(A) for a new hearing, instructing that the burden of proof to demonstrate that the seized evidence led to the unearthing of the undisclosed income rests with the AO.
