Penalty u/s 271(1)(c) towards addition not made voluntary is justified

Shavva Sudheer Reddy Vs ACIT (ITAT Hyderabad)

ITAT Hyderabad held that as addition was not made voluntary but was made only after the search and incriminating evidences found during the search, accordingly, penalty u/s 271(1)(c) of the Income Tax Act towards such addition is sustainable.

Facts- Assessment u/s. 143(3) r.w.s 153A was completed on 30.12.2019 by making addition of undisclosed investment u/s. 69B of the IT Act of Rs.36,50,000/-thereby assessing total income at Rs.94,50,000/-. The Assessing Officer has gone through the facts and circumstances of the case and since the assessee had admitted the undisclosed investment of Rs.36,50,000/- in the sworn statements recorded u/s 131 during the course of assessment proceedings, the Assessing Officer held that the assessee is liable to levy of penalty u/s 271(1)(c) of the I.T. Act, 1961 for concealment of income and accordingly passed the penalty order u/s 271(1)(c) of the Act on 22.07.2021 determining the penalty of Rs.11,27,850/-.

CIT(A) sustained the penalty. Accordingly, being aggrieved, the present appeal is filed.

Conclusion- We find the addition was not voluntary but only after the search was conducted and incriminating evidence were found and confronted to the assessee for which the assessee had no other option but to pay the tax on the said amount. Had there been no search, the assessee would not have offered the above income to tax.

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