ACIT Vs Radhika Jewellers (ITAT Ahmedabad)
Income Tax Appellate Tribunal, Ahmedabad upheld the order of the CIT(A) deleting the penalty of ₹62.11 lakhs levied under Section 271(1)(c) on income disclosed during survey proceedings. The Tribunal noted that during a survey under Section 133A, the assessee-firm admitted unaccounted stock and cash aggregating to about ₹2.01 crores, which was duly recorded in the books and declared as business income in the return filed within the prescribed time. The Assessing Officer accepted the returned income in assessment under Section 143(3), making only minor disallowances unrelated to the disclosed income.
The Tribunal held that once the disclosed income was fully reflected in the return and accepted by the AO, there was no concealment or furnishing of inaccurate particulars, a sine qua non for invoking Section 271(1)(c). Penalty provisions being penal in nature must be construed strictly and cannot be imposed on presumptions that income “would not have been disclosed but for survey.” Relying on the Gujarat High Court decision in PCIT v. Shree Sai Developers (418 ITR 306), the Tribunal reiterated that survey disclosure, when voluntarily offered and accepted in assessment, does not attract penalty.
Accordingly, the Revenue’s appeal was dismissed and the deletion of penalty was confirmed.
