Raghuram Hume Pipes Private Limited Vs ACIT (ITAT Visakhapatnam)
Issue: ITAT Visakhapatnam order on Whether penalty u/s 271(1)(c) of IT Act can be levied on income voluntarily disclosed by the assessee in the return of income filed in response to notice u/s 148, which was based on disclosure made during the course of survey proceedings u/s 133A, when there is no independent evidence of concealment or furnishing inaccurate particulars of income
Facts of the Case:
1. Business Activity: The assessee is engaged in executing contract works for Government Departments such as Irrigation, Public Health, Rural Water Supply, and various Municipal Corporations, classified as a Special Class Contractor.
2. Original Return of Income: For Assessment Year (AY) 2016-17, the assessee filed its return of income under Section 139(1) on time, declaring total income of Rs. 3,38,91,662/-.
3. Survey and Post-Survey Proceedings:
- A survey under Section 133A was conducted on 25.03.2019.
- During the survey, the Revenue confronted the assessee regarding lower profit margins (3.5% to 4%) in comparison to the industry norm (8% to 10%).
- The assessee explained that the lower profits were due to increasing raw material costs, but to buy peace and avoid litigation, it agreed to voluntarily offer higher profit percentages:
- 6% for AY 2016-17
- 6.5% for AY 2017-18
- 7% for AY 2018-19
4. Revised Return under Section 148:
- Based on the survey findings, proceedings under Section 147 were initiated.
- A notice under Section 148 was issued on 30.03.2019.
- In response, the assessee filed its return on 28.12.2019, admitting an enhanced income of Rs. 4,03,16,660/-, reflecting the additional income disclosed during the survey.
The assessment was completed under Section 143(3) r.w.s. 147 accepting the returned income.
