Penalty u/s 271(1)(c) is valid even during search the assessee VOLUNTARY discloses its additional income & then files revised return ?

Pr CIT vs. Dr. Vandana Gupta (Delhi High Court)- 3 March 18

Some of the important discussion of the case for easy reference-

1- Counsel for the Revenue urges that the ITAT fell into error in holding that Section 271(1)(c) was not attracted to the circumstances of this case. It was pointed out that prior to the survey (on 22.02.2010), the assessee had filed a return, which failed to disclose the true particulars. It was only during survey proceedings that she surrendered income to the extent of `2,00,00,000/- and revised the returns subsequently. The fact that she voluntarily revised the return, would not absolve the assessee from liability to penalty

2- Learned counsel submitted that the onus of proving that the returns were filed accurately, in the circumstances shifted to the assessee. Once it was shown that additional income was surrendered and a revised return was filed, it was up to the assessee to establish that, in fact, the omission was bona fide or that there was a cogent and reasonable explanation.

3- Counsel for the assessee argued that Section 271(1)(c) plainly states that an act of concealment or furnishing inaccurate particulars can relate only to a return. It is submitted that in the present case, returns were filed and the mere circumstance that the survey was conducted leading to further disclosures that led to additions could not have legitimately led to the Revenue authorities concluding that there was concealment of material particulars

4- Learned counsel submitted that like in the facts of the present case, penalty imposed in the cases of additional income surrendered after survey were held to be unwarranted by different High Courts. Reliance was placed upon the judgment of the Punjab & Haryana Learned counsel submitted that like in the facts of the present case, penalty imposed in the cases of additional income surrendered after survey were held to be unwarranted by different High Courts. Reliance was placed upon the judgment of the Punjab & Haryana

5- the assessee merely made a voluntary surrender; she did not offer any explanation as to the nature of income or its source. The observations in MAK Data (supra) are that the authorities are not really concerned with the statement- whether voluntarily or otherwise and have to see whether there was any non disclosure of material facts, or income. The complete failure to furnish any details with respect to the income, which if given could have been the only reasonable basis for deletion of penalty, in the opinion of the court, reinforced the views of the AO and CIT (A) that the revised return was an afterthought, based on the subsequent event of disclosure of `2,00,00,000/-.

Hence penalty was allowed by the court and the case favoured to the revenue on imposition of penalty u/s/271 (1)(c)..

For reading full text of the case please refer  link - http://itatonline.org/archives/pr-cit-vs-dr-vandana-gupta-delhi-high-court-s-2711c-voluntary-surrender-of-income-after-survey-by-filing-a-revised-income-does-not-save-the-assessee-from-levy-of-penalty-for-concealment-of-incom/vandana-gupta-penalty-surrender-income/