No Concealment Penalty if Tax Sought to Be Evaded is Nil After Considering Self-assessment Tax | ITAT

Case Details: Smt. Kavita Sachdev vs. Income-tax Officer - [2024] 162 taxmann.com 642 (Indore - Trib.)

Judiciary and Counsel Details

• Vijay Pal Rao, Judicial Member & B.M. Biyani, Accountant Member
• Milind Wadhwani, CA for the Appellant.
• Ashish Porwal, Sr. DR for the Respondent.

Facts of the Case

The assessee sold an immovable property with nine other co-owners. The Assessing Officer (AO) noted that the assessee did not file original return of income for the relevant assessment year . Thus, a reopening notice was issued under section 148 and the AO also initiated the penalty proceedings under section 271(1)(c). Accordingly, AO levied a penalty equivalent to 100 per cent of the tax sought to be evaded.

The assessee pleaded that the assessee had already paid self-assessment tax and there was no outstanding demand under section 156 of the Income-tax Act, 1961, therefore, penalty levied under section 271(1)(c) of the Act is not valid.

Aggrieved by the order, the CIT(A) confirmed the penalty levied by the AO and the matter reached before the Indore Tribunal.

ITAT Held

The Tribunal held that though the assessee did not file a valid return under section 139, the self-assessment tax was already paid by the assessee. The AO acknowledged the self-assessment tax paid by the assessee in computation of income and calculation of tax. This fact was also reflected in Form No. 26AS.

Therefore, there was no dispute that the assessee paid self-assessment tax prior to the notice issued under section 148 and, therefore, as per Explanation 4 to section 271(1)(c), the amount of tax sought to be evaded shall be determined in accordance with the formula provided in clause (a) to (c) of the said Explanation.

Thus, the amount of tax sought to be evaded shall be determined by taking into consideration the amount of tax on the total income assessed as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148. The case of the assessee is covered by this clause (c) of Explanation 4 to section 271(1)(c) and, hence, considering the amount of self assessment tax, the balance would be nil and, consequently, there would be nil amount of tax sought to be evaded for the purpose of levy of penalty under section 271(1)(c).

Accordingly, when the amount of tax to be evaded is nil in the case of the assessee, then question of levy of penalty under section 271(1)(c) does not arise and hence, the penalty levied by the Assessing Officer under section 271(1)(c) is not justified and the same is deleted.

List of Cases Referred to

• CIT v. Pushpendra Surana [2014] 49 taxmann.com 12/264 CTR 204/227 Taxman 151 (Rajasthan) (para 7),
• CIT v. Suresh Chandra Mittal [2000] 158 CTR 26/241 ITR 124/[2002] 123 Taxman 1052 (Madhya Pradesh) (para 7)
• Pr. CIT v. Gujarat State Electricity Corporation Ltd. [2022] 144 taxmann.com 165/[2023] 290 Taxman 77 (Gujarat) (para 7).