No Concealment Penalty if Additions Were Based on Bank Transactions Already Available With AO | ITAT

Case Details: Ismailbhai Savdibhai Hira vs. Income-tax Officer - [2025] 173 taxmann.com 439 (Ahmedabad-Trib.)

Judiciary and Counsel Details

• Ms Suchitra R. Kamble, Judicial Member & Makarand V. Mahadeokar, Accountant Member
• Pritesh L. Shah, AR for the Appellant.
• Rignesh Das, Sr DR for the Respondent.

Facts of the Case

A search and seizure operation under section 132 was carried out in the case of a person. Certain documents were found in the name of the assessee. A notice under section 153C was issued against the assessee, and certain additions were made under sections 68 and 69. Subsequently, the Assessing Officer (AO) initiated penalty proceedings and imposed a penalty under section 271(1)(c) in respect of the concealment of income.

Aggrieved by the order, the assessee preferred an appeal to the CIT(A), which confirmed the penalty order. The assessee then filed an appeal to the Tribunal.

ITAT Held

The Tribunal held that the AO had not given details in the penalty order as to how the assessee had made concealment of income related to additions under sections 68 and 69. In the assessment order, the AO initiated a penalty under section 271(1)(c), read with section 274, for furnishing inaccurate particulars of income. Since the assessee had not maintained the books of accounts and filed the return of income under section 153C, the question of concealment of income and furnishing of inaccurate particulars would not come into the picture.

The penalty provisions act independently, and while invoking the penalty under section 271(1)(c), both limbs can be invoked jointly or separately with the additions made by the AO, but while invoking section 271(1)(c), the AO has to categorically mention in the assessment order as well as in the notice issued under section 274 read with section 271(1) (c) that why there is a component of concealment of income or why there is a component of furnishing of inaccurate particulars on the part of the assessee.

Furthermore, AO didn’t provide details in the penalty order regarding how the assessee concealed income related to the additions under sections 68 and 69, as these components were already in the bank account transactions maintained by the assessee. Therefore, it cannot be treated as a concealment of income. Thus, the penalty imposed by the Assessing Officer under section 271(1)(c) is unjustified.