Appellate Tribunal Cancels Penalty for Income Tax Act Violation

The Appellate Tribunal allowed the appeal, canceling the penalty imposed under section 271(1)(c) of the Income Tax Act. The Tribunal found that the appellant's disclosure of interest income in the capital account and TDS certificates, along with similar disclosures in previous and subsequent years, indicated inadvertent error rather than intentional concealment. Relying on a Supreme Court decision, the Tribunal concluded that it was not a suitable case for penalty imposition, overturning the decisions of the Assessing Officer and the Commissioner of Income Tax (Appeals).

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Issues Involved: Appeal against penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 for non-disclosure of interest income received from bank in the return of income.

Summary:
The appellant, an individual engaged in construction and transport business, filed a return of income declaring total income of Rs. 2,37,910 for the relevant year. The Assessing Officer (A.O.) noted that interest income of Rs. 7,32,404 from Fixed Deposits (FDRs) and Savings Bank (SB) account was not offered to tax. The A.O. added this amount to the total income and initiated penalty proceedings u/s 271(1)(c) for alleged concealment. The appellant claimed oversight in not including the interest income and argued it was not intentional concealment. However, the A.O. imposed a penalty of Rs. 2,42,000.

The appellant challenged the penalty before the Commissioner of Income Tax (Appeals) [CIT(A)], reiterating that the interest income was disclosed in the capital account filed with the return, and it was an inadvertent error. The CIT(A) upheld the penalty, stating the appellant's actions amounted to filing inaccurate particulars of income deliberately to evade tax.

On further appeal to the Appellate Tribunal, the appellant contended that the disclosure of interest income in the capital account and TDS certificates showed no intention to conceal income. Citing a Supreme Court decision, the appellant argued against the penalty imposition. The Revenue, however, supported the penalty citing non-disclosure of interest income as concealment.

The Tribunal observed that the interest income was disclosed in the capital account and TDS certificates were filed, indicating no intent to conceal income. Similar disclosures in previous and subsequent years supported the inadvertent nature of the error. Referring to the Supreme Court decision, the Tribunal concluded it was not a fit case for penalty u/s 271(1)(c) and canceled the penalty imposed by the A.O. and upheld by the CIT(A).

In conclusion, the appeal by the assessee was allowed, and the penalty under u/s 271(1)(c) was canceled based on the facts and legal precedents presented.

(Order pronounced on 15-03-2013)

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