TaxTMI 
TaxTMI 
2017 (6) TMI 242
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....ra 8 of CBDT Circular No.21/2015 dated 10.12.2015. 3. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or the during course of the hearing of the appeal." 4. From the above grounds, it is clear that the only grievance of the department relates to the deletion of penalty of Rs. 355/- levied by the AO u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). 5. Facts of the case in brief are that the assessee filed the return of income u/s 139(1) of the Act declaring an income of Rs. 4,83,040/-. Subsequently, in response to the notice u/s 153A of the Act, the assessee revised its income at Rs. 4,84,190/- by assigning the following reasons: "that the return filed u/s 139(1) is Rs. 483040/-, and u/s 153A is Rs. 484190/-, the difference of Rs. 1150/- is because of GBP 2.12 on account of interest and dividend from investment in foreign assets (e-trade) amounting to Rs. 960/-. The total of foreign income has been rounded off to the higher side i.e. Rs. 1150/- and the same has been disclosed in the return of income filed u/s 153A. As the assessee has failed to furnish the correct particular of her inco....
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....in the original return was not genuine. Thus in the original return filed by the assessee there was neither concealment of income nor furnishing of any inaccurate particulars of income. 5. Your honour will also appreciate that levy of penalty under Section 271(1)(c) of the Act is not automatic. Penalty proceedings are independent of the assessment proceedings. 6. Your honour will also appreciate that penalty under section 271(1)(c) is leviable in case of furnishing of inaccurate particulars of income or concealment of income. For levy of this penalty it is to be shown that assessee has concealed income or furnished inaccurate particulars of income. There has to be a finding with regard to the addition made in the assessment order. It is important to note that provisions of the Income Tax does not provide that penalty shall be leviable under section 271(1)(c) on the difference of income as returned under section 153A or income as originally returned. There is no such deeming provision. The provisions applicable whether it is an assessment under section 153A or a normal assessment under section 143(3) or assessment of a revised return of income for levying penalty a....
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....fact that in the course of assessment proceedings, the AO did not lay his hands on any item of income, which the assessee had not declared in the return till the assessment, was framed. It is also a fact that the AO has accepted the return as it is. 13. Your honour, the scheme of section 271(1)(c) visualizes imposition of penalty when the assessee has concealed income or when the assessee has furnished inaccurate particulars of income. In addition to these two situations, penalty can also be imposed when the assessee is deemed to have concealed particulars of income under the Explanation 1 to section 271(1)(c). This Explanation provides that the assessee will be deemed to have concealed particulars of income where in respect of any facts, material to the computation of the total income of any person under this Act, (i) the assessee fails to provide an explanation; (ii) when the assessee provides an explanation which is found to be false; and (iii) when the assessee provides an explanation which he fails to substantiate and he fails to prove that the explanation was bona fide and that all the facts necessary for the same and material for computati....
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....had been treated as furnishing of inaccurate particulars was offering an income on ad hoc basis, i.e. an additional income offered. The A.O. had very apparently proceeded to treat the assessee's additional income so offered as furnishing of inaccurate particulars. What is a correct claim and what is an incorrect claim is a matter of perception, which in the instant case was accepted as such. 18. Expression, 'inaccurate' is something factually incorrect, but once it is accepted as such to be correct, it does not remain inaccurate. Therefore, the instant case could not be said to be a case of furnishing of inaccurate particulars of income, in its normal sense. 19. There is one more eventuality in which penalty can be imposed and that is the situation in which deeming fiction of the Explanation 1 to section 271(1)(c) comes into play. This deeming fiction comes into play, where in respect of any facts material to the computation of the total income would show that it relates only to the factual aspects. In the instant case, the only controversy was regarding the amount offered and including the same to the returned income. This deeming fiction cannot be in....
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....tion 271(1)(c) has to be construed strictly. Unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. There is no such concealment or non-disclosure, as the assessee had made a complete disclosure in the return and offered the surrendered amount for the purposes of tax". This is an identical case, where survey operations had taken place and the assessment was reopened u/s 148, the coordinate Bench deleted the penalty. 21. Same view has been held in the case of Valavi Shelters vs ITO, reported in [2013] 141 ITD 590, by the Bangalore Bench of the ITAT." 8. The ld. CIT(A) after considering the submissions of the assessee deleted the penalty by observing in para 7 of the impugned order as under: "7. I have considered the facts of the case, the basis of penalty imposed by the AO and the arguments of the appellant during penalty proceedings as well as appellate proceedings. The difference in the return filed under section 139(1) and the return filed in response to notice issued under section 153A has been only of an amount of Rs. 1150 which is in respect of: A. Bank interest from HSBC ....
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....ed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that "assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this subsection pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate." What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and becomes non-est. Now, it is trite to say that the "concealment" has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of levying penalty under Section 271(1)(c), what has t....