2019 (10) TMI 993

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....the learned Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 on the basis of notice issued on 07.02.2014 without striking off the irrelevant portion of the printed show cause notice viz., "furnished inaccurate particulars of income" or "concealed particulars of such income" is bad in law." 2. That the order passed by the learned CIT (A) u/s 271(1)(c) of the Income Tax Act, 1961 is void ab-initio deserves to be quashed. 3. In the facts and circumstances of the case the learned CIT (A) has erred in confirming the penalty of Rs. 1,73,443/- u/s 271(1)(c) of the Income Tax Act, 1961. 4. That the order passed by the learned Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 is void ab-initio deserves to be quas....

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....) vide order dated 19.08.2016 of Rs. 1,73,443/- against the income of Rs. 7,45,263/- which includes the income declared by the assessee in the return of income of Rs. 5,59,827/-. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed. 3. Before the Tribunal, the ld. A/R of the assessee has submitted that once the assessee has declared the income of Rs. 5,59,827/- in the return of income under section 139(1), the same cannot be considered as concealment of particulars of income or furnishing inaccurate particulars of income. Thus the AO has erred in imposing the penalty under section 271(1)(c) in respect of the said income. He has further contended that as regards the addition of Rs. 1,55,036/-, the same w....

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....d to rejection of books of account. The AO then estimated the income of the assessee by applying GP at 2% on the entire sales which includes recorded and unrecorded both sales. Thus it is a clear case of concealment of particulars of income when the assessee has not recorded the sales in the books of account. As regards the disallowance of salary expenditure, the ld. D/R has submitted that the AO detected the bogus claim of salary and consequently the addition of Rs. 4,000/- was sustained by the ld. CIT (A) based on the statement of the employee of the assessee who has admitted that he was receiving Rs. 10,000/- per month as against the claim of Rs. 12,000/- per month. Thus it is a clear case of inflation of expenditure by the assessee. Sim....

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....ction 139(1), then the same cannot be deemed as furnishing of inaccurate particulars of income or concealment of particulars of income as per the provisions of section 271(1)(c) of the IT Act. It is not a case of search carried out under section 132 of the IT Act and thereby the Explanations 5 or 5A of section 271(1)(c) would be applicable to deem such income declared in the return of income filed after search will fall in the category of concealment of particulars of income or furnishing inaccurate particulars of income on the part of the assessee. Therefore, in the absence of any such deeming provision under section 271(1)(c), once the assessee has declared the income in the return of income filed under section 139(1) then the same cannot....

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....les declared by the assessee in the books of account and in the return of income filed under section 139(1), any trading addition made after rejection of books of account by estimating the income would not attract the penalty under section 271(1)(c) and particularly in the case of the assessee when the income declared by the assessee represents GP rate at 1.92% and the AO has estimated the income by applying GP at 2%. Therefore, to the extent of the addition by applying GP at 2% on the declared sales, same will not be regarded as furnishing inaccurate particulars of income or concealment of particulars of income to attract the penal provision under section 271(1)(c). Accordingly, the penalty to the extent of the trading addition made in re....