TaxTMI 
TaxTMI 
2022 (9) TMI 29
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.... conclusion drawn in assessment proceedings, though relevant could not be solely relied upon for imposing penalty. 1.3 That, Ld. CIT(A) has further erred in confirming the penalty by not considering the fact that assessee suo moto offered the sum of Rs. 21,00,000/- (special allowance claimed as exempt in return of income, on which penalty is imposed) for taxation during the course of assessment proceedings. Appellant prays that exemption was claimed in good faith on the advice of erstwhile counsel, however during re-assessment proceedings, assessee was informed by his present counsel that exemption was not allowable and thus claim was withdrawn and due taxes were paid. Therefore, there is neither concealment not any inaccurate particulars of income were furnished and penalty of Rs. 6,48,900/- deserves to be deleted. 2. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal." 3. Brief facts of the case are that assessee is an individual deriving income mainly from salary. The assessee has filed return of income on 28.07.2012 u/s 139(1) of the Income Tax Act, 1961 (hereinafter referred t....
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..... 5. The AO arrived the findings that the penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 be initiated separately for concealing particulars of income and furnishing of inaccurate particulars of income. Subject to the above discussion, the income of the assessee is computed as below:- 1. Income under head salaries Rs. 44,53,415/- Add: Addition on account of expenses Rs. 21,00,000/- Deduction claimed as special allowance Add: Disallowance of other allowance Rs. 1,71,500/- Rs. 67,24,916/- 2. Income from House property (loss H.P. income, adjusted again Salary income Rs. (-) 5,78,838/- 3. Income from other sources Rs. 21,990/- Rs. 61,46,078/- Total income of assessee Rs. 61,46,078/- Less: Deduction under chapter VIA Rs. 2,43,584/- Net Taxable salary income Rs. 59,24,484/- Rounded off Rs. 59,24,480/- Loss from LTCG of Rs. 18,03,526/- allowed to be carry forward Assessed u/s 143(3)/148 at Rs. 59,24,480/-. Issue demand notice and challan. Charge interest u/s 234 of the I.T. Act, 1961. Prepare ITNS-150 which enclosed wit....
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....rnished inaccurate particulars of his income to the extent of income of Rs. 21,00,000/- is found to be correct. The AO also relied upon the following case laws: 271(1)(c) KAMAL CHAND JAIN v ITO (2005) 277 ITR 429 (DEL) When there is no proper explanation from the assessee except surrendering certain amount for taxation to buy peace and avoid further litigation, it was held that levy of penalty u/s 271 (1)(c) was justified. 271(1)(c) SHANTI SWARUP BHATNAGAR VS. CIT [2005] 279 ITR 451 (ALL.) Penalty - Concealment of income - Returned income less than 80 per cent of assessed income - Amount surrendered after search operations and initiation of reassessment proceedings - Presumption of concealment of income not rebutted -Levy of penalty valid - Income Tax Act, 1961, s. 271(1)(c). 271(1)(c) COMMISSIONER OF INCOME-TAX v. MAHABIR PRASAD BAJAJ, [2008]298 ITR 109 (JHARKHAND) Penalty-Concealment of Income-Incriminating documents found during search-Contention by assessee that -Revised return accepted -Revised return filed not voluntarily but owing to search and seizure- Levy of penalty proper Income tax Act, 1961, .271(1)(c). 271(1)(c) CIT V. HANDLOOM EMPORIUM [2006]282 I....
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....hus the said show cause notice issued under Section 274 r.w.s 271(1)(c) does not spell out the charge against the assessee; i.e. as to whether the assessee is guilty of having concealed particulars of income or of having furnished inaccurate particulars of income. It is very necessary to clearly specify in the notice of section 274 as to for what reason the penalty u/s 271(1)(c) is being proposed to be imposed. In the absence of such specification, the assessee is not in a position to give proper explanation in his defense. Again, at the cost of repetition it is mentioned that, concealment of income is quite different from furnishing inaccurate particulars of income. Hon'ble Karnataka High Court in the case of Commissioner of Income Tax vs. Manjunatha Cotton And Ginning Factory (2013) 359 ITR 565, has held that the notice issued by the Assessing Officer under section 274 r.w.s. 271(1)(c) of the Act as bad in law as it does not specify as to under which limb of section 271(1)(c) of the Act the penalty has been initiated. Similar view is pressed in following case laws: In CIT Vs. SSA'S Emerald Meadows ITA No. 380/2015 decided by hon'ble Karnataka H/C, SLP of the depar....
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....t was the assessee who suo moto withdrew the exemption on the advice of his counsel. Moreover, no addition was made of the sum for which reasons were recorded. It is also submitted that reasons have been recorded on 13.10.2014, which mention that approval for initiating re-assessment proceedings was accorded vide office letter no. F.No. DIT(S)-II/CASS/2014-15/2045 dated 30.09.2014. Your honours would appreciate that approval can be granted by the specified authority only after recording of reasons and not before that. In the scenario, your honours would appreciate that re-assessment proceedings itself initiated by ld.AO is not in accordance with law, therefore penalty proceedings initiated vide re assessment order deserves to be deleted in toto. It is further submitted that exemption of Rs.21,00,000/- was claimed by assessee on the basis of expert advice of tax professional on the issue, which eventually turned out to be not in accordance with law. In fact, no sooner it came to the knowledge of assessee that exemption was claimed incorrectly, assessee suo-moto withdrew the claim and paid due taxes along with interest amount. Your goodself would appreciate that assessee is not wel....
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....had not intended to or attempted to either conceal its income or furnish inaccurate particulars. 21. Under these circumstances, the appeal is allowed and the order passed by the Calcutta High Court is set aside." Similarly in the case of CIT Vs. Reliance Petrochemicals Pvt. Ltd (2010) 322 ITR 158(SC), Hon'ble Supreme Court held that "A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee". Thus on perusal of aforesaid judgement it is evident that if the contention of the Revenue is accepted then in case of every Return where the claim made is not accepted by the AO for any reason, the assessee will not invite penalty u/s 271(1)(c). Recently, Hon'ble Pune Bench of ITAT in its decision dated 13.06.2022 in the case of M/s Rane Industries Pvt. Ltd. in ITA No. 555/PUN/2020, relying upon the decision of Hon'ble Apex Court in case of Price Water house coopers (supra) has held as under (copy enclosed) : " 3. We have heard the rival contentions and gone through the relevant material on record. It is apparent from the assessment order itself that the assessee, when p....
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....edings, it shows the bonafide of the assessee and accordingly, cannot be made subject to levy of penalty u/s 271(1)(c) of the Act. In the result, the assessee's appeal is allowed" Further reliance is placed on following judicial pronouncements- CIT vs. Hans Christian Gass in ITA 2209/2010 Bombay HC reported in (2013) TaxPub (DT) 1975 − 359 ITR 101, CIT Vs. DCM Ltd. (Delhi High Court) 322 ITR 73, CIT Vs. Shahabad Co-operative Sugar Mills Ltd. (P&H) − HCL Technologies vs DCIT in ITA No. 3702/JP/2017 (ITAT Delhi) Swati Pearls & Jewellers Vs. DCIT in ITA No.1401/HYD/2014 (Hyderabad ITAT) − - CIT Vs Ms. Sania Mirza in I.T.T.A. No. 526 of 2011reported in All High Courts (5353) Andhra Pradesh HC (84) It is further submitted that ld. CIT (A) has brushed aside the submission and case laws relied upon without assigning any reason. In fact, case CIT(A) placed reliance on the judgments referred by Id. AO without appreciating that facts of the same are on different facts than that of assessee's case which is summarized as under: S.No Judgement Referred Facts of Judgment Referred Facts of Assessee Case 1. Kamal Chand Jain v. ITO (2005) 277 ITR 429 (De....
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....o find out as to whether the addition or disallowance made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in section 271 (1)(c) of the Act, and whether it is a fit case to impose the penalty by invoking the said provisions. Hon'ble Apex court in the case of Eilly Lilly & Company reported in 312 ITR 225 has held that the penalty proceedings is not an automatic or mandatory fallout of the addition made during the assessment proceedings, therefore, the same should not be levied in routine manner. Thus it is humbly prayed that error while filing return of income u/s 139(1) of the Act isabsolutely inadvertent and was rectified as soon the same came to the notice of assessee, it is therefore, requested that penalty 6,48,900/- levied u/s271(1)(c) of the Income Tax Act may please be deleted." In support reliance was placed on the decision in case of M/s Rane Industries Pvt. Ltd vs. DCIT in ITA No. 555/PUN/2020 vide order dated 13.06.2022. 9. On the other hand, the ld. DR supported the order of the lower authorities. 10. We have heard both the parties, perused materials available on record. We observed that all grounds whic....