TaxTMI 
TaxTMI 
2022 (9) TMI 29
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....that penalty proceedings are separate and distinct proceedings and 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proceedings, assessee was informed by his present counsel that exemption was not allowable and thus claim was withdrawn and due taxes were paid.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 i....
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....s been filed before us against the order passed by ld. CIT(A) confirming the penalty. 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 ....
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....iated any penal action or proceedings and also produced various case in law support of his mistake. Hence, the finding of the AO that the assessee has concealed particulars of his income and furnished 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 doc....
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.... his income or furnished inaccurate particulars of his income. It is further submitted that ld. AO had stated that "have concealed particulars of your income or furnished inaccurate particulars of such income" but has not struck off the inapplicable words and phrases out of these two limbs, which he is required to do. Thus 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 ....
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....sment, which observation itself is contradictory for the very simple reason that how could income declared escaped assessment. It is thus clear that no belief whatsoever was formed by ld.AO regarding escapement of income of Rs.21,00,000/- on which penalty is levied. In fact, no query was raised by id. AO regarding claiming of exemption of special allowance of Rs.21,00,000/- by the assessee and it 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 exemptio....
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....n careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. 20. We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and 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 27....
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....eld guilty of deliberate concealment of income so as to levy penalty under section 271 (1)(c). Similarly, Hon'ble ITAT, Jaipur Bench in the case of Dinesh Kumar Vijay, Jaipur v. ITO in ITA No. 58/JP/2016 for AY 2011-12 vide order dated 04.10.2017 held that "In the peculiar facts and circumstances of the case where return was filed which was subsequently revised by way of filing revised computation of income along with payment of taxes during the course of assessment proceedings, 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....
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....mposing penalty just because some additions have been made and upheld. Hon'ble Supreme Court in the case of Anantharaman Veerasian Co. Vs. CIT, 123 ITR 457 held that the findings in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the addition. It is, therefore, necessary to re-appreciate and reconsider the matter so as to 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 retu....
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.... of the Act. The AO has not mentioned that the assessee has concealed the particulars of income or furnished inaccurate particulars of income from the assessment order, the findings of the AO are that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. Further, the ld. AR for the assessee submitted that a show cause notice was issued u/s 274 r.w.s. 271(1)(c) of the Act does not spelt out the charge against the assessee i.e. as to whether the assessee is guilty of having concealed the particulars of income or furnished the particulars of income. We observed that the ld. AO failed to consider regarding that there is no escapement of income of Rs. 21,00,000/- being which is exemption of special allowance claimed by the assessee are genuine . The AO erred in finding that the income of the assessee as Rs. 44,53,415/- shown by him in his return of income filed for the assessment year 2012-13 as escaped income. We observed that the exemption of Rs. 21,00,000/- was claimed by the assessee on the basis of expert advice of tax professional regarding the special allowance. During the course of reassessment proceedings when the assessee ....