TaxTMI 
TaxTMI 
2022 (2) TMI 1429
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....ons 83 ITR 369 (SC) Dilip N. Shroff V/s. JCIT 291 ITR 519 [SC] 3. The penalty order is bad in law in as much as the AO has not discharged the burden to show that the assessee has in fact concealed the income or assessee has furnished which particulars of income which are inaccurate: National Textiles Corp. Vs CIT 249 ITR 125 CIT Vs Jalaram Oil Mills 253 ITR 192 4. The penalty order is bad in law in as much as there is no specific charge as to whether the assessee has concealed the income or furnished inaccurate particulars of income. CIT Vs Manu Engg. 122 ITR 506 (Guj) Sorathia Engg. Co. Vs CIT 282 ITR 642 (Guj) Mitsu Industries Ltd. Vs DCIT (Guj) Tax Appeal No. 216 of 2004 dated 16.10.2014" 2. Briefly stated, the facts of the case are that the assessee during the captioned year was having taxable income under the head "income from other sources" being interest income. The assessee however did not file return of income as required u/s 139 of the Act. The assessment was reopened u/s 147 of the Act and assessment order u/s 143(3) r.w.s. 147 of the Act was passed on 27-12-2013 determining the total income at Rs. 33,26,050/-. Subsequently, the ld. CIT(A) -7 Ah....
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.... then Explanation 3 is not attracted. The ld. Assessing Officer has not demonstrated that all the conditions of Explanation-3 to section 271(1)(c) of the Act are fulfilled and accordingly, penalty u/s. 271(1)(c) is liable to be deleted. The assessee placed reliance on the Hon'ble Gujarat High Court decision in the case of Chhaganlal S. Suteriya Vs. ITO 337 ITR 350 (Guj) in support of his contention that the conditions enumerated in Explanation 3 to section 271(1)(c) are cumulative. The assessee further relied on case of National Textile Agriculture vs. CIT 249 ITR 125 (Gujarat) and CIT vs. Jalaram Oils 253 ITR 192 in support of his arguments that burden is always on the Assessing Officer to show that the assessee has failed to file the Income Tax Return without reasonable cause. The ld. CIT(A) however rejected the assessee's contention and upheld the levy of penalty with the following observations: - "1. The AO has specifically levied the penalty by invoking Explanations to section 271(l)(c) of the Act. This has been mentioned by the AO in para-5 of his order as under:- "Further, the 'assesses has failed to establish that the explanation offered by him was bonafide and all....
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....nly source of income during the year was interest income and since the same had been subjected to TDS, the assessee was under a bona-fide belief that there was no requirement to file return of income. The confirmation of penalty by ld. CIT(A) is erroneous also for the reason that the Assessing Officer has not brought any additional material on record to show that there has been concealment of income or furnishing of inaccurate particulars of income. Reliance in support was placed by the assessee in the cases of Anantharam Veersinghaiah & Co. V/s. CIT 123 ITR 457 (SC), CIT V/s. Khoday Eswarsa & Sons 83 ITR 369 (SC) & Dilip N. Shroff V/s. JCIT 291 ITR 519 [SC]. The assessee further submitted that the penalty order is bad in law as the Assessing Officer has not discharged the burden to show that the assessee has in fact concealed the income or assessee has furnished particulars of income which are inaccurate. Reliance was placed by the assessee on the cases of National Textiles Corp. Vs CIT 249 ITR 125 & CIT Vs Jalaram Oil Mills 253 ITR 192. The ld. Departmental Representative primarily relied on the observations made by ld. CIT(A) in his order and confirmed the penalty u/s 271(1)(c)....
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....e payee had duly deducted tax at source on the payment made to the assessee. Thus the tax due and payable on the income in question has already reached the coffers of the revenue. When the fact that the receipt from M/s. Crisil Ltd was not disclosed in the return of income was confronted to the assessee, she immediately agreed to the addition and also appraised the AO that non disclosure of the said receipt in the return of income was inadvertent and not willful. This circumstance clearly show that there was neither an attempt to conceal particulars of income by the assessee nor to furnish inaccurate particulars thereof. We therefore accept the plea of the assessee and hold that in the facts and circumstances of the case imposition of penalty u/s 271(i)(c) of the Act was not called for. We therefore cancel the order imposing penalty and allow the appeal of the assessee. 9. In the result the appeal by the assessee is allowed." 6. We may also refer ITAT Mumbai Bench decision in the case of M/s. Richa Dubey vs. ITO 68 taxmann.com 268 (Mum) wherein the ITAT Mumbai held that where assessee has offered a bonafide explanation stating that her salary was understated in her return due ....
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....ite. Therefore, in the present facts, the only reason for nonfiling of return seems to be on account of bona-fide mistake on part of the assessee under the mistaken belief that once tax has been deducted at source, there is no further requirement to file return of income in respect to that particular source of income. It may be noted Explanation-3 to section 271(1)(c) starts with the words "where any person fails, without reasonable cause, to furnish within such period specified in sub-section 1 to section 153 a return of his income which he is required to furnish u/s. 139......" Thus, for initiation of explanation- 3 to section 271(1)(c), the Revenue has to establish that there was no reasonable cause for failure to furnish return of income by the assessee. In the instant set of facts, assessee during the year is in receipt of interest income on which the TDS had been deducted and therefore prima facie the assessee seems to be under a bonafide belief that when tax has been deducted at source of income, there is no requirement to file income tax return. 8. We note that the facts in the above cases support the proposition that if on facts, the assessee is able to demonstrate that h....