TaxTMI 
TaxTMI 
2024 (3) TMI 814
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....ct, 1961 thereby ignoring the reasonable cause of the appellant. 2.1 First of all, we take up the appeal of the assessee for the assessment year 2011 wherein brief facts of the case are that the AO had information in his possession that the assessee had made investment in FDR of Rs. 98,00,284/- and had received interest income of Rs. 17,39,319/-. As no regular return had been filed by the assessee, the AO recorded reasons for re-opening and obtained statutory approval of PCIT and issued notice u/s 148. In response no return of income was filed. No reply was filed in response to notices issued u/s 142(1). Therefore, the AO finalized the assessment u/s 147 r.w.s 144 on 17.12.2018 at a total income of Rs. 1,15,39,600/- Penalty proceedings u/s 271(1)(c) were also initiated for concealment of income. To this effect, the assessee filed appeal before CIT(A) who decided the appeal vide order dated 24.07.2019 in which the addition of FDR was deleted but the addition of interest income of Rs. 17,39,319/- was confirmed. Subsequently, the AO took up the penalty proceedings and issued show cause notice u/s 271(1)(c) r.w.s. 274 of the Act. In response, the assessee contended before the AO tha....
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.... that certain assessment orders have been passed against him, he contacted a legal expert in this field and took his services and filed appeals. Moreover, all pending tax dues for all assessment years were duly deposited with interest and return of income was also filed for the assessment year 2018-19 and thereafter regularly, as the window for other assessment years were closed on the income-tax e-filing portal, however all remaining tax with interest was deposited. The Id. CIT(A)-42, New Delhi, vide order dated 24.07.2019 in appeal no 123/2018-19/CIT(A)-42, deleted the addition of Rs. 98,00,284/- in respect of unexplained investments in FDR. The addition of Rs. 17,39,319/- on account of interest income on which TDS of Rs. 1,73,001/- had been deducted which was reflected in 26AS was however sustained as this ground was not pressed by the appellant. During penalty proceedings, the appellant submitted before the Id. A.O. that the appellant is not well versed with the intricacies of complex Indian income tax laws. He did not file his income tax returns due to bonafide ignorance that tax has already been deducted by the bank on interest income and due to his stay out....
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....ich we all are prone to make. Copy of judgment is enclosed herewith for you'r honours kind consideration. Reliance is also being placed on recent judgment (copy enclosed) of Hon'ble ITAT, Ahmedabad Bench in the case of Vijaybhal Dashrathbal Patel Vs. ACIT in ITA No. 2622/Ahd/2017 recently decided on 25.02.2022 wherein it was held at para no. 8 as under:- "We note that the facts in the above cases support the proposition that if on facts the assessee is able to demonstrate that he has a reasonable cause for not filing return of income, then the assessee cannot be subject matter of penalty u/s 271(1)(c) of the Act. In order to invoke Explanation 3 to s.271(1)(c) of the Act, the assessing officer has to establish that there was no reasonable cause on part of the assessee for non-filing of return of income. However, if from the facts of the case, it seems that assessee did not file returm of income under a bona-fide mistake, then uniess the Ld. AO brings anything further to the record, it is not a fit case of levy of penalty u/s 271(1)(c) of the Act. In our considered view in the instant set of facts, the assessee had earned interest income (being the only sou....
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....t he has FDRs of about Rs. 1 crore. Therefore, he cannot take the alibi of ignorance of Indian laws. Therefore, this ground is not acceptable on facts. 13. The legal aspect of defense of ignorance of laws is also examined hereunder. 13.1 It is trite law that ignorance of law is no excuse. Ignorantia juris non excusat or Ignorantia legis neminem excusat (Latin for "ignorance of the law excuses not and "ignorance of law excuses no one" respectively) is a legal principle holding that a person who is unaware of a law may not escape liability for violating that law merely by being unaware of its content. The rationale of the doctrine is that if ignorance were an excuse, a person charged with criminal offenses or a subject of a civil lawsuit would merely claim that one was unaware of the law in question to avoid liability, even if that person really does know what the law in question is. Thus, the law imputes knowledge of all laws to all persons within the Jurisdiction. Even though it would be impossible, even for someone with substantial legal training, to be aware of every law in operation in every aspect of a state's activities, this is the price paid to ensure t....
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....und [2006] 131 Comp Cas 591 (SC); [2006] 5 SCC 361 on penalty prescribed for a breach of a civil law such as tax laws is that the breach of civil obligation which attracts a penalty under the provisions of an Act would immediately attract the levy of penalty irrespective of the fact whether the contravention was made by the defaulter with any willfully or guilty intention or not. This view has been reiterated by the Hon'ble Supreme Court in their decision dated 29.9.2008 in the case Union of India vs. Dharmendra Textile Processors (2008) 306 ITR 277 (SC) holding that levy of penalty is only a civil liability and willful concealment is not an essential ingredient to be established before levy of penalty for concealment. This argument is therefore, rejected. 15. It is trite that admission of concealment after the same is discovered by AO cannot absolve an assessee from the penalty provision under Section 271(1)(C) for concealment of Income as decided by the Hon. Supreme Court in MAK Data Private Limited V. CIT (2013) 358 ITR 593 (SC). In this case, the assessee company filed its return of Income for the AY 2014-15. The case was selected for scrutiny and notices were issu....
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....ue income. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year." 16. It is settled law that the act of concealment or furnishing of particulars of income is committed while filing original return, the revised return by itself would not mitigate the default. Reliance in this regard is placed on 171 ITR 390 All, 163 ITR 440 Raj, 32 ITR 677 Bom, 84 STC 271 Del, 96 STC 6 MP, 178 ITR 643 Pb,178 ITR 430 Ker, and 186 ITR 571 SC. It is observed that in this case there was no original return filed. 16.1 Hon. Supreme Court, in the case of G. C. Agarwal Vs. CIT (186 ITR 571) has held that when the assessee has filed revised return showing much higher income then disclosed in the original return but was unable to discharge the burden of proof, the A. O. is justified in imposing penalty u/s. 271(c). 16.2 In the case of Suresh Chander Mittal 241 ITR 124 MP, disclosure was made in revised return in pursuance of notice u/s 148 after search. The revised returns were filed just to avoid litigation. Th....
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....at the NRI appellant has made unexplained investments in fixed deposits in India amounting to Rs. 98,00,284/- and further earned interest income of Rs. 17,39,319/- on which TDS of Rs. 1,73,001/- has been deducted which is reflected in 26AS. Notice u/s 148 was issued at old rented premises at Flat No.204 Vijay Laxmi Aptts, Bhaskar Marg, Bani Park, Jaipur which the appellant had already left long ago. The assessment was finalized by treating the investments as unexplained. Receipts as per Form 26AS were also added without allowing corresponding TDS credit. All these proceedings/orders came to the knowledge of appellant very late otherwise he could have visited India to resolve the issues. That appellant was not in touch with any legal counsel in India and it is only after it came to his knowledge that certain assessment orders have been passed against him, he contacted a legal expert in this field and took his services and filed appeals. Moreover, all pending tax dues for all assessment years were duly deposited with interest and return of income was also filed for the assessment year 2018-19 and thereafter regularly, as the window for other assessment years were closed on t....
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....f conduct contumacious. 3 Dilip N. Shroff Vs. JCIT (2007) 291 ITR 519 (Supreme Court) AO has to be fair & objective while imposing penalty. Imposition of penalty is not automatic but discretionary. Mere omission or negligence would not constitute a deliberate act of suppression. 4 Price Waterhouse Coopers Pvt. Ltd. Vs. CIT (2012) 348 ITR 306 (Supreme Court) Hon'ble Supreme Court deleted the penalty on account of failure of reputed assessee having great expertise in tax matters, in non-disallowance of an expenditure which was to be disallowed as duly mentioned in its tax audit report. It was held that the assessee should have been careful cannot be doubted but absence of due care does not mean that assessee has furnished inaccurate particulars of its income or has concealed its income. This was a human error which we all are prone to make. Copy of judgment is enclosed herewith for you'r honours kind consideration. The ld. CIT(A) upheld the penalty by relying on the case of Mak Data Pvt. Ltd. Vs. CIT 358 ITR 593 (SC). However, the facts in the case of Mak Data Pvt. Ltd. case were entirely different from the present appellant's case as in that case surrender....
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....losed) of Hon'ble ITAT, Ahmedabad Bench in the case of Vijaybhai Dashrathbai Patel Vs. ACIT in ITA No. 2622/Ahd/2017 recently decided on 25.02.2022 wherein it was held at para no. 8 as under :- "We note that the facts in the above cases support the proposition that if on facts, the assessee is able to demonstrate that he has a reasonable cause for not filing return of income, then the assessee cannot be subject matter of penalty u/s 271(1)(c) of the Act. In order to invoke Explanation 3 to s.271(1)(c) of the Act, the assessing officer has to establish that there was no 'reasonable cause' on part of the assessee for non-filing of return of income. However, if from the facts of the case, it seems that assessee did not file return of income under a bona-fide mistake, then unless the Ld. AO brings anything further to the record, it is not a fit case of levy of penalty u/s 271(1)(c) of the Act. In our considered view, in the instant set of facts, the assessee had earned interest income (being the only source of income for the captioned year) on which taxes had been duly withheld by the payer. Therefore, the assessee is conscious of the fact that the Income Tax Departmen....
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....l before CIT(A) who decided the appeal vide order dated 24.07.2019 in which the addition of FDR was deleted but the addition of interest income of Rs. 17,39,319/- was confirmed. Subsequently, the AO took up the penalty proceedings and issued show cause notice u/s 271(1)(c) r.w.s. 274 of the Act. In response, the assessee contended before the AO that he was a non-resident not well versed with the income tax law in India and return was not field due to bonafide ignorance of law. The AO was not satisfied with the reply. He imposed minimum penalty of Rs. 1,92,439/- for concealment of income u/s 271(1)(c) read with Explanation 1. The assessee carried the matter before the ld. CIT(A) who has confirmed the imposition of penalty of Rs. 1,92,439/- u/s 271(1)(c)of the Act read with Explanation 1 and thus dismissed the appeal of the assessee with following narration ''17. In view of the overall discussion made above, it is concluded that this was a fit case for levy of penalty u/s 271(1)(c) read with Explanation 1. The penalty imposed is confirmed. All grounds of appeal are dismissed. 18. In the result, the appeal is dismissed. The Bench further noted from the submissions....
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....payer. Therefore, the assessee is conscious of the fact that the Income Tax Department is aware about his having income, but was of the mistaken view that once taxes have been deducted on this income, the assessee was not required to be filed return of income. Therefore, in our view, this is not a fit case for levy of penalty since the assessee in the instant set of facts had reasonable cause for not filing of return of income. We, therefore, cancel the order imposing penalty and allow the appeal of the assessee Keeping in view the above facts, circumstances of the case and also the decision of ITAT Ahemdabad in the case Vijaybhai Dashrathbhi Patel vs ACIT, Circle 7(1), Ahemdabads, we do not concur with the order of the ld. CIT(A) and thus the appeal of the assessee is allowed. 3.1 Now we take up the appeal of the assessee for the assessment year 2015-16 wherein the AO had imposed the penalty of Rs. 2,53,750/- vide his order dated 31- 01-2022 and the same was confirmed by the ld. CIT(A) with following narration. ''16. In view of the overall discussion made above, it is concluded that this was a fit case for levy of penalty u/s 271(1)(c) read with Explanation 1. The p....