2015 (2) TMI 1161 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - We find that the penalty was deleted by CIT(A) on two basis. First basis is that the assessee was under bonafide belief that he has shown correct income in the return of income on the basis of TDS certificates issued to him. The second basis is that the Assessing Officer has not recorded the satisfaction for initiation of penalty proceedings u/s 271(1)(c) in a proper manner. In the assessment order also, we find that it was explained by the assessee before the Assessing Officer that at the time of filing return of income, interest income has been disclosed in part and balance amount of ₹ 15,13,676/- remained undisclosed due to incomplete details provided by bank S.B.I. and U.P. Gramin Bank. This goes to show that the omission on the part of the assessee is bonafide omission because when the deductor has issued a wrong TDS certificate, it cannot be said that the assessee has concealed income or furnished inaccurate particulars of income. For the second addition of ₹ 13,882/- regarding excess claim of deduction u/s 80C, it is noted by the Assessing Officer that the assessee could furnish documents of only ₹ 86,118/- whereas deduction claimed was for Rs. One lac u/s 80C. Hence, it is seen that on this account also, the addition was made for the failure of the assessee to produce relevant documents without a finding that the claim itself is wrong or false. Hence, on this aspect, we do not find any reason to interfere in the order of CIT(A). - Decided against revenue

Summary

Issues:
Appeal against deletion of penalty u/s 271(1)(c) of the I.T. Act, 1961 for concealment of income and furnishing inaccurate particulars of income.

Analysis:
1. Issue 1 - Deletion of Penalty by CIT(A):
The Revenue appealed against the deletion of penalty u/s 271(1)(c) by the CIT(A). The Revenue argued that the assessee concealed income as he surrendered interest income only when confronted by the AO. The Revenue contended that the CIT(A) erred in relying on a Gujarat High Court decision and not establishing whether penalty was for concealment or inaccurate particulars of income. However, the assessee did not appear during the hearing. The Revenue supported the penalty order, but the ITAT found that the AO did not record satisfaction for initiating penalty proceedings. The CIT(A) held that the AO failed to justify the penalty under section 271(1)(c) as the appellant believed the interest income was correctly shown in the return. The ITAT upheld the CIT(A)'s decision, stating that the omission was bona fide due to incorrect TDS certificates provided by banks.

2. Issue 2 - Excess Claim of Deduction u/s 80C:
Regarding the excess claim of deduction u/s 80C, the AO noted the assessee could only produce documents for a portion of the claimed amount. The ITAT observed that the addition was made due to the failure to provide complete documentation, not because the claim itself was false. The ITAT found no reason to interfere with the CIT(A)'s decision on this matter. Consequently, the ITAT dismissed the Revenue's appeal against the deletion of the penalty.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the penalty u/s 271(1)(c) for concealment of income and furnishing inaccurate particulars of income. The ITAT found the assessee's omissions were bona fide, and the AO did not properly justify the penalty initiation. The ITAT also noted that the excess claim of deduction u/s 80C was due to incomplete documentation, not deliberate falsification. Thus, the appeal of the Revenue was dismissed, affirming the CIT(A)'s order.