2016 (7) TMI 1233 - AT - Income Tax

Penalty u/s.271(1)(c) - non disclosure of accrued interest - Held that - As far explanation offered by the assessee about the interest is concerned we hold that his explanation was bona fide.If the factors like receipt of TDS certificate in the month of March,2011 and subsequent development are considered it becomes clear that there was plausible reason for filing a revised return of income. Therefore, in our opinion penalty should not have been levied with regard to the accrued interest not shown in the original return. - Decided in favour of assessee Claim of maintenance-charges against the rental income - Held that - In the explanation filed by the assessee, he has stated that it was an inadvertent mistake. We are of the opinion that it is not an issue where two views are possible or there can be difference of opinion. It is a clear case of making an inadmissible claim, as state earlier. Has the case not been scrutinised, the assessee would have walked away with it. It is also a fact that so-called revised return was filed after the AO had issued a notice u/s.143(2)notice. We should not forget that only a miniscule percentage of the returns are selected for scrutiny by the department. Therefore, it is the duty of the taxpayers to pay due taxes.It is their right that they are not taxed for the income that has not been received or accrued to them. But,the other side of the coin is that they should not put forth totally inadmissible claim and reduce the tax liability. For such a omission, if penal provisions are invoked by the AO they should not have any grudge. Therefore, we hold that the AO had rightly levied penalty for claiming maintenance charges against the rental income. - Decided against assessee

Summary

Issues:
1. Levy of penalty u/s.271(1)(c)(1)(c) of the Income-tax Act.
2. Consideration of revised return filed by the assessee.
3. Justification for penalty imposition by the Assessing Officer.
4. Appeal before the First Appellate Authority (FAA).
5. Arguments presented by the Authorised Representative (AR) and the Departmental Representative (DR).
6. Analysis of the penalty imposition and explanation offered by the assessee.

Analysis:

1. The case involved the levy of penalty u/s.271(1)(c)(1)(c) of the Income-tax Act concerning two related appeals by family members. The Assessing Officer (AO) initiated penalty proceedings due to inaccurate particulars of income furnished by the assessee in the original return.

2. The assessee filed a revised return after the original return was not considered timely. The AO, during assessment, held that the revised return was not voluntarily filed and that certain income heads were not disclosed, leading to penalty initiation under section 271(1)(c).

3. The AO imposed a penalty after finding that the assessee concealed income particulars and furnished inaccurate details in the original return. The First Appellate Authority (FAA) upheld the penalty, emphasizing the strict liability of the assessee to provide accurate income disclosure.

4. The appeal before the FAA argued for rectification of mistakes in the revised return, attributing them to inadvertent errors. However, the FAA maintained that penalty under section 271(1)(c) could be imposed if inaccurate particulars were furnished, regardless of the intention.

5. The AR argued that the revised return corrected inadvertent mistakes, while the DR contended that the assessee admitted to furnishing inaccurate particulars, justifying penalty imposition. Various case laws were cited to support both positions.

6. The Tribunal analyzed the penalty imposition independently from the assessment proceedings, emphasizing the need for a plausible explanation by the assessee. It differentiated between concealment and furnishing inaccurate particulars, ultimately partially allowing the appeal based on the specific circumstances of the case.

In conclusion, the Tribunal partly allowed the appeals, considering the explanations provided by the assessee and the specifics of the case. The judgment highlighted the importance of accurate income disclosure and the distinct nature of penalty proceedings compared to assessment procedures.