2014 (7) TMI 1064 - AT - Income Tax

Confirmation of partial penalty u/s 271(1)(c) Concealment of particulars - Suppressed work in progress Late payment of PF Held that - The assessee had disclosed the material facts before the AO and CIT(A) - When the assessee has made a particular claim in the return of income and has also furnished all the material facts, the disallowance of claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing inaccurate particulars - What is to be seen is whether the said claim made by the assessee was bona fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(1) (c) of the Act - all the necessary facts were furnished and the fact that the addition has been substantially reduced in appeal, the addition that was sustained does not call for levy of penalty u/s 271(l)(c) thus, the penalty levied is set aside Decided in favour of Assesse.

Summary

Issues: Late filing of appeal, Penalty under section 271(1)(c) of the Act

Late filing of appeal:
The appeal was filed late by the Assessee, but a condonation petition was submitted along with a notarized affidavit explaining the delay. After considering both parties and the record, the delay was condoned, and the appeal was admitted for hearing.

Penalty under section 271(1)(c) of the Act:
The Assessee, a company engaged in construction contracts, filed a return for AY 02-03, which was selected for scrutiny. The assessment resulted in additions to the total income, leading to a penalty under section 271(1)(c) of the Act. The Assessee appealed the penalty before the CIT(A), who partially confirmed it. In the subsequent appeal, the Assessee argued that the explanation for the additions was genuine and supported by details submitted during assessment proceedings. The Tribunal had previously reduced the addition amount. The key issue was whether the Assessee's explanation was bona fide and all relevant facts were disclosed. The Tribunal found that since all necessary facts were provided, and the addition was significantly reduced in appeal, no penalty under section 271(1)(c) was warranted. Consequently, the penalty levied by the AO was canceled, and the appeal of the Assessee was allowed.

Conclusion:
The Tribunal ruled in favor of the Assessee, canceling the penalty levied under section 271(1)(c) of the Act. The decision emphasized the importance of providing a bona fide explanation supported by all relevant facts to avoid penalties for concealment of income or furnishing inaccurate particulars.