2018 (8) TMI 1763 - AT - Income Tax

Penalty u/s 271(1)(c) - addition on the basis of the details collected from the Government departments about the work orders, date of inspection and payments made by them from time to time to the assessee - Held that - The total receipts declared by the assessee which is more than ₹ 4.61 crores as compared to the total receipts as per the information received from the departments at ₹ 4,26,84,832/-, the difference amount can be part of the declared receipts of the assessee. Without going into the said issue, when it is not disputed that the assessee has not claimed the said amount of ₹ 14,25,059/- as part of the opening balance of work in progress of subsequent year then the addition made by the AO for the year under consideration would not ipso facto amount to concealment of particulars of income. The explanation of the assessee that there may be a discrepancy in the information obtained by the AO and analyzing the same when the assessee has already declared the total receipts more than the total receipts as per the information furnished by the departments, then in considering the totality of the facts and circumstances of the case, we find that all these explanations of the assessee would constitute a bonafide explanation though the same may not be accepted for the purpose of addition in quantum proceedings - Decided in favour of assessee.

Summary

Issues:
1. Penalty under section 271(1)(c) of the IT Act for the assessment year 2009-10.

Analysis:
The appeal was against the penalty order passed under section 271(1)(c) of the IT Act for the assessment year 2009-10. The assessee, a partnership firm engaged in civil contract work, faced penalty proceedings due to an addition made by the AO on account of suppression of closing work in progress. The AO initiated penalty proceedings and levied a penalty of ?4,70,269, being 100% of the tax sought to be evaded. The assessee challenged this action before the ld. CIT (A) but was unsuccessful.

The crux of the matter revolved around the discrepancy in the total receipts declared by the assessee and the information obtained by the AO from government departments. The AO added ?14,25,059 as suppression of closing work in progress based on this difference. The assessee argued that since they had declared total receipts higher than the information provided by the departments, the addition should not amount to concealment of income. The assessee contended that the addition was based on incomplete details and should be deleted.

The Tribunal considered the submissions and facts on record. While acknowledging that the addition had attained finality, it noted that the discrepancy in closing work in progress was based on details obtained from departments. The Tribunal found that the total receipts declared by the assessee exceeded the information from departments, suggesting the difference could be part of declared receipts. Additionally, since the assessee did not claim the amount as part of the opening balance of work in progress for the subsequent year, the addition did not amount to concealment of income. The Tribunal accepted the assessee's explanation as bonafide, deleting the penalty levied under section 271(1)(c) of the Act.

In conclusion, the Tribunal allowed the appeal of the assessee, ruling in their favor and deleting the penalty. The decision was pronounced in open court on 29/08/2018.