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2017 (1) TMI 633 - AT - Income TaxPenalty under section 271(a)(c) - addition under the head under-reported interest income - non filing ROI on due date - Held that - We find that the assessee had not filed his return of income on due date that he himself was filing the return that while preparing the return he had included the income under the head house property and income from other sources. House property income was computed in negative.Clearly, the assessee was aware of the procedure of filing the return and method of computing the income. It is to be remembered that assessee had earned interest income of 1.92 lakhs during the year under consideration. It is not a small amount that could be ignored by a person while filing the return. It is not the case that return was filed in the first month of the subsequent financial year and that assessee had not received the statement of interest income from the bank. Return of income is not a simple piece of paper. The assessees are supposed to not only disclose their income but also has to verify that entries made in it are correct The explanation filed by the assessee about not disclosing interest income in the return of income was not bona fide.So, confirming the order of the FAA, we decide the effective ground of appeal against the assessee.
Issues:
1. Challenge to the order of the CIT (A) regarding penalty imposition under section 271(a)(c) of the Income Tax Act. 2. Assessment of penalty for under-reported interest income. 3. Appeal against the First Appellate Authority's decision upholding the penalty imposition. 4. Argument for non-intentional concealment of income and bonafide mistake by the assessee. Analysis: 1. The appellant contested the penalty imposed by the Assessing Officer (AO) under section 271(a)(c) of the Income Tax Act. The AO added &8377; 1.92 lakhs as under-reported interest income, initiating penalty proceedings. The appellant cited personal distress due to a family tragedy as the reason for the oversight in declaring the interest income. However, the AO maintained that the substantial interest income was deliberately omitted from the return. The AO levied a penalty of 100% of the evaded tax, which was upheld by the First Appellate Authority (FAA). 2. The FAA considered the appellant's explanations but concluded that the omission of interest income was not inadvertent. The FAA highlighted the appellant's previous compliance with disclosing interest income in earlier returns, indicating a lack of bonafide intent in the current case. Referring to legal precedents, the FAA upheld the penalty under section 271(a)(c) of the Act, emphasizing the failure to meet the conditions specified in the explanation. 3. During the appellate process, the Authorized Representative (AR) argued for the appellant, emphasizing the non-intentional nature of the omission and citing a legal case in support. The Departmental Representative (DR) supported the FAA's decision, highlighting the queries raised by the AO regarding investments and the correctness of other incomes disclosed by the appellant. 4. The Appellate Tribunal noted that the appellant was well aware of the income reporting requirements and the significance of the omitted interest income. The tribunal emphasized the need for bonafide intent in claiming deductions and disclosing income accurately. Referring to legal principles, the tribunal concluded that the appellant failed to disclose material facts relevant to income computation, leading to a lack of bonafide explanation for the omission. The tribunal upheld the FAA's decision, dismissing the appeal and confirming the penalty imposition under section 271(a)(c) of the Act. In conclusion, the appeal filed by the assessee challenging the penalty imposition under section 271(a)(c) of the Income Tax Act was dismissed, affirming the decision of the First Appellate Authority. The tribunal found the explanation provided by the assessee regarding the non-disclosure of interest income to be lacking in bonafide intent, leading to the confirmation of the penalty.
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