2017 (3) TMI 102 - AT - Income Tax

Penalty u/s. 271(1)(c) - assessee offered the questioned amount in his revised return filed in response to notice issued u/s. 148 and paid taxes thereon - Held that - As per the provision of Explanation 1 to section 271 (1), the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation; it should not be a fantastic or fanciful one. As indicated the consequence follows as a matter of law. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed the income or furnished inaccurate particulars thereof is available to be drawn. However in the instant case the assessee has explained the reasons for not including the particulars of income as discussed above which appears to be bonafide considering the facts and circumstances of the case. We are, therefore, of the view that the assessee could not be said to have filed false returns when it did not include the amount of interest and notional house property income in the taxable income in the above facts & circumstances. we also find force in the submissions of the Ld.AR that the assessee is old aged and disclosure of amounts in revised and payment of taxes thereon and taking into consideration the submissions, facts and circumstances of the case and we cancel the impugned penalty imposed by the AO and confirmed by the CIT-A. Therefore, this ground of assessee is allowed.

Summary

Issues:
- Justification of penalty imposed by AO under section 271(1)(c) confirmed by CIT-A.

Analysis:
The case involves an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals) regarding the imposition of a penalty under section 271(1)(c) of the Income Tax Act for the assessment year 2009-10. The primary issue in this appeal is whether the CIT-A was justified in confirming the penalty imposed by the AO. The AO had initiated penalty proceedings against the assessee for not disclosing notional rental income and interest income in the original return. The penalty was imposed for concealment of income due to the omission of disclosing these amounts. The assessee contended that the omission was not deliberate but a mistake, and voluntarily disclosed the income in a revised return filed in response to a notice under section 148 of the Act.

The CIT-A, however, held that the disclosure in the revised return was not voluntary and confirmed the penalty imposed by the AO. The CIT-A found that the assessee concealed the income by not showing it in the original return, and therefore, upheld the penalty. The assessee, represented by the ld.AR, argued that the omission was due to a misconception and mistake on the part of the assessee, emphasizing the age and profession of the assessee. The ld.DR relied on the orders of the lower authorities.

Upon hearing both sides and examining the material on record, the Tribunal observed that the penalty was imposed for furnishing inaccurate particulars of income. The Tribunal noted that the assessee had offered the questioned amounts in the revised return filed in response to the notice under section 148 and paid taxes on them. The Tribunal considered the offence of concealment as a deliberate attempt to hide income from tax authorities, but in this case, the assessee claimed it was an unintentional omission due to age and oversight.

The Tribunal referred to Explanation 1 to section 271(1) of the Act, which clarifies the distinction between assessment and penalty proceedings. It highlighted that the burden to establish a bona fide explanation for non-disclosure lies on the assessee. In this case, the Tribunal found the assessee's explanation to be acceptable and genuine, considering the circumstances. The Tribunal concluded that the assessee did not file false returns but omitted the income inadvertently. Taking into account the age of the assessee, the disclosure in the revised return, and the overall facts and circumstances, the Tribunal canceled the penalty imposed by the AO and confirmed by the CIT-A.

In the final order, the Tribunal allowed the appeal of the assessee, canceling the penalty of &8377; 28,773 imposed by the AO. The judgment was pronounced in open court on 28/02/2017.