2017 (5) TMI 1418 - AT - Income Tax

Penalty u/s 271(1)(c) - whether assessee has concealed his income or furnished inaccurate particulars of his income and called for explanation from the assessee - Held that - In the present case, the assessee has disclosed all the particulars before completion of the assessment u/s 143(3), though the details were filed in the scrutiny proceeding. Further, scrutiny assessment proceedings have taken for AY 2011-12, but, the assessee has disclosed all the details in respect of 2008-09, 2009-10 and 2010- 11 also. Therefore, the attempt made by the assessee to disclose the particulars of income shows the bonafides of assessee. In the present case, the assessee has discharged the burden by giving detailed explanation before the AO. The AO simply rejected the explanation without discharging the burden cast upon him, as the assessee has disclosed the particulars of income in the scrutiny assessment.We find that neither the AO nor the CIT(A) has dealt with the issue in correct perspective. Thus we are of the view that the case of the assessee is not a fit case to attract the provisions of section 271(1)(c) - Decided in favour of assessee.

Summary

Issues:
Penalty u/s 271(1)(c) for concealment of income or furnishing inaccurate particulars of income.

Analysis:
The judgment involved three appeals by the assessee against penalty orders under section 271(1)(c) for AYs 2008-09, 2010-11, and 2011-12. The appeals were clubbed as they shared an identical issue. The assessee, a proprietor of a trading business, had disclosed peak cash deposits during scrutiny proceedings, leading to penalty initiation by the AO. The AO accepted the peak credits but levied the penalty under section 271(1)(c) citing non-disclosure in the original return. The CIT(A) upheld the penalty, stating the assessee did not disclose the correct income initially. The assessee contended that the explanation provided was genuine and not false or mala fide, relying on relevant case laws.

In the analysis, it was noted that the AO initiated penalty proceedings based on the non-disclosure of income particulars, which were later revealed during scrutiny. The assessee offered a detailed explanation for the non-disclosure, citing mental stress and oversight due to business issues. The AO rejected the explanation solely on the grounds of disclosure during scrutiny, without deeming it false or mala fide. The Tribunal referred to case laws emphasizing the importance of bonafide explanations and the burden of proof on the Revenue to establish concealment. It was observed that the AO and CIT(A) did not consider the explanation in the correct perspective.

The Tribunal concluded that the case did not warrant penalty under section 271(1)(c) as the assessee had provided a genuine explanation and disclosed income details during scrutiny. Relying on legal precedents, the Tribunal directed the AO to delete the penalties imposed for all the assessment years in question. The judgment highlighted the significance of bonafide explanations and the burden of proof on the Revenue in cases of alleged concealment or inaccurate particulars of income.

In summary, the judgment addressed the issue of penalty under section 271(1)(c) for non-disclosure of income particulars, emphasizing the importance of genuine explanations and the burden of proof on the Revenue to establish concealment. The Tribunal ruled in favor of the assessee, directing the deletion of penalties for all the assessment years involved based on the bonafide nature of the explanation provided by the assessee.