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2018 (10) TMI 486 - AT - Income TaxPenalty u/s 271(l)(c) - TDS not been deducted on the interest payments - bonafide mistake - whether interest payment from HP State Agricultural and Rural Development Bank was exempted from the TDS provisions ? - Held that - We find that HP State Cooperative Agriculture & Rural Development Bank Ltd. is not exempted from deducting the TDS. The assessee has shown the agricultural income even though it is non taxable in the return of income. Similarly the assessee has also shown the interest received on FDR s from SBI, Nahan, ICICI Bank, Nahan and also Himachal Gramin Bank, Nahan. Hence the plea that the interest on FDR s have been omitted on a bonafide belief that the interest on FDR s is not taxable cannot be accepted. The assessee has not disclosed the interest income on these FDRs in his return of income. The contention of the assessee has been that it was a bonafide mistake has been well addressed by the Assessing Officer in para 5 of the penalty order. At the end of para 6 it is clearly mention that the assessee had invested ₹ 40,00,000/- in FDRs and the same was detected by the AO while collecting information u/s 133(6). The Parliament amended the law by omitting the expression deliberately in sub-section (c) which was omitted by Finance Act, 1964. After such omission an explanation was also inserted. After this burden has been shifted to the assessee to prove that he has not concealed the particulars of income and if such explanation is found to be bonafide then penalty cannot be levied but if no explanation is given or the explanation is found to be false then penal consequences will follow. The penalty under the provision is a civil liability. Willful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution u/s 276C of the Income Tax Act. See Union of India & Others Vs. Dharmendra Textile Processors 2008 (9) TMI 52 - SUPREME COURT Hence keeping in view the facts and circumstances of the instant case and the judicial pronouncements, wherein the bonafide has not been proved by the assessee and the revenue could bring about a clear case of concealment of income, we hereby decline to interfere with the order of the Ld. CIT(A). - decided against assessee
Issues Involved:
1. Violation of principles of natural justice. 2. Non-application of mind by CIT(A). 3. Justification of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. Issue-Wise Detailed Analysis: 1. Violation of Principles of Natural Justice: The Assessee contended that the order passed by the Ld. CIT(A) violated the principles of natural justice and deserved to be quashed. However, this issue was not elaborated upon in the judgment, and the Tribunal did not specifically address it in their final decision. 2. Non-Application of Mind by CIT(A): The Assessee argued that the Ld. CIT(A) recorded submissions for AY 2008-09 but disposed of the appeal for AY 2011-12, indicating a lack of application of mind. The Tribunal did not find merit in this argument and did not address it further in their decision. 3. Justification of Penalty Imposed Under Section 271(1)(c): The main issue revolved around the penalty of ?4,88,002/- imposed for concealment of income. The facts revealed that the Assessee filed a return for AY 2011-12 declaring an income of ?3,01,500/- plus agricultural income of ?2,90,000/-. The assessment was completed at an income of ?21,67,630/- after adding ?15,14,000/- as interest received on FDRs from HP State Agricultural and Rural Development Bank, Nahan. The Assessing Officer initiated penalty proceedings for concealment of income. During the hearing, the Assessee argued that the omission of interest income was due to a bona fide belief that it was exempt, as no TDS was deducted by the bank. The Assessee relied on the Supreme Court judgment in Price Waterhouse Coopers (P.) Ltd. v. CIT, which held that inadvertent errors do not necessarily imply concealment of income. The Tribunal examined various judgments, including Hindustan Steel Ltd. v. State of Orissa, which emphasized that penalty should not be imposed for technical or venial breaches or bona fide beliefs. The Tribunal also considered the judgment in CIT v. Manjunatha Cotton and Ginning Factory, which stated that penalty is not automatic and depends on the bona fide nature of the Assessee's explanation. The Revenue argued that the Assessee did not disclose the interest income voluntarily but only after detection by the AO. The Assessee's claim of a bona fide belief was inconsistent, and the interest income was not disclosed even in the exempt income column of the return. The Revenue further contended that HP State Agricultural and Rural Development Bank was not exempt from TDS provisions, and the Assessee's explanation lacked credibility. The Tribunal found that the Assessee had shown interest income from other banks but not from HP State Agricultural and Rural Development Bank, undermining the claim of a bona fide belief. The Tribunal referred to the Supreme Court judgment in K.P. Madhusudhanan v. CIT, which clarified that the burden of proving the absence of concealment lies with the Assessee. The Tribunal also cited the Constitutional Bench decision in Union of India v. Dharmendra Textiles Processors, which held that willful concealment is not necessary for civil liability under Section 271(1)(c). Conclusion: The Tribunal concluded that the Assessee failed to prove the bona fide nature of the omission and upheld the penalty imposed by the CIT(A). The appeal of the Assessee was dismissed, and the order of the Ld. CIT(A) was affirmed. Order: The appeal of the Assessee is dismissed. Order pronounced in the open Court.
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