2019 (5) TMI 1055 - AT - Income Tax

Penalty u/s. 271(1)(c) - concealed income from cash deposits - CIT(A) felt that the estimation of income is unreasonable and, accordingly, reduced the same to 10% and confirmed the addition partly - HELD THAT - The assessee has concealed the particulars of income because the assessee did not file return of income and also did not file the details as called for by the Assessing officer. Accordingly, concur with the findings of the lower authorities and confirm the levy of penalty and dismiss the ground of appeal of the assessee. Penalty u/s 271A - non-maintenance of books of account in violation of section 44AA - reasonable cause - HELD THAT - Assessee has shown a reasonable cause that due to disturbance among the partners, the books of account were not maintained. Hence, in view of provisions of section 273B of the Act, no penalty shall be imposable and allow the ground of appeal of the assessee. Consequently, the appeal of the assessee is allowed. Penalty u/s. 271F - assessee has failed to furnish return of income on or before 31.3.2014 without a reasonable cause - HELD THAT - The disturbance caused among the partners steps compelled to closure of the business could not constitute a valid ground for the delay in furnishing the return of income, as income from the said concern, a partnership firm, if any, is exempt under s. 10(2A) of the Act. In other words, the assessee could well have filed his return of income, clearly stating that the income from the partnership firm, if any, is tax exempt, is not being disclosed, being indeterminate, if indeed so at the relevant date - the assessee has not been able to show any reasonable cause(s) for not furnishing the return of income by 31st March, 2004 and, thus, the levy is not saved by s. 273B. As such, the impugned default can only be considered as a conscious disregard of one s statutory obligations, and therefore, the penalty levied by the Assessing Officer is confirmed. - Decided against assessee.

Summary

Issues Involved:
1. Penalty u/s.271(1)(c) of the Act for concealed income determination.
2. Penalty u/s.271A of the Act for non-maintenance of books of account.
3. Penalty u/s.271F of the Act for failure to furnish return of income.

Issue 1: Penalty u/s.271(1)(c) of the Act for concealed income determination:
The appellant contested the penalty imposed u/s.271(1)(c) of the Act for concealed income. The Assessing Officer noted significant cash deposits in the bank account of the assessee during assessment proceedings, leading to the computation of income at 20% of the gross turnover. The CIT(A) reduced the income computation to 10% and confirmed an addition of &8377; 7,31,880/-. The Assessing Officer levied a penalty of &8377; 4,38,830/-, considering the assessed income as concealed. The CIT(A) directed a reduction in the penalty amount based on the revised concealed income. The Tribunal affirmed that the assessee concealed income by not filing returns or providing required details, upholding the penalty of &8377; 2,19,415/-.

Issue 2: Penalty u/s.271A of the Act for non-maintenance of books of account:
The appellant challenged the penalty imposed u/s.271A of the Act for non-maintenance of books of account. The Assessing Officer found the assessee in violation of section 44AA for not maintaining books of account and levied a penalty of &8377; 25,000/-. The appellant cited a serious dispute among partners as the reason for non-maintenance. The Tribunal observed the turnover exceeding &8377; 73,00,000/- and the nature of business, questioning the feasibility of such turnover without maintaining books. However, considering the reasonable cause of partner disputes affecting bookkeeping, the Tribunal invoked section 273B and waived the penalty.

Issue 3: Penalty u/s.271F of the Act for failure to furnish return of income:
The appellant contested the penalty imposed u/s.271F of the Act for failure to furnish the return of income. The Assessing Officer penalized the assessee for not filing returns without a reasonable cause. The Tribunal noted that failure to furnish the return by the due date did not have a valid excuse, as the disturbance among partners leading to business closure did not justify the delay. The Tribunal upheld the penalty, stating that the delay was a conscious disregard of statutory obligations, as the income from the partnership firm could have been disclosed even with uncertainties.

In conclusion, the Tribunal upheld the penalties for concealed income determination and failure to furnish the return of income, while waiving the penalty for non-maintenance of books of account due to reasonable cause.