2019 (7) TMI 853 - AT - Income Tax

Penalty u/s 271(1)(c) - difference between the sales figures as reported in the books of accounts and the corresponding figure reflected in the respective TDS statement - HELD THAT - Admittedly there is a difference between the sales figures as reported in the books of accounts and the corresponding figure reflected in the respective TDS statement. When the said discrepancy was pointed out to the assessee, a reconciliation statement was filed, the assessee failed to explain the same in his favour whereupon further time for three months was prayed for. Ultimately, the assessee failed to submit reconciliation before the AO neither during the penalty proceeding or even before the first appellate authority. Needless to mention that the assessee failed to submit the same even before us at the time of hearing of the instant appeal. Thus the observation made by the Learned CIT(A) is without any ambiguity while confirming the order of penalty. So far as the argument of specific charge is concerned it is evident on record that while issuing penalty proceeding the specification has expressed by the AO towards furnishing of inaccurate particulars of income by the assessee which is again reflected in the final order of penalty at penultimate paragraph 4.6. Thus we find no force in such argument advanced by the Learned Advocate appearing for the appellant before us. We find no infirmity in the order passed by the authorities below so as to warrant interference. Thus the same is hereby upheld.

Summary

Issues Involved:
1. Confirming the penalty under section 271(1)(c) for furnishing inaccurate particulars of income.
2. Validity of the penalty proceedings initiated without specifying the charge.

Detailed Analysis:

1. Confirming the penalty under section 271(1)(c):

The assessee, engaged in construction, telecom, and infrastructure work, filed its return of income declaring a total income of ?48,33,544/-. During the assessment, discrepancies were found between the gross amount subjected to TDS and the corresponding sales credited in the books, leading to an addition of ?12,52,978/-. The AO initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income.

The assessee argued that the difference was due to various components such as service tax, VAT, and reimbursement of expenses, which do not form part of the turnover. Despite providing a reconciliation statement, the assessee failed to substantiate the discrepancy satisfactorily and requested additional time, which was denied by the AO. The AO added the amount to the income and levied a penalty, stating that the assessee failed to reconcile the income vis-à-vis TDS claims and thus furnished inaccurate particulars of income.

The CIT(A) upheld the penalty, noting that the assessee never reconciled the receipts during the assessment or penalty proceedings and provided only vague explanations. The CIT(A) emphasized that the discrepancy between the sales figures and TDS certificates indicated concealment or furnishing of inaccurate particulars of income.

The Tribunal observed that the assessee admitted the discrepancy and failed to provide a satisfactory explanation or reconciliation. The Tribunal referred to various judicial precedents, including the Supreme Court's judgment in Price Waterhouse Coopers Pvt. Ltd. vs. CIT, which held that penalty is not leviable for a bona fide error. However, the Tribunal noted that the assessee's case involved a clear discrepancy in income, not a mere error.

The Tribunal concluded that the assessee furnished inaccurate particulars of income, justifying the penalty under section 271(1)(c). The appeal was dismissed, and the penalty order was upheld.

2. Validity of the penalty proceedings initiated without specifying the charge:

The assessee contended that the penalty notice under section 274 did not clearly specify the charge, making the penalty proceedings invalid. The Tribunal noted that the AO specified the charge of furnishing inaccurate particulars of income in the penalty order, satisfying the statutory requirement. The Tribunal found no merit in the assessee's argument and upheld the penalty.

Conclusion:

The Tribunal upheld the penalty under section 271(1)(c) for furnishing inaccurate particulars of income, rejecting the assessee's arguments regarding the discrepancy in income and the validity of the penalty proceedings. The appeal was dismissed, and the penalty order was confirmed.