2019 (10) TMI 1225 - AT - Income Tax

Penalty u/s. 271(1)(c) - claim of deduction 80HHC - HELD THAT - Assessee has disclosed all the particular pertaining to his claim of deduction 80HHC which was not claimed in the original return of income, however, assessee had filed Form No. 10CCA. Considering this fact we observe that claiming deduction u/s 80HHC cannot be treated as concealment of income as the assessee has filed all the particular pertaining to his claim. Therefore, on this account levying of penalty is not correct. Addition pertaining to estimation of income from other sources out of agriculture income - There is a no case of furnishing inaccurate particulars of income. The AO has also not established with any relevant supporting evidences that there was case of furnishing any inaccurate particular income in respect of estimation of income from other sources out of agriculture income. Therefore, we consider that it is not justified to levy penalty. Addition in respect of interest income - AO has not established that there was case of furnishing inaccurate particular of income so we consider that no penalty is required to be levied on the addition made on account of interest expenses. However, we observe that assessee has concealed the particular of income for not disclosing the salary income which was not shown in the original return of income, therefore, we consider that assessee has concealed the particular of income in respect of salary income. Accordingly, AO is directed to restrict the penalty u/s. 271(1)(c) to the amount of addition made on account of salary income. Therefore, appeal of the assessee is partly allowed.

Summary

Issues:
Assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; Penalty imposed under section 271(1)(c) for different additions made by the AO.

Analysis:

Issue 1: Penalty Imposed under Section 271(1)(c)
The appeal filed by the Assessee was against the penalty of ?5,28,000 imposed under section 271(1)(c) by the Ld. CIT(A). The original return of income declared total income, but subsequent revised returns showed variations in income figures. The AO issued a notice under section 148 as income chargeable to tax was found to have escaped assessment. The CIT(A) partly allowed the appeal, directing the AO to consider specific income sources and disallowing certain deductions. The ITAT partly allowed the appeal, adjusting income figures and directing the AO to consider specific amounts as income from other sources and agriculture. The AO initiated penalty proceedings under section 271(1)(c) for alleged concealment of income. The ITAT observed discrepancies in income disclosure but concluded that the penalty was not justified for certain additions. The penalty was restricted to the amount related to concealed salary income, partly allowing the appeal of the assessee.

Issue 2: Assessment and Additions
The AO made various additions during the assessment under section 147 r.w.s. 143(3) of the Act. The penalty was imposed on the quantum of additions sustained by the ITAT. The ITAT found that the assessee had disclosed details regarding the deduction under section 80HHC, which was not initially claimed. The penalty for this deduction was deemed unjustified as the necessary particulars were provided. Regarding the estimation of income from other sources out of agriculture income, the ITAT found no case of inaccurate particulars furnished, leading to the conclusion that penalty on this amount was unwarranted. The ITAT also noted that the AO failed to provide sufficient evidence for inaccuracies in interest income, leading to the decision that no penalty was required for these additions. However, the ITAT found that the assessee had concealed salary income, directing the AO to restrict the penalty to the amount related to this specific income, partially allowing the appeal.

In conclusion, the ITAT partly allowed the appeal of the assessee, restricting the penalty to the concealed salary income amount. The decision was pronounced in open court on 16/09/2019.