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2020 (5) TMI 405 - AT - Income TaxPenalty u/s 271(1)(c) - Addition of salary and bank interest received by the assessee - penalty proceedings initiated on the directions of the ld. PCIT u/s 263 (1) - HELD THAT - Assessee has been out of India and has been receiving salary from three different employers and the returns have been prepared by a consultant. TDS on the salary has been already deducted and deposited to the department. Further the ESOP amount is a non-cash transaction and on which the TDS has also been deducted and the Form 26 AS has clearly shown the TDS deducted. Assessee has been in different jobs and out of India the returns have been prepared by a consultant the explanation of the assessee could fairly substantiate that such explanation is bonafide and material relevant to the computation of the total income have been disclosed by him. In the case of Pitambar Das Dulichand 2003 (12) TMI 11 - MADHYA PRADESH HIGH COURT held that no penalty is leviable in such case where there is no even an iota of evidence to suggest that the mistake was with the consent and knowledge would be treated as a deliberate act. In the absence of any such deliberate act on the part of the assessee no penalty u/s 271(1)(c) of the Act is leviable. Also MS. SANIA MIRZA 2013 (2) TMI 220 - ANDHRA PRADESH HIGH COURT held that an error committed by the assessee does not necessarily attract the penalty proceedings if that error was accepted and the amount was surrendered to tax. - Decided in favour of assessee.
Issues:
Appeal against order of ld. CIT (A) under section 271(1)(c) of the Income Tax Act, 1961 - Allegations of concealment of income - ESOP income discrepancy - Penalty proceedings initiated under section 263 - Bonafide explanation by the assessee. Analysis: 1. Alleged concealment of income: The appeal was filed against the order of the ld. CIT (A) upholding the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. The assessee contended that the penalty was unjustified as there was no intention to conceal income. The AO had initiated penalty proceedings under section 263 based on an addition to the income declared by the assessee. 2. ESOP income discrepancy: The primary issue revolved around the ESOP income of ?9,48,230, which was a non-cash transaction reflected in Form 26AS but not mentioned in the salary certificate. The assessee argued that TDS was deducted on the ESOP income, and upon reconciliation with Form 26AS, the discrepancy was rectified by filing a revised return. The explanation provided by the assessee was deemed bonafide, supported by the fact that taxes were duly paid on the disclosed income. 3. Penalty proceedings under section 271(1)(c): The assessee's argument emphasized that the discrepancy in income was unintentional, as the returns were prepared by a consultant due to the assessee's overseas employment and job changes. The Tribunal noted that the assessee had paid all taxes due suo-moto and that the TDS on income was already deposited with the department. Citing legal precedents, including judgments from the Hon'ble High Courts, the Tribunal concluded that in the absence of deliberate intent to conceal income, no penalty under section 271(1)(c) should be levied. 4. Judicial Decisions: The Tribunal referred to cases such as CIT vs. Sania Mirza and CIT vs. Pitambar Das Dulichand, where it was established that inadvertent errors or mistakes in income declaration do not warrant penalty if rectified and taxes paid promptly. Relying on these precedents, the Tribunal held that since there was no deliberate attempt to conceal income and the explanations provided were bonafide, the penalty levied on the assessee was unjustified. In conclusion, the Tribunal allowed the appeal of the assessee, directing the deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The judgment highlighted the importance of bonafide explanations, timely rectification of discrepancies, and the absence of deliberate intent to conceal income in determining the applicability of penalties in tax matters.
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