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2020 (7) TMI 490 - AT - Income TaxPenalty u/s 271(1)(c) - concealment of income - non specification of charge - Whether no clear finding in the notice u/s 274? - whether the assessee has concealed the particulars of income with respect to such business receipts not disclosed in the income tax return? - HELD THAT - The term concealment of particular of income has not been defined under the provisions of section 271(1)(c) or elsewhere in the Act. The meaning of the term concealed /inaccurate has been discussed in the case of Reliance Petroproducts (P) Ltd 2010 (3) TMI 80 - SUPREME COURT wherein it was held that the term inaccurate signifies deliberate act or omission on the part of the assessee. As such, the details/informations contained in the return of income /financial statements /audit report which are not correct according to truth, and were furnished by the assessee with the dishonest intent shall be treated as inaccurate particulars. We find that the assessee has disclosed the business income during the assessment proceedings which was not doubted by the authorities below. Business income was charged to tax on presumption basis under the provisions of section 44 AD of the Act. Thus it is transpired that there was no deliberate act on the part of the assessee not to disclose the business receipts in his income tax return. In holding so we draw support and guidance from the judgment in the case of ITO Vs. Bombay wala readymade stores 2014 (11) TMI 1099 - GUJARAT HIGH COURT Any addition/disallowances made during the quantum proceedings does not automatically justify the levy of the penalty under section 271(1)(c) - Besides the element of income added the quantum proceedings, there must be some material/circumstantial evidences leading to the reasonable conclusion that there was conscious concealment or the act of furnishing of inaccurate particulars on the part of the assessee. Accordingly, we are not convinced with the finding of the authorities below. Hence we set aside the order of the learned CIT (A) and direct the AO to delete the penalty levied by him under section 271(1)(c). Thus the appeal of the assessee is allowed.
Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 for ?63,460/- on account of concealment of income. 2. Validity of the notice under section 274 of the Income Tax Act. 3. Consideration of facts and evidence submitted by the assessee. 4. Justification and legality of the CIT(A)'s findings. Issue-wise Detailed Analysis: 1. Confirmation of Penalty under Section 271(1)(c): The primary issue is whether the penalty imposed under section 271(1)(c) was justified. The assessee had deposited ?51,85,699/- in cash, which was not disclosed in the income tax return. Upon inquiry, the assessee claimed these were business receipts and offered an income of ?4,14,856/- under section 44AD. The AO initiated penalty proceedings and levied a penalty of ?63,455/- for concealing income. The CIT(A) confirmed this penalty, stating that the assessee had not disclosed business activities in the return and used an incorrect form (ITR-1), which indicated concealment of income. 2. Validity of Notice under Section 274: The assessee argued that the notice under section 274 was defective and lacked clear findings, rendering the AO's order without jurisdiction. However, this argument was not elaborated upon in the judgment, and the focus remained on whether there was deliberate concealment of income. 3. Consideration of Facts and Evidence: The assessee contended that the income was offered to tax during the assessment proceedings to avoid litigation and had paid the taxes before the assessment order was passed. The assessee claimed there was no deliberate concealment of income. The Tribunal noted that the business income was taxed on a presumptive basis under section 44AD and found no evidence of deliberate concealment. The Tribunal cited the Supreme Court's definition of "inaccurate particulars" in Reliance Petroproducts (P) Ltd, emphasizing that inaccurate particulars must involve a deliberate act or omission. 4. Justification and Legality of CIT(A)'s Findings: The Tribunal disagreed with the CIT(A)'s findings, stating that the mere addition of income during assessment proceedings does not justify a penalty under section 271(1)(c). There must be material evidence of conscious concealment or furnishing of inaccurate particulars. The Tribunal referenced the Gujarat High Court's judgment in ITO Vs. Bombaywala Readymade Stores, which held that penalties cannot be levied merely on estimated additions. The Tribunal concluded that the assessee's actions did not constitute deliberate concealment and directed the AO to delete the penalty. Other Considerations: The Tribunal acknowledged the delay in pronouncing the order due to the Covid-19 lockdown, citing the Mumbai Tribunal's decision in JSW Limited Vs. Deputy Commissioner of Income Tax, which extended the time for pronouncing orders beyond the usual 90 days due to the pandemic. Conclusion: The Tribunal allowed the assessee's appeal, setting aside the CIT(A)'s order and directing the AO to delete the penalty under section 271(1)(c). The judgment emphasized the need for evidence of deliberate concealment to justify such penalties.
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