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2024 (6) TMI 1140 - AT - Income TaxPenalty leviable u/s 271(1)(C) - assessee has not filed the return of income under section 139 of the act despite having taxable income and having interest income from various investments - income offered consequent to reopening notice - as per revenue had the revenue not reopened the case, the total income would have remained untaxed, therefore he is satisfied that any person who has concealed the particulars of income or furnished inaccurate particulars of such income, the penalty is leviable HELD THAT - In this case there is no dispute that assessee has earned income from one party on which tax is deductible at source u/s 195 of the act. The payer of the interest has deducted tax at the source at the rate of 10% instead of 12.5%. The assessee as soon as the notice under section 148 was received immediately offered the same income and also paid the balance tax due. Special provisions relating to certain income of non-resident as provided under Chapter XII A of the act is applicable to the assessee. According to provisions of section 115G non-resident assessee is not required to file her return of income u/s 139 (1) if total income in respect of which she is assessable under this act during the previous year consisted only of investment income or income by way of a long-term capital gain or both and tax deductible at source under the provisions of chapter XVII B has been deducted from such income. There is no dispute that assessee is a non-resident, she is deriving only investment income and tax is deductible at source on such income. Only dispute is that tax deductible at source is at the rate of 12.5% whereas the deductor has deducted tax at the rate of 10%, therefore, the return of income was not filed - On detection, on receipt of notice under section 148 of the act, assessee offered that income and also paid the balance tax of 2.5% on that income which is arising due to shortage of tax deducted at source. Therefore the assessment is made at the returned income. But AO considered that there is a concealment of income. We find that there is an error made by the deductor and not the deductee i.e. assessee. For this, the assessee could not have been penalized for levy of penalty under section 271(1)(C) of the act. Honourable Supreme Court in case of PRICE WATERHOUSE COOPERS (P.) LTD. 2012 (9) TMI 775 - SUPREME COURT in reopened assessment proceedings on a genuine mistake or omission, reassessment order was passed on the assessee paid due tax thereon as along with the interest, it was held that absence of due care does not mean that assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. In that case the contents of the income are already available in the tax audit report. In the present case also the details of the income and tax deducted thereon is already available with the assessing officer in form number 26AS based on which reopening of the assessment was made. Assessee also paid due tax immediately in response to notice under section 148 of the act. In the present case it is also not the error of the assessee but the error of the tax deductor from whom interest income is received. In the case the inadvertent error also gain be on account of the person who paid interest to the assessee of deducting tax at lower rate but not on part of the assessee. Similarly High Court in case of CIT versus Hans Christian Gass 2012 (8) TMI 146 - BOMBAY HIGH COURT - Reliance by the lower authorities on the decision of Mak data 2013 (11) TMI 14 - SUPREME COURT is misplaced because in that case The surrender of income on this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the Assessing Officer in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. Thus the facts in that case are distinguishable Thus we find that the learned lower authorities are incorrect in imposing penalty under section 271(1)(C) - Decided in favour of assessee.
Issues Involved:
1. Confirmation of penalty levied under Section 271(1)(c) of the Income Tax Act, 1961. 2. Validity of the assessment order under Section 147 due to procedural irregularities. 3. Alleged concealment of income and furnishing of inaccurate particulars. 4. Consideration of detailed submissions and judicial pronouncements by the CIT(A). 5. Applicability of penalties in case of bona fide mistakes and non-concealment of income. Detailed Analysis: 1. Confirmation of Penalty under Section 271(1)(c): The primary issue revolves around the penalty of Rs. 150,606 levied under Section 271(1)(c) for alleged concealment of income. The assessee, a non-resident, did not file a return for the assessment year 2013-14. The case was reopened under Section 148, and the assessee subsequently declared an income of Rs. 6,539,260. The penalty was initiated on the grounds that the income was only declared after the notice was issued, suggesting concealment. 2. Validity of Assessment Order under Section 147: The assessee challenged the assessment order under Section 147, arguing that it was digitally signed on 30/03/2022, despite being dated 27/03/2022, and the Document Identification Number (DIN) was taken on an unsigned order. This procedural irregularity was claimed to render the assessment order void ab initio, and consequently, the penalty order should also be considered invalid. 3. Alleged Concealment of Income: The assessee contended that there was no concealment of income as the details were available in Form 26AS and AIS. The discrepancy arose because the tax deductor deducted tax at 10% instead of the applicable 12.5% under the Double Taxation Avoidance Agreement (DTAA) with UAE. The assessee believed no additional tax was payable and filed the return promptly upon receiving the notice under Section 148. 4. Consideration by CIT(A): The CIT(A) upheld the penalty, stating that the income was brought to tax due to the timely action of the assessing officer. The CIT(A) relied on the Supreme Court's decision in Mak Data Pvt Ltd vs. CIT, asserting that the assessee had no intention to declare true income voluntarily. 5. Bona Fide Mistakes and Judicial Pronouncements: The assessee argued that the penalty should not be levied for bona fide mistakes, citing several judicial precedents. The Bombay High Court in CIT vs. Hans Christian Gassin and Sania Mirza's case, and the Supreme Court in CIT vs. Reliance Petroproducts Ltd and PricewaterhouseCoopers Pvt Ltd vs. CIT, supported the view that penalties should not be imposed for genuine errors or where there was no intention to evade tax. Tribunal's Findings: The Tribunal found that the assessee's failure to file a return was due to a bona fide belief that no additional tax was due, given the tax deducted at source, albeit at a lower rate. The Tribunal noted that the details were available with the tax authorities, and the assessee promptly paid the due tax upon receiving the notice. The Tribunal distinguished the present case from Mak Data, highlighting that the error was on the part of the tax deductor, not the assessee. Conclusion: The Tribunal concluded that the penalty under Section 271(1)(c) was incorrectly imposed. The assessee's actions did not constitute concealment of income or furnishing inaccurate particulars. The penalty of Rs. 150,606 was directed to be deleted, and the appeal was allowed. Order Pronounced: The order was pronounced in the open court on 21.06.2024.
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