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2014 (4) TMI 551 - AT - Income TaxPenalty u/s 271(1)(c) of the Act Assessee contended that it has furnished all the particulars of income and there is no concealment of income in the instant case and hence it is not a fit case for levy of penalty Held that - So long as a matter is pending before a court and has not attained finality, the right of the assessee to receive a particular amount would be incomplete, i.e. subject to the final outcome of the proceedings it cannot be treated as income in the hands of the assessee in the year of receipt as held in Commissioner of Income-Tax, West Bengal II Versus Hindustan Housing And Land Development Trust Limited 1986 (7) TMI 10 - SUPREME Court - Even otherwise the assessee has declared the income in the computation statement and also given a note wherein specific reasons were mentioned as to why, in the opinion of the assessee, it is not taxable in the year under consideration - it cannot be said that the assessee has furnished inaccurate particulars of income thus, it is not a fit case for levy of penalty the order of the Penalty u/s 271(1)(c) set aside Decided in favour of Assessee.
Issues:
Penalty under section 271(1)(c) for concealment of income. Analysis: The appeal pertains to the penalty levied by the Assessing Officer (AO) under section 271(1)(c), confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)], where the assessee contended that there was no concealment of income as all income particulars were disclosed. The case involves the business of import and trade in iron and steel, specifically focusing on a redumption fine of Rs.110 lakhs paid by the assessee under Customs and Central Excise provisions. The assessee initially claimed deduction for this amount as business expenses in the assessment year (A.Y.) 1999-2000, which was later allowed by the Income Tax Appellate Tribunal (ITAT) Mumbai Benches. However, the actual receipt of the refund occurred in the previous year relevant to A.Y. 2008-09, subject to the decision of the Hon'ble Bombay High Court regarding the redumption fine. The dispute arose when the AO questioned why the sum of Rs.110 lakhs was not offered as income in A.Y. 2008-09, considering the receipt of the refund in the previous year. The assessee explained that they intended to offer the amount in a later year, awaiting the final decision of the Hon'ble Bombay High Court. The AO initiated penalty proceedings, alleging concealment of income and furnishing inaccurate particulars of income by the assessee. The CIT(A) upheld the penalty, emphasizing that failure to return the refunded redumption fine amounts to furnishing inaccurate income particulars. In the appeal before the Appellate Tribunal, the assessee relied on legal precedents to argue that the receipt of the amount, subject to a pending decision, should not be taxed as income until finality is reached. The Tribunal considered the bonafide intention of the assessee, who disclosed all details and reasons for not offering the amount to tax in the year under consideration. Citing the decision in Hindustan Housing and Land Development Trust Ltd. case, the Tribunal concluded that the assessee did not furnish inaccurate particulars of income, thus setting aside the penalty levied under section 271(1)(c) by the AO and CIT(A). In its detailed analysis, the Tribunal highlighted the legal principles governing the taxation of disputed amounts pending final adjudication, emphasizing that incomplete rights to receive income are not taxable until conclusiveness is achieved. The Tribunal found the assessee's disclosure and explanation sufficient, ruling that there was no concealment of income or furnishing of inaccurate particulars. The judgment reflects a nuanced understanding of tax law principles, emphasizing the importance of bonafide intentions and legal precedents in determining penalty implications for disputed income matters.
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