2019 (4) TMI 617 - AT - Income Tax

Penalty u/s. 271(1)(c) - non-availability of separate calculation of interest on refund and other technical fault - bifurcation of interest amount and tax amount refunded to the assessee - minor difference on account of contractual receipt - HELD THAT - No separate information about the interest and tax element of refund has been provided in Form No. 26AS issued to the assessee. Therefore, as per page no. 10 & 11 of the paper book the assessee has made working of interest receivable on the refund on estimated basis as per the material on record. In respect of difference of ₹ 6,844/- in contractual receipt it is noticed that as per actual contract the total contract receipt was to the amount of ₹ 15,44,92,552/- whereas the contract receipt shown by the assessee was at ₹ 15,44,85,708/-;after taking into account the huge volume of contract receipt minor difference of ₹ 6,884/- for want of reconciliation in the account of the assessee and in the account of the contractee R & B Department of Gujarat is not a case of furnishing inaccurate particular of income. Non-availability of separate calculation of interest on refund and other technical fault as explained above. CIT(A) is not justified in sustaining the penalty u/s. 271(1)(c) levied by the AO. Appeal of the assessee is allowed.

Summary

Issues:
Penalty under section 271(1)(c) for disallowances made in the assessment order.

Analysis:
The appellant challenged the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act for disallowances totaling &8377; 51,960, &8377; 1,57,032, and &8377; 6,884. The additions were related to non-deduction of tax on interest payment, under-reporting of interest on income tax refund, and a difference in reporting of contract receipt. The appellant contended that the disallowances were not intentional concealment of income but were due to technical errors and lack of detailed information. The CIT(A) upheld the penalty, prompting the appellant to appeal before the Appellate Tribunal.

The Tribunal considered the explanations provided by the appellant regarding the disallowances. It was noted that there was no separate bifurcation of interest and tax amount in the Form No. 26AS issued to the assessee, leading to an estimated working of interest receivable on the refund. Additionally, a minor difference in the reported contract receipt amount was attributed to reconciliation issues between the assessee and the contractee. The Tribunal concluded that the discrepancies were not indicative of deliberate concealment of income but rather technical faults and lack of detailed information. Consequently, the Tribunal held that the CIT(A) was unjustified in upholding the penalty under section 271(1)(c) and allowed the appeal of the assessee.

In light of the above analysis, the Tribunal set aside the penalty imposed by the Assessing Officer and upheld by the CIT(A). The decision was based on the finding that the discrepancies in the assessment were not due to intentional concealment of income but were the result of technical errors and lack of detailed information. The Tribunal emphasized the importance of considering the specific circumstances of each case while determining the applicability of penalties under the Income Tax Act.