2021 (9) TMI 347 - AT - Income Tax

Penalty u/s 271(1)(c) - Defective notice u/s 274 - non specification of charge - new plea before the authorities below - HELD THAT - On perusal of the paper book filed by the assessee, we find that the penalty notice was issued on the assessee on 27.12.2016 and the assessee has filed reply vide letter dated 17.01.2017 as well as letter dated 30.06.2017 - at no earlier point of time, the assessee had raised the plea before the authorities below that on account of the defect in the notice, it was put to prejudice on the ground that the notice issued under section 274 r.w.s. 271(1)(c) of the Act, the Assessing Officer has not specified any specific charge either for furnishing of inaccurate particulars or concealment of income. In view of the factual position, the ground raised by the assessee is devoid of any merits. Our view is duly supported by the decision of the Hon ble Jurisdictional High Court in the case of Sundaram Finance Ltd. 2018 (5) TMI 259 - MADRAS HIGH COURT which was affirmed by the Hon ble Supreme Court reported in 2018 (10) TMI 1451 - SC ORDER The Hon ble Jurisdictional High Court has rejected the additional substantial question of law on the reason that the assessee had at no earlier point of time pointed out the defect in the notice that the notice issued under section 274 r.w.s. 271(1)(c) of the Act did not specifically state the grounds mentioned in section 271(1)(c) of the Act. In this case in hand, there is no such plea raised by the assessee before the Assessing Officer at the initial stage. Hence, the notice issued under section 271(1)(c) of the Act is valid notice and therefore, the ground raised by the assessee is not acceptable. Whether mere omission or negligence would not constitute a deliberate act of suppression? - The assessee has very well aware that the interest income from mutual fund is liable for taxation and accordingly filed the original return by offering the income for taxation. But, while filing the revised return, the assessee claimed the interest income as exempt, without any basis or evidence, and thus, the act of the assessee cannot be held as mere omission or negligence. Under the above facts and circumstances, we sustain the penalty levied under section 271(1)(c) of the Act and confirmed by the ld. CIT(A). - Decided against assessee.

Summary

Issues:

1. Assessment of penalty under section 271(1)(c) of the Income Tax Act, 1961 for concealment of income.
2. Validity of penalty notice under section 274 r.w.s. 271(1)(c) of the Act.
3. Interpretation of inaccurate particulars in the return of income.

Issue 1: Assessment of Penalty under Section 271(1)(c) of the Income Tax Act:

The case involved the assessee appealing against the penalty order issued under section 271(1)(c) of the Income Tax Act for concealment of income. The Assessing Officer had levied a penalty of &8377;14,17,399 after the assessee failed to offer interest income from mutual funds for taxation in the revised return. The assessee argued that the interest income was inadvertently claimed as exempt and submitted a comparative income computation to rectify the error. However, the Tribunal upheld the penalty, stating that the assessee furnished inaccurate particulars by claiming the interest income as exempt, which would have escaped assessment if not selected for scrutiny.

Issue 2: Validity of Penalty Notice under Section 274 r.w.s. 271(1)(c) of the Act:

The assessee challenged the penalty notice, arguing that it did not specify the grounds for either filing inaccurate particulars or concealment of income. However, the Tribunal found that the assessee had not raised this plea earlier before the authorities, rendering the argument devoid of merit. Citing legal precedents, the Tribunal concluded that the notice issued under section 271(1)(c) of the Act was valid, as the defect in the notice was not pointed out at the initial stage of assessment.

Issue 3: Interpretation of Inaccurate Particulars in the Return of Income:

The Tribunal analyzed the nature of inaccurate particulars in the return of income, emphasizing that the assessee's failure to offer interest income from mutual funds for taxation in the revised return constituted inaccurate particulars. Despite the assessee's awareness of the tax liability on the interest income, claiming it as exempt without valid reasons was considered a deliberate act warranting the penalty under section 271(1)(c) of the Act. The Tribunal rejected the argument that the act was a mere omission or negligence, emphasizing the intentional nature of the misrepresentation.

In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the penalty levied under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars in the return of income.