2023 (2) TMI 964 - AT - Income Tax

Penalty u/s 271(1)(c) - non filler of income tax return - Assessee has not filed the return u/s. 139 but filed the return in consequence to the notice issued u/s. 148 - HELD THAT - Had the AO not issued notice u/s. 148, the assessee would not have filed the return of income, especially considering the past conduct of the assessee and therefore, it is a clear case of concealment of income as per Explanation 3 to section 271(1)(c) of the I.T. Act. Therefore, penalty in our opinion was rightly levied by the AO and sustained by the ld.CIT(A). AO has levied penalty for both concealment of income and furnishing of inaccurate particulars of income which he could not have done and therefore, the notice being defective such penalty should be cancelled - Merely for non-specifying in the notice as to under which limb the penalty is levied i.e., for concealment of income or furnishing inaccurate particular of income thereof, the penalty cannot be cancelled especially when the assessee who is a non-filer was put to notice which he has understood and has replied to such notice issued by the AO. In the light of the above discussion, we uphold the order of the ld.CIT(A) in sustaining the penalty levied by the AO. - Decided against assessee.

Summary

Issues Involved:
1. Whether the penalty under section 271(1)(c) of the Income Tax Act is justified.
2. Whether the notice issued under section 274 r.w.s. 271(1)(c) of the Income Tax Act was defective.
3. Whether the assessee's failure to file a return of income under section 139 constitutes concealment of income.

Detailed Analysis:

1. Justification of Penalty under Section 271(1)(c):
The primary issue revolves around the penalty levied under section 271(1)(c) for concealment of income. The assessee failed to file a return of income for AY 2012-13 and only filed it after a notice under section 148 was issued. The Assessing Officer (AO) accepted the returned income but initiated penalty proceedings, arguing that the assessee had concealed particulars of income. The CIT(A) upheld the penalty, noting that the assessee did not file the return under section 139 and did not provide a bona fide explanation. The Tribunal also upheld the penalty, citing Explanation 3 to section 271(1)(c), which deems the failure to file a return as concealment of income.

2. Defectiveness of Notice under Section 274 r.w.s. 271(1)(c):
The assessee argued that the notice issued under section 274 r.w.s. 271(1)(c) was defective because it did not specify whether the penalty was for concealment of income or for furnishing inaccurate particulars. The Tribunal rejected this argument, referencing the AP High Court's decision in CIT vs. Chandulal, which held that a notice is not rendered invalid merely because the inappropriate portions were not struck off. The Tribunal emphasized that the assessee understood the nature of the offence and responded accordingly, thus fulfilling the requirement of natural justice.

3. Concealment of Income Due to Failure to File Return:
The Tribunal noted that the assessee was a non-filer and only filed the return after receiving a notice under section 148. The Tribunal held that the assessee's failure to file a return under section 139, coupled with the filing of the return only after the notice, constituted concealment of income under Explanation 3 to section 271(1)(c). This explanation deems the failure to file a return within the specified period as concealment of income, thereby justifying the penalty.

Conclusion:
The Tribunal dismissed the appeals, upholding the penalties levied by the AO and sustained by the CIT(A). The Tribunal concluded that the penalty was justified under section 271(1)(c) due to the assessee's failure to file a return, which constituted concealment of income. The Tribunal also ruled that the notice issued under section 274 r.w.s. 271(1)(c) was not defective, as the assessee understood the nature of the offence and responded appropriately.