2023 (3) TMI 93 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - furnishing inaccurate particulars of income - Non disclosure of professional receipt - HELD THAT - It is undisputed fact that assessee deposited tax on impugned professional receipt of Rs. 5 Lakh i.e. after issuance of notice under section 142(1) where explanation with regard to difference in the amount of professional income declared viz-a-viz income reported in Form-26AS was sought. The assessee in reply explained that the amount was omitted to be included in the computation of income by the accountant due to oversight. However, such human error was rectified on realization of mistake by depositing due taxes. As during the year the assessee has offered taxable income of Rs. 4,03,78,080/- on account of professional receipt, STCG and other receipts. Thus, considering the same, we find force in the contention of the assessee that impugned receipt of Rs 5 lakh was omitted due to oversight without being any mala fide intention. AO only on the basis of presumption and surmises held that the assessee offered income only after same has been identified by the department. Such presumption of the AO is not based on any material. Therefore, in this fact and circumstances it cannot be held that the assessee has concealed or furnished inaccurate particulars of his income and liable to penalty under section 271(1)(c) of the Act. As decided in PCIT vs. Gujarat State Electricity Corporation Ltd. 2022 (10) TMI 1052 - GUJARAT HIGH COURT reported where held that in no penalty can be imposed where the assessee made bona fide mistake and corrected the same on realization of mistake. There was human error committed by the accountant of the assessee due to which impugned professional receipt of Rs. 5 lakh omitted to be included in the total income. Thus, there was no willful attempt from the assessee to conceal his income. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

Issue: Levy of Penalty under Section 271(1)(c) of the Act
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) confirming the penalty under section 271(1)(c) of the Act for the Assessment Year 2015-16. The assessee, engaged in advocacy, declared income but omitted a professional receipt of Rs. 5 lakh due to an accountant's oversight. The AO initiated penalty proceedings, contending that the assessee concealed income. The assessee argued it was a bona fide mistake rectified promptly. The AO, however, imposed a penalty of Rs. 1,54,500.

Analysis:
The AO found the undisclosed income was offered only after departmental detection, implying potential tax evasion. The AO emphasized the duty to disclose true income and the absence of mens rea, citing the explanation to section 271(1)(c) which deems any addition to total income as concealment unless proven otherwise. The AO referred to CBDT circulars and judicial pronouncements to justify the penalty. The CIT(A) upheld the penalty, leading to the appeal.

Judicial Precedents:
The ITAT Member referred to the Madhya Pradesh High Court's ruling emphasizing the revenue's burden to prove concealment or inaccurate particulars, with the burden shifting to the assessee based on explanations provided. The Supreme Court's confirmation of this principle was also cited.

Conclusion:
The ITAT Member considered the factual background, noting the accountant's human error in omitting the receipt. The assessee rectified the mistake promptly upon realization, with no evidence of willful concealment. Citing a Gujarat High Court case, the Member ruled in favor of the assessee, deeming the explanation bona fide and setting aside the penalty. The appeal was allowed, directing deletion of the penalty imposed.