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TMI Blog2016 (10) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... stt.Year 20012- 13. 2. Solitary grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of ₹ 2,50,000/- imposed by the AO under section 271(1)(c) of the Income Tax Act, 1961. 3. Brief facts of the case are that the assessee is an individual NRI residing in US. He did not file his return of income under section 139 of the Income Tax Act, 1961. The AO got information from AIR wing exhibiting fact that the assessee has deposited a sum of ₹ 12,78,530/- in his saving bank account. Accordingly, he issued a notice under section 148 of the Income Tax Act, on 28.3.2014. In response to the notice under section 148, the assessee filed his income-tax return on 17.6.2014 and declared total income at ₹ 12,78,530/-. This return included a sum of ₹ 12,20,000/- deposited in the saving bank account. The ld.AO has passed an assessment order on 30.6.2014 and determined the taxable income of the assessee equivalent to one declared by him. The ld.AO initiated penalty proceedings under section 271(1)(c) of the Act. He imposed penalty of ₹ 2,50,000/-. The stand of the department was that, had the department not initiated proceedings under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such income or fringe benefits: Explanation 1- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income or such person as a result thereof shall, for the purposes of Clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. Explanation 2.-Where the source of any receipt, deposit, outgoing or investment in any assessment year is claimed by any person to be an amount which had been added i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsuance of a notice under section 148.] 6. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied, that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. As far as the quantification of the penalty is concerned, the penalty imposed under this section can range in between 100% to 300% of the tax sought to be evaded by the assessee, as a result of such concealment of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation-1 to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o concealment under s. 271(1)(c) of the Act. In the circumstances, the contention raised on behalf of the Revenue that non-filing of the return of income per se amounts to concealment within the meaning of s. 271(1)(c) of the Act, being contrary to the settled legal position, does not merit acceptance. 12. But the introduction of Expln. 3 to s. 271(1) w.e.f. 1st April, 1976 has changed the law on the point in certain cases. Explanation 3 provides that if a person, who has not hitherto been assessed to tax under the IT Act, 1961 does not file a return of income for an assessment year voluntarily within the normal period of limitation and no notice under s. 142(1) or 148 is issued to him till the expiry of the said period, he will be treated to have concealed his income and penalty will be leviable on him accordingly if he is later found to have had taxable income in that year. Thus, for the purpose of falling within the purview of Expln. 3, firstly, a person should not have been previously assessed (that is, a new assessee); secondly, he should have failed without reasonable cause, to furnish return of income for asst. yr. 1989-90 or any year subsequent thereto within two year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified under sub-s. (1) of s. 153 of the Act is clearly not satisfied. As discussed earlier, the conditions for applicability of Expln. 3 to s. 271(1) are cumulative and each of the conditions has to be established for the purpose of invoking the said provision. In the present case, all the conditions are not cumulatively satisfied. The failure on the part of the petitioner to furnish return of income within the specified period, therefore, cannot be deemed to be concealment within the meaning of the Expln. 3 to s. 271(1)(c) of the Act. In the light of the aforesaid, it is apparent that the case of the petitioner does not fall within the ambit of Expln. 3 to s. 271(1) of the Act and as such, no penalty could be levied on the petitioner under s. 271(1)(c) of the Act for concealment of particulars of his income on the ground that the petitioner had failed to furnish return of income for the year under consideration. The impugned order, therefore, being contrary to the provisions of the Act, cannot be sustained. Insofar as the order passed by the revisional authority is concerned, in the revision application the petitioner has stated that the reason for not appearing in response to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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