10 June 2024


Judgments

Income Tax Appellate Tribunal

Rameshchandra P. Bhatt vs. Deputy Commissioner of Income Tax

MANU/IB/0067/2023

22.02.2023

Direct Taxation

In the penalty proceeding, the burden lies on the revenue to prove that the assessee has concealed income or furnished inaccurate particular of income

The captioned appeal has been filed at the instance of the assessee against the order of the Learned Commissioner of Income Tax (Appeals), arising in the matter of penalty order passed under Section 271(1)(c) of the Income Tax Act, 1961 relevant to the Assessment Year 2015-16. The only issue raised by the assessee is that, the learned CIT(A) erred in confirming the levy of penalty under Section 271(1)(c) of the Act.

Admittedly, the assessee not offered income on professional receipt of Rs. 5 lakh in the original return filed under Section 139 of the Act. The income was offered during the assessment proceedings by filing a letter in response to notice issued under Section 142(1) of the Act and assessment was accordingly completed by the AO after making addition of impugned amount. Subsequently, the AO initiated penalty proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars income and finally levied the penalty which was also confirmed by the learned CIT(A).

It is a settled position of law that, the penalty proceedings are different from assessment proceedings. In the penalty proceeding, the burden lies on the revenue to prove that the assessee has concealed income or furnished inaccurate particular of income.

it is undisputed fact that, assessee deposited tax on impugned professional receipt of Rs. 5 Lakh after issuance of notice under Section 142(1) of the Act 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. The explanation of the assessee was nowhere found to be incorrect by the AO. The AO also has not brought any evidences on record that the assessee willfully not offered the income from impugned professional receipt of Rs. 5 Lakh.

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, 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.

In 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. Gujarat High Court in case of PCIT vs. Gujarat State Electricity Corporation Ltd. held that, 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. The explanation furnished by the assessee in this regard is bona fide and duly substantiated by the affidavit of the accountant. Therefore, AO is directed to delete the penalty. Appeal allowed.

Tags : Penalty Imposition Legality

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