SHRI DINESH KUMAR AGARWAL,GUWAHATI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, GUWAHATI

Assessment Year: 2015-2016 Shri Dinesh Kumar Agarwal 2. Though the assessee has taken five grounds of appeal, but his grievances revolve around a single issue, namely ld. CIT(Appeals) has erred in confirming the penalty of Rs.1,65,780/- imposed by the ld. Assessing Officer under section 271(1)(c) of the Income Tax Act.

We ourselves gone through the record carefully with the assistance of ld. D.R. and deem it appropriate to decide it like a Assessment Year: 2015-2016 Shri Dinesh Kumar Agarwal first appellate authority, because there is no finding of fact available in the impugned order. The brief facts are that the assessee his filed his return of income on 30.09.2015 showing total income of Rs.49,76,450/-. The assessment order was passed on 08.12.2017 determining the total income of the assessee at Rs.57,87,581/-. The ld. Assessing Officer was of the view that there is a discrepancy in the turnover disclosed by the assessee in the Income Tax Return vis-à-vis available as per Form No. 26AS. In this form, the gross turnover was shown by the contractee at Rs.3,09,15,820/-, whereas the assesee has shown it at Rs.2,69,38,693/-. There was a difference of Rs.39,77,127/-. The ld. Assessing Officer treated this difference as undisclosed turnover and estimated the profit equivalent to the rate disclosed by the assesese on the turnover of Rs.2.69 crores. The ld. Assessing Officer was of the view that the assessee has furnished inaccurate particulars of income. He issued a show-cause notice under section 271(1)(c) read with section 274. In response to this show-cause notice, the assessee has filed a written submission. This submission has been reproduced by the ld. Assessing Officer on pages no. 3 & 4 of the impugned order.

With the assistance of ld. D.R., we have gone through the record carefully and particularly the submission of the assessee reproduced in the penalty order. The assessee worked out how the difference has been reflected. He has demonstrated that the total difference was of Rs.41,41,440/-. This difference is, because the contractee has not made any payment during the period. 3 Assessment Year: 2015-2016 Shri Dinesh Kumar Agarwal Hence it was not recognized by the assessee. The payments have been made in the next financial year and this income has duly been counted in the books in the next year. The assesese further submitted that there may be a difference of opinion about recognition of an item of income but how it is to be construed as concealment of income or filling of inaccurate particulars of income. A perusal of the penalty order would suggest that the ld. Assessing Officer has not recorded any categorical finding whether assessee has submitted inaccurate particulars of income or concealed the income. The ld. Assessing Officer has simply avoided all these mandatory factors of section 271(1)(c) by observing that assessee has evaded tax. It is the established position of law that ld. Assessing Officer has to demonstrate the charge against the assessee for which he wished to impose a penalty upon the assessee. A perusal of the assessment order would reveal that he initiated the penalty for concealment of income but no such finding is discernable in the penalty order.

Apart from the above, event on merit, no penalty is imposable upon the assessee because this computation of income resulting into higher income is only a difference of opinion. The assessee has given an explanation as to why this higher alleged income made by the ld. Assessing Officer was not disclosed by the assessee. This explanation was not found to be false because it has been offered in the next year. The assessee has already suffered double taxation on this estimation of profit on the alleged undisclosed receipts. In view of the above, the assessee 4 Assessment Year: 2015-2016 Shri Dinesh Kumar Agarwal does not deserve to be visited with penalty under section 271(1)(c) of the Act. We allow the appeal of the assessee and delete the penalty.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 30.03.2023.