SHRI VINODKUMAR SHARMA,,VADODARA vs. THE INCOME TAX OFFICER, WARD-3(2),, VADODARA

Sole grievance of the assessee is that the ld.CIT(A) has erred in confirming penalty of Rs.1,02,800/- imposed by the AO under section 271(1)(c) of the Income Tax Act.

Brief facts of the case are that is an individual. He has filed return of income on 25.3.2011 declaring total income at Rs.2,83,880/-. On scrutiny of the accounts, it revealed to the AO that the assessee was

The ld.AO thereafter initiated penalty proceedings for concealment of income. However, in the show cause notice, issued under section 274 read with section 271(1)(c) of the Act, he has mentioned both the expressions for visiting the assessee with penalty i.e. for concealment of income or furnishing of inaccurate particulars. In the penalty order available on page no.14 of the paper book, the ld.AO observed that penalty was initiated for concealment of income, but is being imposed for furnishing inaccurate particulars. Appeal to the CIT(A) did not bring any relief to the assessee.

With the assistance of the ld.representatives, we have gone through the record carefully. A perusal of penalty order would indicate that the ld.AO has observed that the assessee has admitted qua a fact that he has furnished inaccurate particulars. He made reference to the assessment order. We have perused the assessment order. The assessee has nowhere admitted that he has furnished inaccurate particulars. What the assessee has admitted is that, in case the expenses are partly disallowed, then he did not dispute. It could not be construed that the assessee has admitted allegations that he has furnished inaccurate particulars. The AO has nowhere brought any material or reasoning for harbouring this plea. The only question is that, out of total expenditure claimed by the assessee, partly not accepted by the AO. His explanation qua the expenditure was not found to be false. The assessee could not substantiate his claim of expenditure with help of evidence. In these circumstances penalty upon the assessee cannot be imposed with help of Explanation 1 to section 271(1)(c) of the Act. If the AO was able to demonstrate that the explanation of the expenditure given by the assessee was false, then his case can be appreciated. Taking into consideration all these facts and circumstances, we are of the view that penalty is not imposable upon the assessee. We accordingly allow the appeal of the assessee and delete impugned penalty.

In the result, appeal of the assessee is allowed. Pronounced in the Open Court on 30th April, 2019.