OMPRAKASH B. TIWADI,SOLAPUR vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, SOLAPUR

PDF · subscribers
ITA 1733/PUN/2018Status: DisposedITAT Pune01 August 2019AY 2000-016 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a mere claim that is not sustainable in law does not automatically amount to furnishing inaccurate particulars. The Revenue failed to demonstrate that the assessee had concealed particulars of income or filed inaccurate particulars.

What were the facts?

The assessee initially filed a return declaring a loss. The assessment was later reopened, and the Assessing Officer (AO) determined a higher income. The AO levied a penalty under Section 271(1)(c) for furnishing inaccurate particulars of income related to claimed interest expenses.

What were the issues?

Whether a penalty under Section 271(1)(c) can be levied solely on the basis of a disallowed claim without proving concealment or furnishing of inaccurate particulars. Whether the penalty proceedings were initiated with specific charges.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(1),Section 148,Section 147,Section 274

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

For Appellant: Shri M.K. Kulkarni
For Respondent: Shri M.K. Verma
Hearing: 15.07.2019Pronounced: 01.08.2019

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the order of 1. Commissioner of Income Tax (A) – 9, Pune dated 30.07.2018 for the assessment year 2000-01.

2.

The relevant facts as culled out from the material on record are as under :-

Assessee is an individual having income from share profit, house property and interest income. Assessee filed his return of income for A.Y. 2000-01 declaring loss of Rs.1,18,512/-. The return was initially processed u/s 143(1) of the Act on 25.02.2002. Subsequently, the case

was re-opened by issuing notice u/s 148 of the Act and thereafter

assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order

dt.23.09.2004 and the total income was determined at Rs.3,37,540/-. AO

noted that assessee had claimed interest expenses of Rs.33,232/- in the

revised income as against Rs.5,04,425/- as claimed in the original return

of income. AO noted that the claim of interest of Rs.33,232/- payable to

M/s. S.B. Tiwadi seems to be allowable as against Rs.5,04,425/- which

was claimed with the original return. He therefore concluded that

assessee had furnished inaccurate particulars of income in the original

return of income to the extent of Rs.4,71,203/- (Rs.5,04,435/- -

Rs.33,232/-) of the aforesaid amount and accordingly vide order

dt.18.07.2007 passed u/s 271(1)(c) of the Act levied penalty of

Rs.1,26,900/-. Aggrieved by the order of AO, assessee carried the matter

before Ld.CIT(A), who vide order 30.07.2018 (in appeal No.PN/CIT(A)-

7/490/2014-15) upheld the order of AO. Aggrieved by the order of

Ld.CIT(A), assessee is now before us and has raised the following grounds :

“1. On the facts and in the circumstances of the case and in law and as a result of Hon'ble Tribunal order in ITA/604-A/Pn/2006 in quantum appeal dt. 31-10-2006 the cause for levy of penalty under S. 271(1)(c) of the Act was removed. The penalty levied by A. O. and confirmed by Ld. CIT(A) is not sustainable. The same be quashed.

2.

On the facts and in the circumstances of the case and in law the income finality assessed after giving effect to the Hon'ble Tribunal Order in sustain appeal was Rs. 1,16,010/- then by no stretch of imagination the penalty of Rs. 1,26,896/- cannot be levied by the A. O. which itself is in excess of the assessee income. No proper application of mind is visible of the A. O. the penalty levied be quashed.

3.

On the facts and in the circumstances of the case and in law and perusal of show-cause notice dt. 24-09-2004 issued u/s 274 of the Act itself reveals that there is not specific charge of either 'concealment' or 'furnishing of inaccurate particulars of income". On assessment order also the penalty proceedings have not been initiated for any 'specific charge' which shows "penal proceedings u/s 274 r.w.s. 271(1)(c) are initiated separately" and at the end it says "issue notice for furnishing inaccurate particulars of income". This is contrary to settled law. The penalty levied be quashed.

4.

On the facts and in the circumstances of the case and in law the penalty proceedings completed vide order dt. 18-07-2007 are barred by limitation. The penalty levied is not sustainable. It be quashed.”

3.

Before us, Ld.A.R. submitted that though the assessee has raised

several grounds but all the grounds are inter-connected and the sole

controversy is with respect to levy of penalty u/s 271(1)(c) of the Act.

4.

Before us, Ld.A.R. reiterated the submissions made before AO and

Ld.CIT(A) and further submitted that in the original return of income that

was filed assessee had claimed interest expenses of Rs.4,04,435/- but

subsequently in the return of income filed in response to notice u/s 148

of the Act, assessee had claimed interest of Rs.33,232/-. He further

submitted that during the course of assessment proceedings all the

information and explanations which was called for by the AO were

submitted. He further submitted that there is no material on record which

could demonstrate that the explanation given by the assessee was false or

that the assessee had concealed the particulars of income. He further

submitted that mere making of the claim which is not sustainable in law

and would not amount to furnishing inaccurate particulars of income and

such claim made in the return cannot amount to inaccurate particulars.

He therefore submitted that the penalty be deleted. Ld.DR, on the other

hand, supported the orders of AO and ld.CIT(A).

5.

We have heard the rival submissions and perused the material on

record. The issue in the present ground is with respect to levy of penalty

u/s 271(1)(c) of the Act.

6.

The necessary ingredients for attracting Explanation-1 to Section

271(1)(c) are that: (i) the person fails to offer the explanation, or (ii) he

offers the explanation which is found by the AO or the ld.CIT(A) or the

ld.CIT to be false, or (iii) the person offers 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 have been disclosed by him. If the

case of any assessee falls in any of these three categories, then according

to the deeming provision provided in Explanation-1 to Section 271(1)(c) the

amount added or disallowed in computing the total income shall be

considered as the income in respect of which particulars have been

concealed, for the purposes of clause (c) of Section 271(1), and the penalty

follows. On the other hand, if the assessee is able to offer an explanation,

which is not found by the authorities to be false, and assessee has been

able to prove that such explanation is bona fide and that all the facts

relating to the same have been disclosed by him, then in that case penalty

shall not be imposed.

7.

A case for levy of penalty for concealment of income has to be

evaluated in terms of provisions of Explanation 1 to Section 271(1)(c), as

per which if in relation to any addition in the assessment, the assessee

offers no explanation or offers explanation which is found to be false or is

not able to substitute the explanation and is also not able to prove that the

explanation is bonafide, the addition made would amount to concealment

of particulars, of income. It is well settled that the parameters of judging

the justification for addition made in the assessment case of the assessee

is different from the penalty imposed on account of concealment of income

or filing inaccurate particulars of income and that certain

disallowance/addition could legally be made in the assessment

proceedings on the preponderance of probabilities but no penalty could be

imposed u/s. 271(1)(c) of the Act on the preponderance of probabilities

and Revenue has to prove that the claim of expenses by the assessee was

not genuine or was inflated to reduce its tax liability. Further merely

because additions have confirmed in appeal or no appeal has been filed by

assessee against additions made, it cannot be the sole ground for coming

to the conclusion that assessee has concealed any income. Before us,

Ld.A.R. has given the reasons and submissions have not been

controverted by the Revenue. Further, there is nothing on record to

demonstrate that assessee had filed inaccurate particulars of income or

had concealed the particulars of income. We further find that Hon’ble

Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd.

reported at (2010) 322 ITR 158 (SC) held that a mere making of the claim,

which is not sustainable in law, by itself, will not amount to furnishing

inaccurate particulars regarding the income of the assessee. Such claim

made in the return cannot amount to the inaccurate particulars.

8.

Considering the aforesaid facts and relying on the foresaid judgment

of the Hon’ble Apex Court in the case of CIT vs. Reliance Petro Products

Pvt. Ltd. (supra), we are of the view that in the present case no case for

levy of penalty u/s. 271(1)(c) of the Act has been made out. We thus direct

the deletion of penalty u/s. 271(1)(c) of the Act. Thus, the grounds of

assessee are allowed.

9.

In the result, the appeal of assessee is allowed.

Order pronounced on 1st day of August, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 1st August, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-9, Pune. Pr. CIT-5, Pune. 4. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →