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Before: Shri Duvvuru RL Reddy & Shri S. Jayaraman
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Madurai, dated 28.01.2019 relevant to the assessment year 2014-15 passed under section 271(1)(c) of the Income Tax Act, 1961 [“Act” in short].
Brief facts of the case are that the assessee filed the original return of income on 29.11.2014 for the assessment year 2014-15, which was revised on the same day. The case was selected for scrutiny and notice under section 143(2) of the Act was issued to the assessee. After considering the submissions of the assessee against statutory notices, the Assessing Officer completed the assessment under section 143(3) of the Act after making various additions.
Subsequently, the Assessing Officer initiated penalty proceedings by issuing notice under section 274 r.w.s. 271(1)(c) of the Act towards concealment of income. After considering the submissions of the assessee as well as facts of the case, the Assessing Officer levied penalty under section 271(1)(c) of the Act of ₹.14,17,399/-.
Against the penalty order, the assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee and facts of the case, the ld. CIT(A) confirmed the penalty levied under section 271(1)(c) of the Act.
On being aggrieved, the assessee is in appeal before the Tribunal against confirmation of penalty levied under section 271(1)(c) of the Act. The ld. Counsel for the assessee has submitted that the assessee has already offered the interest from mutual funds in the financials and the same was also available to the Assessing Officer during the course of assessment. It was further submission that the notice issued under section 271(1)(c) of the Act dated 27.12.2016 does not specify any specific charge and therefore, the penalty initiated under section 271(1)(c) of the Act is bad in law. It was further submission that the assessee has filed the original return of income wherein the interest from mutual fund amounting to ₹.43,28,917/- has been offered to tax. Subsequently, while filing the revised return the assessee, by oversight claimed it as exempt income. It was further submission that when the assessee noticed the error crept-in in the revised return, the time has already passed by for revising it for second time, therefore, in the 1st appearance for assessment, the assessee has submitted a comparative income computation between the original and revised return and also what was being offered before assessment by virtue of the fact that it has inadvertently claimed exemption under section 10 of the Act. Thus, the ld. Counsel for the assessee prayed for deleting the penalty levied under section 271(1)(c) of the Act. On the other hand, the ld. DR strongly supported the orders of authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the Assessing Officer has observed that the assessee has filed the original return on 29.11.2014 which was revised on the same day. In the original return, the assessee had offered a sum of ₹.43,28,917/- being interest on mutual fund for taxation. But, in the revised return this amount was claimed as income from mutual funds as exempt income. The nature of this receipt was interest from mutual funds, which the assessee failed to offer for taxation in the revised return. Moreover, the assessee could not submit any cogent reason for claiming the interest income from mutual funds as exempt. The assessee company is an established corporate which has battery of professionals/ exports for accounting and filing income tax returns. Had the case not been picked up for scrutiny, the interest receipt on mutual funds of ₹.43,28,917/- could not have been brought to tax. Since it is a clear case of filing of inaccurate particulars in the income tax return warranting penalty under section 271(1)(c) of the Act, the Assessing Officer levied penalty. Before the ld. CIT(A), while opposing the penalty levied under section 271(1)(c) of the Act, the assessee strongly relied on the decision of Hon’ble Supreme Court in the case of CIT v. Reliance Petro Products (P) Ltd. (supra) contending that the failure to offer an income for assessment does not amount concealment since the income from mutual fund has been separately disclosed in the accounts under the head “Other Income”. However, by referring to para 8 of the said judgement, wherein, the Hon’ble Supreme Court has held that “….there can be no dispute that everything would depend upon the return filed, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise”, the ld. CIT(A) confirmed the penalty levied under section 271(1)(c) of the Act as admittedly, the assessee has furnished inaccurate particulars by claiming interest from mutual funds as exempted income.
6.1 It is an admitted fact that in the original return, the assessee offered a sum of ₹.43,28,917/- being interest on mutual fund for taxation. But, in the revised return this amount was claimed as income from mutual funds as exempt income. However, the assessee has not furnished any valid reason for claiming the interest income from mutual funds as exempt. Since the nature of the receipt was interest from mutual funds, the receipt of such interest income is liable for taxation. In the revised return, the assessee failed to offer the interest income from mutual fund, which clearly amounts to furnishing of inaccurate particulars. In case the Department has not selected the return filed by the assessee for scrutiny and notice under section 143(2) of the Act was not issued, the above interest income would have escaped assessment. This being so, it is clear that the assessee has furnished inaccurate particulars in the return of income warranting levy of penalty under section 271(1)(c) of the Act.
6.2 In the grounds of appeal before the Tribunal, the assessee has challenged the issuance of penalty notice under section 274 r.w.s. 271(1)(c) of the Act as not specifying either for filing of inaccurate particulars or concealment of income. On perusal of the paper book filed by the assessee, we find that the penalty notice was issued on the assessee on 27.12.2016 and the assessee has filed reply vide letter dated 17.01.2017 as well as letter dated 30.06.2017. However, at no earlier point of time, the assessee had raised the plea before the authorities below that on account of the defect in the notice, it was put to prejudice on the ground that the notice issued under section 274 r.w.s. 271(1)(c) of the Act, the Assessing Officer has not specified any specific charge either for furnishing of inaccurate particulars or concealment of income. In view of the factual position, the ground raised by the assessee is devoid of any merits. Our view is duly supported by the decision of the Hon’ble Jurisdictional High Court in the case of Sundaram Finance Ltd. v. ACIT 403 ITR 407, which was subsequently affirmed by the Hon’ble Supreme Court reported in [2018] 99 taxmann.com 152. The Hon’ble Jurisdictional High Court has rejected the additional substantial question of law on the reason that the assessee had at no earlier point of time pointed out the defect in the notice that the notice issued under section 274 r.w.s. 271(1)(c) of the Act did not specifically state the grounds mentioned in section 271(1)(c) of the Act. In this case in hand, there is no such plea raised by the assessee before the Assessing Officer at the initial stage. Hence, the notice issued under section 271(1)(c) of the Act is valid notice and therefore, the ground raised by the assessee is not acceptable.
6.3 By relying upon the decision in the case of Ashok Pai v. CIT 292 ITR 11 (SC), through a written submission dated 04.02.2021, the ld. Counsel for the assessee has raised a plea that mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi” has also no application to the facts of the present case, because it is not a mere omission or negligence. The assessee has very well aware that the interest income from mutual fund is liable for taxation and accordingly filed the original return by offering the income for taxation. But, while filing the revised return, the assessee claimed the interest income as exempt, without any basis or evidence, and thus, the act of the assessee cannot be held as mere omission or negligence. Under the above facts and circumstances, we sustain the penalty levied under section 271(1)(c) of the Act and confirmed by the ld. CIT(A).
In the result, the appeal filed by the assessee is dismissed. Order pronounced on the 31st August, 2021 in Chennai.