T vs. LOGISTICS SERVICES LTD.,MADURAI

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.

In the result, the appeal filed by the assessee is dismissed. Order pronounced on the 31st August, 2021 in Chennai.