SRI BROJA MOHAN THAKUR ,KOLKATA vs. DCIT (IT) - 1(1), KOLKATA , KOLKATA

The only issue is to be decided as to whether the CIT(A) is justified in confirming the action of AO in imposing penalty u/s 271(1)(c) of the Act.

Heard both parties and perused the material available on record. Brief facts relating to the issue are that the assessee is an individual and derives income from salary and income from other sources. According to AO, the assessee received gross salary of Rs.6,68,246/- from his employer “Varun Shipping Company Limited” and tax was deducted at source. But in computing the total income, the assessee excluded Rs.4,36,836/- from such gross salary with the remark “money received in foreign exchange” (outside India). The AO held that the assessee did not refer to any provision in the I.T.Act for such exclusion and stated his residential status as resident in the relevant column in the return of income. Thereby, the (ASSESSMENT YEAR-1999-2000) AO initiated penalty proceedings for excluding the above said amount in the computation of income. In the penalty proceedings in explanation, the assessee appeared alongwith relevant documents. On an examination of said document by AO and opined that the assessee is not entitled to claim exemption on foreign exchange and imposed penalty of Rs.1,37,052/- on the charge that the assessee concealed the income by claiming exemption of Rs.4,36,836/-. The CIT(A) confirmed the order of AO in imposing penalty.

Before us, the contention of the Ld.AR was that it is not a false claim infact it is a wrong claim. The assessee did not conceal any income as every material regarding the salary earned in India as well as foreign exchange of the assessee was before the AO in the assessment proceedings. The penalty imposed and confirmed by the CIT(A) is not maintainable and it is not a false claim. Ld.DR supported the order of both the authorities below. On perusal of the assessment order, it appears that the assessee shown the gross salary of Rs.6,68,246/- which is inclusive of salary received in foreign currency. Therefore, it is clear that every detail in respect of gross salary was before the AO that rightly pointed out by the Ld.AR and it was a wrong claim but not a false claim nor the assessee concealed any income in the return of income. In our opinion, imposition of penalty on wrong claim is not maintainable as there was no concealment of income by the assessee on which charge the AO proceeded to impose penalty u/s 271(1)(c) of the Act. Therefore, imposition of penalty as confirmed by the CIT(A) is cancelled. Thus, grounds raised by the assessee are allowed.