WILIAM WADHWA,NEW DELHI vs. ACIT, NEW DELHI

PER SHRI K.N. CHARY, JUDICIAL MEMBER

1. “On the facts and circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) [CIT(A)] confirming the penalty of Rs. 1,31,450/- levied under section 271(1)(c) by the AO, is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the Ld. CIT (A) has erred both on facts and in law in confirming the penalty u/s 271(1)(c ) amounting to Rs. 1,31,450/- levied by the AO on account of remittance from US.

3. On the facts and circumstances of the case, the Ld. CIT (A) has erred both on facts and in law in confirming the penalty rejecting the contention of the assessee that the non-inclusion of said amount in the income was on account of bonafide belief of the assessee as she was a non-resident in earlier year, as such the said amount was not taxable in those years.

4. On the facts and circumstances of the case, the Ld. CIT (A) has erred in confirming the penalty despite the fact that there is neither concealment nor furnishing of inaccurate particulars of income.

5. On the facts and circumstances of the case, the Ld. CIT (A) has erred both on facts and in law in confirming penalty u/s 271(1)(c ) amounting to Rs. 1,31,450/- despite the fact that the omission to include the amount of remittance was a bonafide mistake on the part of the assessee without there being any deliberate intention to furnish inaccurate particulars.

6. On the facts and circumstances of the case, the Ld. CIT (A) has erred in confirming penalty u/s 271(1)(c ) as no finding has been given on merit regarding concealment in the order passed by the AO.

7. On the facts and circumstances of the case, the Ld. CIT (A) has erred in ignoring the fact that penalty proceedings are independent proceedings and as such mere addition made in assessment does not tantamount to concealment of income or furnishing of inaccurate particulars.

.”

2. Briefly stated facts are that the assessee was in profession of teaching Statistics and Economics, and was also associated with a renowned NGO “Pratham” in India, she went to USA every year to teach in University of California and was a non-resident till the year 2002-03, after which she shifted to India. Till such time she was regularly filing her return of income in USA and was duly assessed to tax. However, after coming to India she was not aware of her income which now became taxable in India. For the AY 2008-09 she filed her return of income on 15.10.2008 declaring a total income of Rs. 29,28,019/-. It was processed u/s 143(3)(1) of the Income Tax Act, 1961 (for short called as the ‘Act’), thereafter on receiving the information that the assessee received foreign remittance in US Dollars from USA and the said amount was not declared in the return of income, AO reopened the assessment and completed by order dated 18.12.2012 disallowing 50% of other expenses to a tune of Rs. 5,52,310/-.

Simultaneously AO initiated proceedings u/s 271(1)(c ) of the Act and concluded them by order dated 26.06.2013 with the levy of penalty of Rs. 1,31,454/-. Appeal preferred by the assessee was dismissed by the Ld. CIT (A) by way of impugned order holding that since the assessee failed to discharge her duty of disclosing the true and full particulars of income, penalty is sustainable.

Hence, this appeal is preferred by the assessee.

5899 to 5901/Del/2014 a coordinate bench of this Tribunal had taken a view that it is not a fit case for levy of penalty though it is a fit case for making addition. The observations of the coordinate bench of this Tribunal vide paragraph no. 13 are relevant for the disposal of this matter and those are as follows:

“13. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee was a non- resident till the AY 2002-03, thereafter she shifted to India. The assessee was earning honorarioum from the University of California, Irvine as there was a treaty between the USA and the India, the amount so received by the assessee was not taxable in USA. The assessee was under a bonafide belief that the income earned in USA was exempt under DTAA between USA and India and this fact was disclosed in Form No. 1040NR for the year 2005 comprising the Income Tax Return filed by US Non-Resident Alien. From the aforesaid facts it appears that there was no malafide intention of the asessee to either conceal any income or to furnish inaccurate particulars of income because the amount received as honorarium was disclosed by the assessee and due taxes was paid when it was pointed out that the said amount i.e. foreign remittance in USD received from USA was taxable. In the present case, the AO also made the addition by disallowing 50% of the expenses claimed by the assessee on account of her visit to University of California. The said disallowance was purely on adhoc basis, so it cannot be said that the assessee furnished inaccurate particulars of her income or concealed the income. In my opinion the present case can be a good case or making the addition but not for levying the penalty u/s 271(1)(c ) of the Act. I, therefore, considering the peculiar facts of this case deem it appropriate to delete the penalty levied by the AO and sustained by the Ld. CIT (A).”

We, therefore, while respectfully following the same, find that the penalty cannot be sustained. We, therefore, direct the AO to delete the same.

Order pronounced in the open court on 09.10.2017