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Facts
The assessee, a non-resident, did not file an income tax return for AY 2013-14. The case was reopened under Section 148 due to information about transactions and TDS. The assessee later filed a return, offered income, and paid taxes. The Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(C) for concealment of income.
Held
The Tribunal held that the penalty was wrongly levied. The short deduction of tax at source was an error by the deductor, not the assessee. The assessee, being a non-resident with only investment income and TDS, was not required to file a return under Section 115G. The assessee cooperated and paid taxes promptly upon detection.
Key Issues
Whether penalty under Section 271(1)(C) is leviable when the shortfall in tax was due to an error by the tax deductor and not the assessee, and the assessee subsequently cooperated and paid the due taxes.
Sections Cited
271(1)(C), 148, 147, 139, 115G, 194A, 195, 143(2)
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI SUNIL KUMAR SINGH, JM
This appeal is filed by Mrs Rita Hemchand Gandhi [the assessee] against the appellate order passed by The Commissioner Of Income Tax (Appeals) – 56, Mumbai (the learned CIT – A) dated 8/11/2023 for assessment year 2013 – 14 wherein the penalty levied by The Income Tax
2. Assessee aggrieved with the same has preferred this appeal raising following grounds:-
“1. On the facts and circumstances of the case, CIT(A) erred in confirming the Penalty levied u/s.271(1)(c) of the Act of Rs.1,50,606.
On the facts and circumstances of the case, the penalty levied u/s.271(1)(c) on basis of the assessment order which itself was bad in law since the AO had no power to issue Notice u/s.148 during the financial year 2020-21 and order passed in pursuant to the said notice is bad in law and hence penalty order is also bad in law.
3. a) On the facts and circumstances of the case and in law, the assessment order passed u/s.147 is bad in law since order dated 27/03/2022 is digitally signed only on 30/03/2022 & DIN was taken on unsigned order, which is not permitted & hence order is bad in law.
b) The penalty order passed u/s.271(1)(c) on basis of such assessment order is void ab-initio.
5. a) On the facts and circumstances of the case and in law, there is no concealment of Particulars of Income as the full particulars of Income were available before the department in the Form 26AS and AIS.
b) The appellant submits that no addition has been made in the Return of Income filed, therefore, no penalty can be levied. c) The AO erred in not considering several judicial pronouncements where it has been held that Bonafide mistakes do not constitute the concealment of Income.”
Brief facts of the case shows that assessee is a non- resident and has not filed any return of income for assessment year 2013 – 14. The case of the assessee was reopened by issue of notice under section 148 of the act on 30/3/2021 after recording of the reasons and obtaining necessary approval. The information was received from AIMS module that assessee has made various transaction of ₹ 19,722,528 on which tax has been deducted at source
During penalty proceedings assessee submitted a reply stating that she is a non-resident Indian settled in UAE since 1978 and possesses tax residency certificate of UAE. For impugned assessment year only source of income was interest on investment. As per The Double Taxation Avoidance Agreement the rate of tax on interest income is 12.5% the tax deduction at source was required to be done from the interest income at the rate of 12.5% but the deductor deducted tax at source on interest income at
The learned assessing officer was of the view that as assessee has not filed the return of income under section 139 of the act despite having taxable income and having interest income from various investments, assessee was well aware that she is having interest income which is above the maximum taxable income for filing of return of income therefore, the assessee has not only made default of not filing the return of income but also not paid the due taxes on her total income earned during the year. Thus, The assessee has willfully evaded the tax by choosing not filing of return of income. Had the revenue not reopened the case, the total income would have remained untaxed. Therefore he is satisfied that any person who has concealed the particulars of income or furnished inaccurate particulars of such income, the penalty is leviable under section 271 (1) (C) of the act. Therefore he
Assessee aggrieved with the penalty order preferred an appeal before the learned CIT – A who dismissed the appeal holding that the income has been brought to tax by the timely action of the learned assessing officer by selecting the case for scrutiny after analyzingfacts are available from non-filers database. If the AO would not have done any scrutiny, there was no way to bring this transaction to tax. Therefore it is clear that the assessee has no intention to declare her true income. Accordingly he held that the learned assessing officer has recorded a categorical finding that he was satisfied that assessee has concealed true particulars of income and is liable for penalty under section 271(1) ( c) read with section 274 of the act. He supported his appellate order by the decision of the honourable Supreme Court in case of Mak Datta private limited versus CIT (2013) 38 taxmann.com 448 (SC). Accordingly the penalty order was confirmed.
Assessee aggrieved with appellate order preferred this appeal before us. The learned authorized representative Shri Rajesh Shah, CA, submitted a paper book containing 14 pages. He referred to form number 26 AS and submitted that only dispute is with respect to interest
He submits that all the details are available with the assessing officer as all the details are exhibited in form number 26 AES there is no error in the income stated in that form. He submitted that inadvertently as the deduct has not deducted proper tax the notice was issued to the assessee. He referred to the provisions of section 115G of the act which provides that return of income is not required to be filed in case of non-resident under section 139 (1) of the act if the income is consisting only of investment income and also tax deductible at source has
The learned departmental representative vehemently supported the order of the learned lower authorities and submitted that it was found on the basis of a nonfilers detail available with the lower authority that assessee has on income and has not filed her return of income. On the examination of the return of income it was found that assessee has income on which lesser tax has been deducted. Had the revenue not invoke the provisions of reopening of the assessment, this income would have gone taxed at a lower rate and therefore the penalty has rightly been levied for furnishing inaccurate particulars of income.
We have carefully considered the rival contention and perused the orders of the lower authorities. In this case there is no dispute that assessee has earned income from
in view of above facts and judicial precedents, we find that the learned lower authorities are incorrect in imposing penalty under section 271 (1) (C) of the act of ₹ 150,606/–. The learned AO is directed to delete the same
In the result appeal of the assessee is allowed.
Order pronounced in the open court on 21.06.2024.