Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR
Aforesaid appeal at the instance of the assessee is directed against the order dated 27th February 2015, passed by the learned Commissioner (Appeals)–33, Mumbai, confirming imposition of penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act") for the assessment year 2004–05.
Brief facts are, the assessee an individual filed her return of income for the assessment year under consideration on 15th July 2004,
2 Sheryl Terrance Dalgado declaring total income of ` 91,720. Subsequently, on the basis of information received, the Assessing Officer having found that the assessee during the relevant previous year, had received an amount of US$ 41,752 from first clearing LLC, Verginia, USA, which was not offered as income in the return of income filed by the assessee, re– opened the assessment under section 147 of the Act. During the assessment proceedings, when this fact was brought to the notice of the assessee she explained that in the year 1998, when the assessee along with her husband, a Marine Engineer, was travelling on his job assignment they met with an accident and her husband was in a critical condition and was hospitalized for a prolonged period. The assessee after recuperating lodged an insurance claim against her husband’s employer. Ultimately, in on an out of court settlement the company agreed to settle the claim by paying Canadian dollar of 20,37,000. After settling hospitalization charges, legal and other expenses, the balance amount of US $ 7,03,209.56 was invested in an asset management company and assessee received interest. She explained that since the interest amount was received in U.S.A., assessee being under a bonafide impression that such interest income received in USA is to be offered as income in USA had filed her return of income in USA offering such income to tax. However, when the Assessing Officer appraised the assessee that as per the provisions of 3 Sheryl Terrance Dalgado the Act, assessee being a resident of India has to offer such income to tax in India, the assessee filed a revised computation of income offering interest income received to tax. The Assessing Officer accordingly completed the assessment. However, alleging that by not showing interest income the assessee has furnished inaccurate particulars of income Assessing Officer initiated proceedings for imposition of penalty and ultimately passed an order imposing penalty of ` 5,38,193 under section 271(1)(c). Though, the assessee challenged imposition of penalty by filing an appeal before the learned Commissioner (Appeals), he also confirmed the penalty imposed.
Learned Authorised Representative reiterating the stand taken before the Departmental Authorities submitted, the assessee being under a bona–fide impression that the interest income since was received in USA had offered it to tax in USA, however, once she was made aware by the Assessing Officer during the assessment proceedings that such amount is legally taxable in India, she accepted her liability and offered the amount to tax in the course of assessment proceedings itself. He, therefore submitted, there is no intention on the part of the assessee to either furnish inaccurate particulars of income or conceal the particulars of income. He, therefore, pleaded for deleting the penalty.
4 Sheryl Terrance Dalgado
Learned Departmental Representative relied upon the order of the Assessing Officer and learned Commissioner (Appeals).
We have considered the submissions of the parties and perused the material available on record. There is no dispute that the interest income which was offered to tax arises out of an investment made by the assessee in USA and the interest income on such investment was also received by the assessee in USA. From the stage of assessment proceedings itself, the assessee has taken a consistent stand that under a bona–fide impression that interest income received by the assessee in USA is taxable in USA had filed return of income in USA offering the interest amount of tax. The aforesaid factual position has not been disputed by the Departmental Authorities. It is also evident, in the course of assessment proceedings once, the assessee was made aware of the fact that interest income is taxable in India she accepted her liability and filed a revised computation offering interest income to tax. Thus, explanation of the assessee that non–disclosure of interest income in the return of income filed in India is under a bona–fide impression that such income received in USA is also taxable in USA, appears to be plausible, hence, in our view, is a valid explanation in terms of Explanation–1 to section 271(1)(c) r/w section 273B of the Act. That being the case, imposition of penalty in the instant case is not justified. Accordingly, we delete the same.
5 Sheryl Terrance Dalgado
In the result, appeal stands allowed. Order pronounced in the open Court on 18.11.2016