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2019 (7) TMI 1489 - AT - Income TaxPenalty u/s 271(1)(c) - non disclosure of interest income - in these assessment years the assessee deposited the tax on interest income at the time of filing of returns of income in response to the notices issued under section 148 - HELD THAT - The explanation of the assessee for not depositing the tax earlier is, the time limit for re opening the assessment even by the Department for these assessment years was not available, hence, the assessee could not have paid the tax for these assessment years. It is relevant to observe, the time limit to re assess the income arising in foreign country by issuing notice under section 148 of the Act was extended to 16 years by virtue of introduction of section 149(1)(c) of the Act by Finance Act, 2012, w.e.f. 1st July 2012. Thus, with introduction of the aforesaid provision the Assessing Officer became empowered to re open the assessment for the impugned assessment years. Keeping in view the aforesaid facts, the assessee s explanation with regard to its inability to deposit the tax for the impugned assessment years earlier needs to be examined. Moreover, the assessee has filed additional ground challenging the validity of the penalty proceedings. Considering the fact that the issue raised in the additional ground is a purely legal issue going to the root of the matter, we are inclined to admit the additional ground in all these appeals. However, since, the issue raised in the additional ground is raised for the first time before us and the assessee had not raised it before learned Commissioner (Appeals). Therefore, in all fairness, the issue raised in the additional ground needs to be restored to the learned Commissioner (Appeals) for adjudication. Even, in our view, the issue relating to merits of imposition of penalty also requires fresh adjudication in the light of the argument made by the learned Authorised Representative before us.
Issues:
Challenging penalty under section 271(1)(c) for AY 2000-01, 2001-02, and 2002-03. Analysis: The appeals were filed by the assessee against penalty orders for three assessment years, confirming penalties under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer treated interest income from a foreign bank account as unexplained cash credit, initiating penalty proceedings. The assessee argued that the deposits were from explained sources and the non-disclosure was due to oversight. The assessee voluntarily offered the income in subsequent years, paying taxes and filing revised returns. The penalty was imposed despite explanations, leading to appeals. The learned Authorised Representative contended that the penalty orders were invalid as the show cause notices did not specify the grounds for penalty imposition. They sought to raise additional grounds challenging the validity of the penalty proceedings, which were not raised before the first appellate authority. The Departmental Representative supported the Commissioner's observations but agreed to restore the legal issue raised by the assessee for fresh adjudication. Upon considering the submissions and facts, it was noted that the assessee had a foreign bank account with interest income not initially declared. The revised returns filed later included the interest income, albeit reduced by the Assessing Officer. The Department did not dispute the source of deposits. Comparisons were drawn with a previous year where penalty was deleted due to bona fide reasons for non-disclosure. The time limit for reopening assessments was a key factor in the delayed tax payment. With a legal issue raised for the first time, the Tribunal admitted the additional ground and decided to restore all issues to the Commissioner for fresh adjudication, providing the assessee with a fair opportunity. In conclusion, the appeals were allowed for statistical purposes, and all issues were remanded to the Commissioner for reconsideration after granting the assessee a proper hearing. Order pronounced on 26.07.2019.
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