2011 (2) TMI 156 - CALCUTTA HIGH COURT

Penalty u/s 271(1)(c) - Explanation - whether explanation offered by assessee is afterthought - Nursing Home - On information and materials having been collected from two Nursing Homes the Assessing Officer found that a large number of cases handled by the assessee were not shown in Form 3(c) and in some cases payment receipts submitted by the appellant/assessee show amount lesser than actual amounts paid by the respective patients. - Held that:- the assessee explained that he completely relied on Accountant/Advisor who is the new comer in this profession. The Accountant in discharge of his duty did not record and register receipt of income in the Register maintained under Form (c). The said Accountant had filed an affidavit and accepted his lapses and failure. Therefore, there has been some explanation, but all the fora below did not accept the said affidavit on the ground of afterthought. - The findings of afterthought of all the fora below is perverse and without having any material whatsoever. This conclusion of all the authorities below is based on conjecture and surmise. The question of afterthought will arise when an explanation was asked to be given earlier but not given at the appropriate time and after having realized the mistake any document or affidavit is created or prepared subsequently it can be said to be an instance of afterthought.

Explanation is required at the stage of initiation of the penalty proceedings, not at the time of the assessment made on discovery of concealment of income. On discovery of concealment of income the Assessing Officer is to collect materials and to add the amount of concealed income in the assessment. At that stage no explanation is required as to why there has been concealment of income. - Matter remanded back for fresh consideration.