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2019 (6) TMI 299 - AT - Income TaxPenalty under s. 271(1)(c) - disallowances u/s.40(a)(ia) and Sec.40A(3) - HELD THAT:- Firstly, the disallowances u/s.40(a)(ia) and Sec.40A(3) are statutory disallowances and there is no dispute about the genuineness of these expenses or that they were unrelated to the business of the Assessee. On such statutory disallowances, there cannot be imposition of penalty, especially when the Assessee had not made claim for deduction of these expenses in a return of income filed. Secondly, there cannot be any penalty on income which is declared in a return of income, on the facts and circumstances of the present case. Penalty u/s.271(1)(c) is imposed for "concealing particulars of income or furnishing inaccurate particulars of income". When an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having "concealed particulars of income or furnished inaccurate particulars of income". See VASAVI SHELTERS VERSUS INCOME-TAX OFFICER, WARD 4(1), BANGALORE [2013 (4) TMI 485 - ITAT BANGALORE] The starting point of determining concealment for imposing penalty is the return of income. If the return of income declares income which is ultimately brought to tax there can be no complaint by the revenue that the Assessee is guilty of "concealing particulars of income or furnishing inaccurate particulars of income. The decision of the Tribunal in the case of Vasavi Shelters [2013 (4) TMI 485 - ITAT BANGALORE] supports the plea of assessee in this regard. Non specification of charge - Also the show cause notice issued by the AO before imposing penalty does not specify the charge against the assessee for which the penalty is sought to be imposed viz., as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. In the circumstances, the decision of Manjunatha Cotton & Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] will apply and imposition of penalty has to be held to be not sustainable - Decided in favour of assessee.
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