Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 993 - AT - Income TaxPenalty u/s 271(1)(c) - surrender made by the assessee in the survey proceedings prior to filing of the return of income u/s 139(1) - HELD THAT:- As per the provisions of section 271(1)(c), only when an amount is added or disallowed in computing the total income of the assessee as a result thereof shall for the purpose of clause (c) of section 271(1) be deemed to represent income in respect of which particulars have been concealed or inaccurate particulars have been furnished. Since the Explanation 5 or 5A of section 271(1)(c) cannot be pressed into service in this case, therefore, any surrender made by the assessee in the survey proceedings prior to filing of the return of income u/s 139(1) would not lead to the conclusion that disclosure of the said income in the return of income filed u/s 139(1) represents the income in respect of which inaccurate particulars have been furnished or particulars have been concealed. Penalty levied by the AO in respect of the said amount declared in the return of income filed under section 139(1) is not sustainable in law and the same is deleted. Addition it is pertinent to note that the AO has rejected the books of account by invoking the provisions of section 145(3) and thereafter estimated the income of the assessee by applying GP rate at 2% as against 1.92%. Thus to the extent of sales declared by the assessee in the books of account and in the return of income filed under section 139(1), any trading addition made after rejection of books of account by estimating the income would not attract the penalty under section 271(1)(c) and particularly in the case of the assessee when the income declared by the assessee represents GP rate at 1.92% and the AO has estimated the income by applying GP at 2%. Extent of the addition by applying GP at 2% on the declared sales, same will not be regarded as furnishing inaccurate particulars of income or concealment of particulars of income to attract the penal provision under section 271(1)(c). Accordingly, the penalty to the extent of the trading addition made in respect of the declared sales is deleted. Addition made by the AO in respect of unaccounted sales by applying GP at 2%, since it is the case of undisclosed sales by the assessee and, therefore, the addition on the said amount will fall in the category of concealment of particulars of income and consequently the penalty levied under section 271(1)(c) in respect of the addition is sustained. AO is directed to re-compute the penalty in respect of the addition on account of unaccounted sales. Salary expenditure which was originally disallowed by the AO of ₹ 24,000/- but the ld. CIT (A) has restricted the same to ₹ 4,000/-, this is only a case of non-acceptance of the claim of the assessee whereas it is not a bogus claim of salary expenditure. The assessee has claimed the salary @ ₹ 12,000/- per month whereas the CIT (A) in quantum appeal has allowed the salary @ ₹ 10,000/- per month. Therefore, in such a situation when the claim and particulars were already declared by the assessee in the return of income, then disallowance of part of the claim would not attract the penalty provision under section 271(1)(c). Miscellaneous expenditures were disallowed on estimated basis of ₹ 6,400/- as per the order of the ld. CIT (A) in quantum proceedings, therefore, the disallowance sustained on estimation basis would not amount to furnishing of inaccurate particulars of income or concealment of particulars of income. Accordingly, the penalty levied u/s 271(1)(c) in respect of the disallowance of salary and miscellaneous expenditure is deleted. The assessee has also raised a legal ground regarding the validity of initiation of penalty proceedings under section 271(1)(c) for want of specifying the limb and default of the assessee whether it is for furnishing of inaccurate particulars of income or concealment of particulars of income. Though A/R as well as the ld. D/R has seriously contested this issue, however, in view of the finding on the merits of the appeal, I do not propose to take up this issue for adjudication. Hence the same is dismissed being infructuous. Appeal of the assessee is partly allowed.
|