Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (4) TMI 436 - AT - Income TaxPenalty u/s 271(1)(c) - Defective notice - whether the assessee is being visited with penalty for concealment of income or for furnishing of inaccurate particulars of income? - HELD THAT:- Deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations, then the related addition or disallowance in computing the total income of the assessee for the purpose of section 271(1)(c) would be deemed to be representing the income in respect of which inaccurate particulars have been furnished. If examine the facts, then it would reveal that before issuance of notice under Section 148 assessee itself has brought certain errors in its computation of income to the notice of the Department. Therefore, it shows that there is no deliberate attempt at the end of the assessee to withhold the information. Similarly, the Assessing Officer has made ad-hoc disallowance out of trade settlement expenses, advertisement expenses and commission income etc. CIT(A) has already reduced the disallowance out of trade settlement expenses in the quantum proceedings. Thus, considering the explanation of the assessee, more so in the light of failure of the AO to record a categorical finding as to whether the assessee is being visited with penalty for concealment of income or for furnishing inaccurate particulars of income, assessee does not deserve to be visited with penalty. The penalty proceedings were initiated for furnishing of inaccurate particulars of income. In the show-cause notice, the AO has used both the options i.e. for concealment of income or for furnishing inaccurate particulars of income. So far as the show-cause notice is concerned, this defect is not fatal to the proceedings in view of the judgment of Hon’ble jurisdictional High Court in the case of Snita Transport P. Ltd. Vs. ACIT [2012 (12) TMI 981 - HIGH COURT OF GUJARAT] has observed that for providing an opportunity to the assessee for explaining its position, the Assessing Officer may use expression “or” in between the ‘concealment of income’ and ‘furnishing inaccurate particulars of income’ in the show-cause notice; but for visiting the assessee with penalty, the Assessing Officer has to record a conclusive finding. Assessee does not deserve to be visited with penalty. Accordingly, the appeal of the assessee is allowed and the penalty is deleted.
|