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Smt. Punita Lal Versus Asstt. Commissioner of Income Tax, Range-47, New Delhi

2016 (5) TMI 1011 - ITAT DELHI

Penalty u/s 271(1)(c) - revised computation of income filled - Held that:- The assessee already revised computation of income and paid the taxes before being noticed or detected by the Assessing Officer and further the assessee could not revise return because the original return was filed belated. Thus, in our considered view, the assessee has offered explanation for the mistake of not offering the income in the return of income filed and substantiated the explanation, which is also found to be .....

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: This appeal of the assessee is directed against order dated 24/09/2015 of learned Commissioner of Income-tax(Appeals) for assessment year 2011-12 confirming the penalty, levied under section 271(1)(c) of the Income-tax Act, 1961 (for short the Act ) by the Assessing Officer. The grounds of appeal raised by the assessee are as under: 1. That the Commissioner of Income Tax(Appeals) erred on facts and in law in not holding that the impugned order dated 24.07.2014 levying penalty of ₹ 18,35, .....

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irming the levy of penalty solely on the basis of findings given in the assessment order, without appreciating that penalty proceedings are separate and independent from assessment proceedings and consequently, the impugned penalty order is bad in law. Without prejudice 2. That Commissioner of Income Tax(Appeals) erred on facts and in law in upholding the action of the Assessing Officer of imposition of penalty under section 271(1)(c) of the Act in respect of addition made to salary, capital gai .....

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ent proceedings and suo-motu paid tax on the said amount even before the case were taking up for scrutiny. 2.3 That the Commissioner of Income Tax(Appeals) erred on facts and in law in confirming the penalty imposed by the Assessing Officer without appreciating that the appellant had no malafide intention in as much as taxes were already paid by the appellant. 3. That the Commissioner of Income Tax(Appeals) erred in leveling various facts/baseless allegations while confirming the imposes of pena .....

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rivate Limited. The Assessing Officer observed from the form No. AS-26, which is maintained on database of the Income Tax Department, that total receipts during the year under consideration was of ₹ 2,53,08,932/- whereas in the Income Tax Return total receipt of ₹ 1,92,99,900/- was only shown. During the course of scrutiny, the assessee explained that the employer gave a revised form No. 16 on 14/10/2011 i.e. after filing of income tax return, in which the perquisites was shown at &# .....

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ount of Foreign Dividend Income of ₹ 4,69,537/- and interest income of ₹ 41,760/- received from HSBC, which was not shown by the assessee in the original return of income. The assessee did not prefered appeal against the order of the Assessing Officer. The Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act in respect of all the four additions made in the assessment order. After providing opportunity of hearing to the assessee, the Assessing Officer lev .....

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5. The learned Authorised Representative of the assessee submitted that the assessee had suo-motu paid tax on the additional income even before the case was taken up for scrutiny. Further, he submitted that since the return was filed belated, the assessee could not revise return of income but paid the differential taxes of ₹ 1,29,430/- on 16/03/2012 and ₹ 1,870/- on 02/02/2012 and the balance was already deducted at source by the employer while issuing revised form No. 16. Further, .....

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essing Officer vide letter dated 22/10/2013 during the course of scrutiny proceedings. The Ld. AR drawn our attention to page No. 24 of the paper book and submitted that the income as per Form No. 26 AS was duly reconciled with the revised computation of income filed by the assessee. The Ld. AR argued that all the information was duly furnished before the Assessing Officer and tax was also duly paid before the Assessing Officer could raise the issue and thus the explanation submitted by the asse .....

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ITA No. 550 of 2009 (Allahabad High Court) 6. Further, in support of the proposition that no penalty under section 271(1)(c) of the Act could be levied in case of voluntary surrender of income by the assessee on detection of bona fide/inadvertent mistake by the assessee, the ld. AR relied on the following case laws: 1. CIT versus Manjunatha cotton and ginning factory 359 ITR 565 (Karnataka High Court) 2. CIT versus Sania Mirza 259 CTR 386 (Andhra Pradesh High Court) 3. CIT versus Saket Aggarwal .....

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Commissioner of Income-tax(Appeals) in the impugned order has held that (i) the assessee was fully aware of the ESOP related transaction which had taken place in the month of March 2011 and the payments credited in the assessee s bank account, as such there was no reason as to why the assessee could not have paid the tax by way of advance tax or selfassessment tax before filing the return of income, therefore, the assessee had mala fide intention of evading tax by nondisclosure of perquisites va .....

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dend the situation remained same as the assessee had always a detailed information regarding accrual of income under those heads but for mala fide reasons the same were not disclosed in the return of income filed. (v) the assessee is a well-paid executive working with PepsiCo and had the benefit of advice of competent tax consultant (vi) the assessee failed to substantiate the explanations and also failed to prove that such explanation was bona fide and all material facts to computation of taxab .....

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of the assessee because as and when the mistake came to her notice on the receipt of a revised Form No. 16 from the employer, the assessee paid the due taxes suo-motu, thus, there was no malafide intention on the part of the assessee. Regarding second finding of the learned CIT(A), that the revised computation was filed after taking the case under scrutiny, the learned AR submitted that no query was raised by the Assessing Officer in respect of additional income prior to the revised computation .....

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ed computation of income but also paid the due taxes on the additional income before it came to the notice of the AO and therefore the assessee demonstrated the bonafide reason behind the mistake. As regard to the finding of the ld. CIT(A) in respect of the other income of interest and dividend, the ld. AR repeated same arguments. As regard to the finding of the ld. CIT(A), that the assessee is a well paid executive of a large MNC and could have taken assistance of consultants, the ld. AR submit .....

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as already submitted bonafide explanation for the mistake. 10. In view of the above submissions of the ld. AR ,we are of the opinion that the assessee has offered the explanation in respect of the fact material to the computation of income and such explanation was not found to be false. We also find that the explanation furnished by the assessee is bonafide and all facts material to the computation of income has been disclosed by the assessee in the explanation furnished by her, and thus the cas .....

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t there was a concealment of income by the assessee and penalty was validly imposed, the Hon ble jurisdictional High Court held that the assessee had filed a voluntarily return on its own then in all probability no proceeding would have been initiated against the assessee and the question of law was answered against the Revenue. In the case of the assessee in hand, also the revised computation of income and tax was paid voluntary by the assessee and therefore facts of the cited case are similar .....

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e cited case is applicable over the facts of the case in hand. 13. In the case of Commissioner of income tax versus Sunil Chand Gupta (supra), the Hon ble High Court of Allahabad had that on being intimated by the DDIT (Inv.), the assessee paid a difference in amount of tax on the transactions and surrendered the income in response to the return filed under section 148 of the Act, the conduct of the assessee was found to be bonafide and, therefore, no penalty for concealment of particulars of in .....

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owing features: (1) Every difference between reported and assessed income needs an explanation. (2) If no explanation is offered, levy of penalty may justified. (3) If explanation is offered, but is found to be false, penalty will be exigible. (4) If explanation is offered and it is not found to be false, penalty may not be leviable,- (a) such explanation is bona fide. (b) the assessee had made available to the Assessing Officer all the facts and materials necessary in computation of income.&quo .....

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conclusion, the law mandates that before imposing penalty, the assessee must be heard. The assessee is given the opportunity to offer his explanation. Once such an opportunity is given and the assessee fails to offer the explanation or offers explanation which is found to be false, then the penalty will follow as prescribed under Clause (iii) of clause (c) of sub-section (1) of Section 271. Where the assessee offers an explanation and substantiate the explanation, the question of imposing penal .....

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