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Smt. Pratima B. Shah and Shri Pratik Bharat Shah Versus The ACIT Range-16 (3) Mumbai

Penalty u/s.271(1)(c) - non disclosure of accrued interest - Held that:- As far explanation offered by the assessee about the interest is concerned we hold that his explanation was bona fide.If the factors like receipt of TDS certificate in the month of March,2011 and subsequent development are considered it becomes clear that there was plausible reason for filing a revised return of income. Therefore, in our opinion penalty should not have been levied with regard to the accrued interest not sho .....

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a fact that so-called revised return was filed after the AO had issued a notice u/s.143(2)notice. We should not forget that only a miniscule percentage of the returns are selected for scrutiny by the department. Therefore, it is the duty of the taxpayers to pay due taxes.It is their right that they are not taxed for the income that has not been received or accrued to them. But,the other side of the coin is that they should not put forth totally inadmissible claim and reduce the tax liability. F .....

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me- tax Act ,1961(Act ) PER RAJENDRA, AM Challenging the orders, dated 14.2.14,of the CIT(A)-27,Mumbai the assessees have filed the above mentioned appeals.As the same issue-levy of penalty u/s.271(1)(c)(1)(c) of the Act-is involved in both the cases and the assessees are members of the same family,so, we are adjudicating both the appeals by a single order. 2.Assessee,an individual filed his return of income,on 29.3.2010,declaring income of ₹ 39, 16,000/-.Subsequently,a revised return was .....

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. Accordingly, the revised return was not considered filed as per the provisions of section 139 (5) of the Act. In his submission, dated /12/2011, the assessee stated that he had not received intimation u/s. 143 (1) and that accordingly he had revised his return. The AO held that explanation filed by the assessee was not acceptable, that the order u/s. 143 (1) of the Act was passed on 26/08/2010, that as per the provisions of section 139 (5) returns filed u/s. 139 (1) only could be revised. Ther .....

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ty should not be levied under the said section. In his explanations, filed on 06/01/2012 and 22/06/2012, the assessee accepted that he had committed mistakes. After considering the submission of the assessee and the cases relied upon by him, the AO held that the original return was filed on 29/03/2010, that the revised return was filed only after the assessee came to know that the case had been selected for scrutiny and that notice u/s. 143 (2) had been served upon him, that the act of filing of .....

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half of his minor son.The AO further held that cases relied upon by the assessee were not applicable to the facts of the matter before him.He finally held that assessee had concealed/ furnished inaccurate particulars of income in the original return,that it was a fit case where penalty u/s.271(1)(c) was required to be imposed.Finally, the AO imposed a penalty of ₹ 2.58 lakhs. 4.Aggreived by the order of the AO,imposing penalty,the assessee preferred an appeal before the First Appellate Aut .....

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tent of ₹ 54,864/- and other sources income to the extent of ₹ 7.05 lakhs much before the effective start of assessment proceedings in the month of June,2011, that TDS certificates from Allahabad Bank and Punjab and Sindh Bank were not received by the assessee before the date of filing of the original return, that as soon as the TDS certificates were received,the assessee calculated the accrued interest figure and voluntarily disclosed the same by filing a revised return.After consid .....

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g the penalty, that it was the duty of the assessee to make a correct and complete disclosure of his income. The FAA referred to the explanation of the section 271(1)(c) and held that provisions of clause (B) of the explanation to section 271(1)(c) of the Act were attracted for testing the exigibility of penalty in the case under consideration, that the assessee was not able to prove that explanation filed by it was bona fide, that he could not prove that all the facts relating to the competitio .....

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anks over received on 18/03/2011, that at the time of filing of original return passbook was not available/traceable, that the interest accrued remained to be shown in the original return, that in the revised return the assessee had shown the income arising out of the interest from the FDRs.He referred to the reconciliation statement of the interest income.With regard to maintenance charges,he stated that the assessee had inadvertently claimed the charges in the original return, that while filin .....

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Organics Ltd.(ITA/5454/Mum/2011-24/09/ 2015), Mahabir Prasad Agarwal (IT A/739/KOL/2013-dated,15/01/2016) and Manjunath Cotton & Ginning Factory (359ITR565). The Departmental Representative (DR) argued that it was a clear case of furnishing of inaccurate particulars, that the assessee himself had admitted inadvertent mistake with regard to house property income, that the accrual of interest was not dependent on TDS, both the authorities have given clear finding about the failure of the asse .....

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ate that stand taken by him about an expenditure or a claim is one of the plausible views then no penalty should be levied irrespective of the facts that what treatment was given to it during the assessment or appellate proceedings. Is, short, if the explanation is not so fanciful that a person of common prudence would agree with it, then the assessee should not be visited by penal provisions. But, if the explanation is prima facie contrary to the provisions of the Act then the intention of the .....

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n initiated. In the assessment order the AO had mentioned that penalty proceedings were initiated for furnishing inaccurate particulars. While imposing the penalty the AO had held that the assessee had concealed/furnished inaccurate particulars. In our opinion, the act of initiation of penalty has culminated in imposing penalty on same footing. 6.1.It is true that all the cases of filing of inaccurate particulars of income may not result in concealing the particulars of income-in some cases ther .....

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s initiated for concealing the particulars of income.The Hon ble court has not deliberated upon a situation where both the omissions are there and penalty is initiated for both counts but penalty is levied only for one omission/ commission, after considering the explanation filed by the assessee.If the AO at the time of finalising the assessment arrives at the conclusion that an assessee has furnished inaccurate particulars and finally levies penalty for that omission only,then in our opinion it .....

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oming back to the facts of the case under consideration,we find that the assessee had not disclosed accrued interest in the return of income and had made a patently inadmissible claim with regard to the house property. As far explanation offered by the assessee about the interest is concerned we hold that his explanation was bona fide.If the factors like receipt of TDS certificate in the month of March,2011 and subsequent development are considered it becomes clear that there was plausible reaso .....

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