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2017 (1) TMI 633 - ITAT MUMBAI

2017 (1) TMI 633 - ITAT MUMBAI - TMI - Penalty under section 271(a)(c) - addition under the head under-reported interest income - non filing ROI on due date - Held that:- We find that the assessee had not filed his return of income on due date, that he himself was filing the return, that while preparing the return he had included the income under the head house property and income from other sources. House property income was computed in negative.Clearly,the assessee was aware of the procedure o .....

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s are supposed to not only disclose their income but also has to verify that entries made in it are correct - The explanation filed by the assessee about not disclosing interest income in the return of income was not bona fide.So,confirming the order of the FAA,we decide the effective ground of appeal against the assessee. - I.T.A. /3337/Mum/2015 - Dated:- 6-1-2017 - Sh.Rajendra,Accountant Member and Amarjit Singh,Judicial Member For The Revenue by: Shri S.K. Mishra-Sr.-DR For The Assessee : .....

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ad under-reported interest income.He also initiated penalty proceedings for concealing the particulars of income under section 271(a)(c) of the Act. 2. Effective ground of appeal is about upholding the order of the AO levying penalty. During the assessment proceedings, the AO found that interest income earned by the assessee on saving bank account with State Bank of India and Karnataka Bank Ltd, aggregating ₹ 1,92, 677/- was not offered to tax in the return filed by the assessee. According .....

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ncome in the return, that he had suo motu declared the interest income, that there was no independent finding on the part of the AO in that regard, that no specific query was raised by the AO about interest income, that the notice issued by the AO were general in nature. He placed reliance on the cases of Reliance Petro Products and Pricewaterhouse Coopers. However, the AO did not accept the contention of the assessee and stated that he had filed the belated return on 8.4.2011 in which the savin .....

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claim deduction of ₹ 9,378/- being interest paid on capital borrowed for purchase of house property, that on the other hand he did not disclose substantial interest income, that much lesser interest income had been offered by him in the preceding assessment years, that he had earned substantial interest income during the year under consideration, that a notice was issued to the assessee under section 142 (1) of the Act to furnish information as per earlier questionnaire issued to him that .....

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of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA). Before him it was contended that assessee s mother was diagnosed with cancer in February, 2009 and passed away in August, 2010, that being a pilot over international routes the assessee would often be out of India, that he had to rush to Bangalore to take care of his mother, he was under severe stress, that a belated return was filed in the month of April, 2011, that this was the first and only time the asses .....

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the assessee and the penalty order of the AO, the FAA held that the AO had correctly brought out the fact that assessee had not submitted correct details and particulars of income under the head income from other sources, that he had taken into consideration the smaller amounts of FD interests,that the assessee had applied himself in preparing the return of income, that it could not be said that he was too stressed due to illhealth and sad demise of his mother, that he had offered the saving ba .....

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oceedings, that the cases relied upon by the assessee were of no use. He referred to the matters of HCIL Kalindee ARSSPL and Zoom Communications private Ltd.(327ITR510) and held that the assessee had failed to discharge the onus and had not satisfy the conditions mentioned in explanation 1 to section 271(1)(c),that he had not proved is bona fide during the assessment/ penalty proceedings,that he had also failed in his obligation to disclose all the facts material to the competition of income on .....

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on of concealing the particulars of income of furnishing inaccurate particulars,that it was a bonafide mistake.He relied upon the matter of Heranba Industries Ltd.(ITA/2292/Mum/2013 dtd.08.04.2015).The Departmental Repr -esentative(DR)supported the order of the FAA and argued that in the notice issued by the AO query was raised about investments,that the assessee had shown the other incomes correctly. 5. We have heard the rival submissions and perused the material.We find that the assessee had n .....

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t that could be ignored by a person while filing the return. It is not the case that return was filed in the first month of the subsequent financial year and that assessee had not received the statement of interest income from the bank. Return of income is not a simple piece of paper. The assessees are supposed to not only disclose their income but also has to verify that entries made in it are correct. We find that the FAA has invoke the provisions of explanation 1 to the section 271 of the Act .....

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Had he paid the taxes after filing the return and before the receipt of notice from the AO it could have been presumed that it was a bona fides and inadvertent mistake on part of the assessee.We would like to reproduce the relevant portion of the case of Zoom Communication (supra) and same reads as under: 19. It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim .....

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d to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without the .....

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