INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Assessee failed to explain excess liability - Assessee had given reasonable and plausible explanation -

AO made additions on account of difference of irreconcilable sundry creditors on the ground that assessee could not explain the said difference, therefore, amount was added to the total income of assessee and initiated the penalty under section 271(1)(c) for furnishing inaccurate particulars of income. Show-cause notice under section 274 read with section 271(1)(c) was served upon the assessee. Held: Lower authorities while considering the reply of assessee, filed in response to the show cause notice for levying the penalty, had not held that reply of assessee was false. Assessee had given reasonable and plausible explanation that accountant had committed mistake while preparing the accounts as credit note sent by sundry creditor was not brought to his notice and there was no attempt for tax evasion as assessee suffered loss. It was sufficient explanation and reasonable within the scope of section 273B. Thus, AO was directed to delete the penalty levied under section 271(1)(c).

Relied:Price Waterhouse Coopers (P) Ltd. v. CIT (CA No. 6924 of 2012 of Supreme Court) : 2012 TaxPub(DT) 2967 (SC) National Textiles v. CIT (2001) 249 ITR 125 (Guj) : 2001 TaxPub(DT) 0677 (Guj-HC) CIT v. Lakhdhir Lalji (1972) 85 ITR 77 (Guj) : 1972 TaxPub(DT) 0306 (Guj-HC) ACIT v. Dipesh M. Panjwani [ITA No. 6330/Mum/2012, ITA No. 5878/Mum/2012, ITA No. 6328/Mum/2012, ITA No. 6188/Mum/2012, dt. 18-3-2016] Mukeshchandra A. Lakdawala v. ITO (2010) 0004 ITR 307 (Trib) : 2010 TaxPub(DT) 1505 (Ahd-Trib).

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2012-13

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