INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Non-specification of charge -

AO noted that assessee was maintaining two bank accounts in name of a proprietary concern 'K' and income from the 'K' was not disclosed by him in the income offered for taxation. Accordingly, the AO added peak credit of both the bank accounts. Further, the AO while passing assessment order initiated penalty under section 271(1)(c) for concealing particulars of income and furnishing inaccurate particulars of income. However, while levying the penalty, he levied penalty only for concealment of income. Held: AO initiated penalty proceedings under both the limbs of section 271(1)(c) and further, the penalty ultimately was levied on assessee for concealing the income by observing that his case was covered by the Explanation 1 to section 271(1)(c). Further, it was found that in reply to show cause notice, the assessee explained that due to oversight, he could not disclose the bank accounts; however, the AO did not accept the said explanation. Thus, the AO failed to discharge his onus as he was not sure at initiation of penalty under section 271(1)(c) that which specific charge of the penalty should be initiated against the assessee and even while levying the penalty also, he simply relied on the Explanation 1 to section 271(1)(c). Therefore, the very basis of the levy of the penalty itself was not correct and hence, the same was deleted.

REFERRED : Wadhwa Estate &Developers India Pvt. Ltd. v. Asstt. CIT [ITA No. 2158/Mum/2016, dt. 24-2-2017] : 2017 TaxPub(DT) 1316 (Mum-Trib)

FAVOUR : In assessee's favour

A.Y. :

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