INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Addition made on account of undisclosed interest income - Bona fide claim on part of assessee regarding earned of interest -

During course of assessment proceedings, AO observed that interest income was received by assessee from a Bank but the income from bank interest as declared by the assessee was less. It was explained on behalf of assessee that concerned bank had inadvertently created two clients ID out of which the interest income relating to only one client ID was communicated to the assessee. It was submitted that interest income relating to other client ID was accumulated to Fixed Deposits and only when the same was received by the assessee in the immediately succeeding year relevant to assessment year 2012-13, assessee came to know about the same and offered it to tax. AO did not find this explanation of assessee to be acceptable and proceeded to make an addition on account of undisclosed interest income. Further, he initiated penalty proceedings under section 271(1)(c). Held: The interest income related to other client ID earned was never informed by bank to the assessee and even Form No.16A for the same was apparently not issued. Assessee came to know about the earning of the said interest income only when the same was realized by it in the immediately succeeding year when the concerned Fixed Deposits in bank got matured. Mistake of assessee in understating its interest income from bank to extent was bona-fide one and it gets further fortified by the fact that credit for tax deducted at source from the said income by bank was not claimed by assessee in the return of income filed. Therefore, this was not a fit case where assessee can be said to have concealed particulars of its income or furnished inaccurate particulars of such income as contemplated under section 271(1)(c).

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

SUBSCRIBE FOR FULL CONTENT

OR Try Reload the Page