INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Assessee was deriving income from civil contract works and did not disclose bank accounts in which contract receipts were deposited - Assessee filed revised balance sheet after reconciling/explaining the credits -

Assessee was an individual deriving income from civil contract works. Issue was as regards validity of penalty imposed under section 271(1)(c) because assessee did not disclose bank accounts. Pursuant to such non-disclosure during assessment, assessee offered additional sum as income from the said unaccounted contract received. Assessee sought deletion of penalty on grounds that said accounts were inadvertently missed out and it was not a deliberate act. However, CIT(A) held this submission/Explanation of assessee to be self-serving and upheld the levy of penalty. Held: Admittedly, assessee did not disclose bank accounts in which contract receipts were deposited. While passing penalty order, penalty was levied for concealment as there was material on record to show that bank accounts contained undisclosed income of assessee. This fact was discernible from the assessment order. In the assessment order, AO initiated both the limbs, i.e.; concealment and filing of inaccurate particulars. Assessee filed revised balance sheet after reconciling/explaining the credits in the above said accounts. By producing bank accounts, assessee displaced the presumption that failure to return the correct income arose from any fraud or gross or willful neglect. No specific addition was made in the assessment order on that account. Assessee was not liable for concealment under section 271(1)(c) as during assessment proceedings assessee demonstrated his bona fides. Further, assessee did not file any appeal against the addition made towards such bank accounts. Thus, the conduct of assessee deserved the penalty to be deleted.

REFERRED : CIT & Ors. v. Manjunatha Cotton & Ginning Factory & Ors. (2014) 359 ITR 565 (Karn) : 2014 TaxPub(DT) 0202 (Karn-HC).

FAVOUR : In assessee's favour.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 271B

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