Penalty Once the Income has been Declared/Filed in the Return of Income, Whether Penalty Under Section 271(1)(c) is Justified?

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The Tax Publishers Income Tax--Penalty Once the Income has been Declared/Filed in the Return of Income, Whether Penalty Under Section 271(1)(c) is Justified? Akhilesh Kumar Sah In this short write-up, the learned author discusses a legal issue, being levy of penalty imposed upon the assessee by AO as per provisions of Income Tax Act, 1961. In the assessment proceedings, the AO forms an opinion, prima facie or otherwise to launch penalty proceedings against the assessee. Thus assessment proceedings forms the basis for penalty proceedings, but they are not composite proceedings to draw strength from each other. A penal proceeding is a corollary, nevertheless, it is distinct from assessment proceedings. The findings in the assessment proceedings cannot be regarded as conclusive for the purpose of the penalty proceedings. Therefore, whenever, a SCN under Section 274 read with Section 271(1)(c) is issued by AO, he is under obligation to specify under which limb of Section 271(1)(c), penalty proceedings is being initiated. Even he has to record his satisfaction as contemplated under Section 271(1B) before initiating and imposing penalty under Section 271(1)(c) In the instant case the declaration made by assessee in his return of income was found bona fide and revenue authorities have not been able to establish that any specific particulars were concealed or inaccurate particulars were furnished and, therefore, Tribunal upheld the Order of CIT deleting the penalty. He concludes that under Section 271(1)(c) the penalty can be imposed only when it is found that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income and A bona fide action of an assessee should not be a matter of penal action. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Penalty

Once the Income has been Declared/Filed in the Return of Income, Whether Penalty Under Section 271(1)(c) is Justified?

Akhilesh Kumar Sah

In this short write-up, the learned author discusses a legal issue, being levy of penalty imposed upon the assessee by AO as per provisions of Income Tax Act, 1961. In the assessment proceedings, the AO forms an opinion, prima facie or otherwise to launch penalty proceedings against the assessee. Thus assessment proceedings forms the basis for penalty proceedings, but they are not composite proceedings to draw strength from each other. A penal proceeding is a corollary, nevertheless, it is distinct from assessment proceedings. The findings in the assessment proceedings cannot be regarded as conclusive for the purpose of the penalty proceedings. Therefore, whenever, a SCN under Section 274 read with Section 271(1)(c) is issued by AO, he is under obligation to specify under which limb of Section 271(1)(c), penalty proceedings is being initiated. Even he has to record his satisfaction as contemplated under Section 271(1B) before initiating and imposing penalty under Section 271(1)(c) In the instant case the declaration made by assessee in his return of income was found bona fide and revenue authorities have not been able to establish that any specific particulars were concealed or inaccurate particulars were furnished and, therefore, Tribunal upheld the Order of CIT deleting the penalty. He concludes that under Section 271(1)(c) the penalty can be imposed only when it is found that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income and A bona fide action of an assessee should not be a matter of penal action.