Concealment penalty deleted when income was received by cheque after deducting TDS. ITAT accepts non disclosure as inadvertent

Concealment penalty deleted when income was received by cheque after deducting TDS. ITAT accepts that non disclosure was inadvertent not willful. 

ABCAUS Case Law Citation:
ABCAUS 1171 (2017) (03) ITAT

The Grievance:
The appellant assessee had challenged the order of CIT(A) confirming the order of Assessing Officer (‘AO’) imposing penalty on the assessee u/s 271(1)(c) of the Income tax Act, 1961 (Act).

Assessment Year : 2009-10
Date/Month of Pronouncement: March, 2017

Brief Facts of the Case:
The Assessee was an individual. In the course of assessment proceedings the AO on scrutiny of the information available in AIR and ITS noticed that the assessee was paid a sum of Rs.2,24,000/- as technical service fees. The AO further noticed that this sum had not been declared by the assessee in her return of income. This fact was confronted to the assessee. The assessee agreed to the aforesaid sum being added to the total income of the assessee. The AO accordingly added the aforesaid sum to the total income of the Assessee.

In respect of the addition so made, the AO initiated penalty proceedings u/s 271(1)(c) of the Act. In the penalty proceedings, the assessee pointed out that there was a mistake at the time of filing the return of income and there was no intention whatsoever to conceal any particulars of income. The assessee also pointed out that tax has been deducted at source on the payment made to the assessee and in such circumstances there was no reason for the assessee not to declare the aforesaid item of income in the return of income.

The assessee pointed out that when the mistake was pointed out by the AO the assessee readily agreed to the addition and therefore the imposition of penalty u/s 271(1)(c) of the Act was not called for. The explanation of the assessee was however rejected by the AO on the ground that had the return of income not been picked up for scrutiny, the fact of receipt of fees by the assessee would not have come to light and the assessee would have got away with not declaring the aforesaid income in the return of income.

On appeal, the CIT(A) confirmed the order of AO. Aggrieved by the order of CIT(A) the assessee had preferred the present appeal before the Tribunal.

Observations made by the Tribunal:
The Tribunal observed that It was not in dispute that the amount in question was received by the assessee by way of cheque and that the payee had duly deducted tax at source on the payment made to the assessee. Thus the tax due and payable on the income in question had already reached the coffers of the revenue.

It was further observed that when the fact that the receipt was not disclosed in the return of income was confronted to the assessee, she immediately agreed to the addition and also appraised the AO that non disclosure of the said receipt in the return of income was inadvertent and not willful.

The Tribunal opined that the circumstance of the case clearly showed that there was neither an attempt to conceal particulars of income by the assessee nor to furnish inaccurate particulars thereof.

Held:
ITAT accepted the plea of the assesse and held that in the facts and circumstances of the case imposition of penalty u/s 271(1)(c) of the Act was not called for. Accordingly, it cancelled the order imposing penalty and allowed the appeal of the assessee.