Concealment penalty deleted when income suo moto declared in return filed u/s 148

Concealment penalty deleted when income suo moto declared in return filed u/s 148 without the same being brought to its notice by the AO

ABCAUS Case Law Citation:
ABCAUS 2511 (2018) 09 ITAT

By the instant appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) arising in the penalty order passed by the Assessing Officer (AO) u/s 271(1)(c) of the Income Tax Act, 1961 (the Act).

The assessee in the instant case wrongly claimed depreciation on fixed assets already sold during the year under consideration. Thus, the taxable income was underreported to this extent. Thereafter, the case was re-opened under section 147 of the Act in pursuance of notice u/s 148 of the Act.

The assessee filed another return of income u/s 148 wherein the assessee suo motu withdrew the aforesaid wrong claim of depreciation made in the original return. The re-assessment proceedings were accordingly completed and penalty was imposed on the aforesaid wrong claim of depreciation made earlier.

The argument on behalf of the assessee for non-imposition of penalty were two fold;

(i) the assessee itself has suo motu declared and conceded the wrong claim without the same being brought to its notice by the Revenue &

(ii) the AO had initiated the penalty proceedings on the grounds of ‘concealment of particulars of income’ whereas the penalty was ultimately confirmed by the AO alleging ‘furnishing of inaccurate particulars of income’.

It was thus claimed by the assessee that the basis of ‘satisfaction’ has undergone substantive change and therefore, the penalty imposed was not sustainable in law.

The Tribunal opined that in the light of the decision of the co-ordinate bench, the penalty u/s 271(1)(c) of the Act was not sustainable where the edifice of ‘satisfaction’ had undergone fundamental change.

Thus, according to the Tribunal, the penalty was liable to be cancelled on this ground alone.

The Tribunal also find merit in the first plea of the assessee as well. The assessee had shown its bonafide by conceding the mistake in the second return filed in pursuance of notice u/s 148 of the Act. Significantly, the reasons recorded under s. 148(2) of the Act were not made available to the assessee at that stage. Therefore, the plea of the assessee that revision of income was made suo moto without any knowledge obtained from the AO in this regard deserveed to be accepted.

The Tribunal clarified that the penalty under s. 271(1)(c) of the Act is not automatic consequence of any and every type of mistake committed by an assessee.

The Tribunal held that the bonafides were proved reasonably. The penalty was not maintainable on either count.

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