Penalty 271(1)(c) deleted. Employee misguided by employer coop. bank that interest income was exempt

Penalty 271(1)(c) deleted as employee was misguided by employer cooperative bank that interest income was exempt

ABCAUS Case Law Citation:
ABCAUS 3155 (2019) (09) ITAT

Important case law relied upon by the parties:
Badshah Parshad Vs. CIT, 127 ITA 601 (Patna)
Rave Entertainment P.Ltd. Vs. CIT, 376 ITR 544 (All)
Garden Silk Weaving Factor, 172 ITR 575
Price Water House, 348 ITR 306 (SC)

Penalty u/s 271(1)(c) deleted as employee was misguided by employer

In The instant case, appeals were filed by the assessee against order(s) of the CIT(A) in confirming the penalty u/s 271(1)(c) of the Income Tax Act, 1961 (the Act).

The assessee was a salaried employee working with the Co-operative Bank. The case of the assessee was reopened for the reasons that he had omitted to disclose interest income in his return of income.

Subsequently, Penalty had been imposed upon the assessee under section 271(1)(c) of the Act for all the three Assessment Years under appeal.

Appeal to the CIT(A) did not bring any relief to the assessee.

Before the Tribunal, the assessee contended that in each assessment years, he had declared more interest income as against proposed additions by the Assessing Officer (AO) in reasons for reopening the assessment. Thus, the assessee had already included more interest income than the one alleged by the AO.

The assessee submitted that the error at the end of the assessee had happened on the ground that being an employee of the cooperative bank, he was given an impression that since TDS provision was not applicable to cooperative bank, therefore such interest income is exempt from tax.

He submitted that under this bona fide belief he did not include the above income. In support of his contentions, he relied upon number of decisions.

The Tribunal observed that the assessee has not deliberately withheld the information from the department. He had been misguided by the employer as well as management of the cooperative bank, hence under a misconception of law, he failed to disclose the interest income.

The Tribunal noted that otherwise, when he was appraised his mistake, he immediately furnished more interest income which could even take care of small penalty imposed upon the assessee. Thus there was no deliberate attempt at the end of the assessee to conceal his particulars of income.

Therefore, the Tribunal allowed all the appeals of the assessee and cancelled penalties imposed in all the years.

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