| Question And Answer | |
|---|---|
| Subject: | Penalty u/s 271(1)(c) |
| Category: | Income-Tax |
| Querist: | manali |
| Answered by: | Research Team |
| Tags: | concealment, penalty |
| Date: | April 2, 2023 |
Assessee is a partnership firm engaged in the business of manufacturing and job work of engineering goods. Search u/s 132 of the Act was carried out in the month of January,2018. While filing return of income in response to notice u/s 153A, assessee firm discloses additional income on account of unaccounted scrap sale. This scrap sale has been worked out by estimating burning loss at the rate of 20% and the assessee firm declared income as unaccounted scrap sale.
Penalty proceedings u/s 271(1)(c) are initiated for concealing the inaccurate particulars of income in the assessment order.
Notice u/s 274 r.w.s 271(1)(c), it is mentioned by the AO that, “It appears to me you have concealed the particulars of income.”
In the penalty order, it is mentioned that, “The assessee has committed default within the meaning of section 271(1)(c) of the Act, without any reasonable cause, and therefore levy penalty for concealment of income.”
- Whether the levy of penalty is justified in law?
- Whether assessee can take a stand that there is no difference in the return filed in response to notice u/s 153A of the Act and assessed income?
- When the income is offered by estimating the burning loss in the manufacturing process and the penalty levied on such income is to be considered as penalty on estimated income ?
Depends on facts of the case . In Mohd. Farhan A. Shaikh v. ACIT ( 2021 ) 434 ITR 1/ 200 DTR 65/ 320 CTR 26/ 280 Taxman 334 / 125 taxmann.com 253 (Panji)(FB) ( Bom) (HC) Non-striking off of the irrelevant part while issuing notice under section 271(1)(c) of the Income-tax Act,Order is bad in law . Assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness . In PCIT v. Financial Technologies India Ltd. (2019) 112 taxmann.com 398 / (2020) 269 Taxman 33 (Bom.)(HC) Assessee filed its return claiming depreciation on its intellectual property rights. During the course of search proceedings as per the statement u/s 132(4) director of the company reduced the claim depreciation. AO imposed penalty under S. 271(1)(c) for raising a false claim. On appeal the Tribunal held claim of depreciation being a plausible claim, mere fact that same was withdrawn during subsequent search proceedings, would not give rise to penalty. Followed CIT v Reliance Petro Products (P) Ltd (2010) 322 ITR 158 (SC) .