The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has recently while deleting the penalty imposed by the assessing officer held that computation of income resulting in a higher income is only difference of opinion.
Assesse Dinesh Kumar Agarwal, filed his return of income showing total income of Rs.49,76,450.Therfater while making assessment proceedings the AO found that there is a discrepancy in the turnover disclosed by the assessee in the Income Tax Return vis-à-vis available as per Form No. 26AS.
In this form, the gross turnover was shown by the contractee at Rs.3, 09, 15,820/-, whereas the assessee has shown it at Rs.2, 69, 38,693/-. There was a difference of Rs.39,77,127/-. Assessing Officer treated this difference as undisclosed turnover and estimated the profit equivalent to the rate disclosed by the assessee on the turnover of Rs.2.69 crores.
Thereafter, the AO initiated penalty proceedings under section 271(1)(c) of Income Tax Act 1961. Aggrieved assessee filed appeal before CIT(A). The CIT(A) confirmed the penalty imposed by the assessing officer.
Thereafter the assesee filed a second appeal before the tribunal.
While considering the submission filed by the assessee which shows that “this difference is, because the contractee has not made any payment during the period Hence it was not recognized by the assessee. The payments have been made in the next financial year and this income has duly been counted in the books in the next year.”
Further submitted that there may be a difference of opinion about recognition of an item of income but how it is not to be construed as concealment of income or filling of inaccurate particulars of income.
Moreover, the AO has simply avoided all these mandatory factors of Section 271(1)(c) of the Income Tax Act by observing that the assessee has evaded tax.
Amit Kumar Pandey, counsel for the revenue, supported the decision of the lower authorities.
While considering the contentions, the tribunal observed that no penalty is imposable upon the assessee because this computation of income resulting into higher income is only a difference of opinion.
Further, the assessee has given an explanation as to why this higher alleged income made by the AO was not disclosed by the assessee. This explanation was not found to be false because it has been offered in the next year.
Therefore the tribunal bench of Rajpal Yadav , (Vice-President) and Manish Borad, (Accountant Member) allowed the appeal filed by the assessee and deleted the penalty.
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