Assessee needs to establish his Bonafideness for not disclosing details with regard to Income Tax Return: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Pune bench consisting of Inturi Rama Rao, Accountant Member, and Partha Sarathi Chaudhury, Judicial Member held that the assessee need to establish his bonafideness for not disclosing details with regard to Income Tax Return.

The assessee, Association of Indian Forging Industry is a not-for-profit company incorporated u/s 25 of the Companies Act, 1956 and is also registered u/s 12A of the I.T. Act 1961, therefore eligible for exemption u/s 11 of the Act. As per the memorandum of association, the principal object of the appellant is to promote the interests of the forging industry in India. The appellant filed its return of income for the year under consideration declaring total income at Rs. NIL after claiming exemption u/s 11 of the Act. Subsequently, the case of the appellant was selected for scrutiny through CASS and after considering the submissions of the appellant produced before the Assessing Officer (AO) during the course of assessment proceedings, total income was assessed at Rs. 15,00,000/- after making additions on account of accumulated income not utilized within the prescribed period of five years. Penalty proceedings were initiated separately against the appellant vide issue of notice u/s 274 and 271(l)(c) of the Act dated for furnishing inaccurate particulars in respect of such income. During the course of penalty proceedings, the appellant made submissions contending that the penalty shall not be levied as it has co-operated during the course of assessment, and the mere omission to add back the accumulated income not utilized does neither amount to concealment nor deliberate furnishing of inaccurate particulars of income; it is just a bonafide mistake rather than a deliberate mistake. However, the AO ongoing through the contentions so raised held that the same is unacceptable and therefore levied penalty u/s 271(1)(c) of the Act at minimum rate i.e. 100% of the tax sought to be evaded, thereby raising demand at Rs.4,63,500/-.

The Assessing noted that penalty proceedings under section 271(1)(c) and 274 of the Act are initiated separately for filing inaccurate particulars of income and the Commissioner upheld the penalty.

ITAT observed that” the assessee could not establish his bonafideness for not disclosing such details in the return of income and no documentary evidence was furnished in its support”- hence confirming the order of AO and CIT.

To Read the full text of the Order CLICK HERE

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