Non Furnishing of Full Details of Income required by Assessing Officer Leads to Penalty: ITAT [Read Order]

In a recent case, the Income Tax Appellate Tribunal (ITAT), Ahmedabad held that if the assessee failed to furnish full details of income required by Assessing Officer, by virtue of Section 271(1)(c) of the Income Tax Act, the penalty will be imposed upon the assessee.

Brief facts are the case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee.  On scrutiny of the accounts, it revealed to the AO that the assessee’s authorized share capital has been increased and the assessee has taken share application money from 273 applicants, out of that from 272 parties share application money was taken in cash.

The AO has directed the assessee to furnish identity of the creditors, their credit-worthiness and genuineness of the transaction. The assessee has given half details.  The AO made addition and determined taxable income of the assessee. It was determined after setting off of business loss/unabsorbed depreciation of earlier years.  Dispute travelled to the Tribunal, and the Tribunal has confirmed the addition. The AO has initiated penalty proceedings and issued the notice under section 274 r.w. section 271(1)(c) of the Act, for furnishing inaccurate particulars of income.  Appeal to the CIT(A) did not bring any relief to the assessee.

The assessee submitted that the assessee has given address and details of share applicants.  It was for the AO to verify those details. He failed to prove that explanation put-forth by the assessee that it has received share application, was false.

The department contended that the assessee failed to furnish full details of income.  Hence, it is a fit case, wherewith the help of Explanation of section 271(1)(c) of the Act, penalty deserves to be imposed upon the assessee.

The Tribunal bench comprising of Judicial Member Rajpal Yadav and Accountant Member Amarjit Singh held that by virtue of section 271(1)(c) of the Act, penalty can be imposed upon assessed, if the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should be satisfied that the assessee has; (i) concealed his income or furnished inaccurate particulars of income. The other most important features of this section are deeming provisions regarding concealment of income. This deeming provision can be applied in two situations, they are if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false.

In the second situation, the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee.

In the present case, the assessee is not furnished full details of income. Apart from that, the assessee has not given any details.  Monies have been taken in cash and not through banking channel. Therefore, neither it has proved the genuineness of the transaction nor credit-worthiness of the alleged applicants; rather say their identities also doubtful.  In such circumstances, it has to be construed that the explanation offered by the assessee has been proved as false by the AO. Therefore, the court upholds the order of the ld.CIT(A) and the appeal of the assessee is dismissed.