No Penalty u/s 271(1)( c ) If Assessee had acted in a Bonafide Manner: ITAT [Read Order]

Imposing Penalty - ITAT - Taxscan

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) ruled that the department should not impose the Penalty under section 271(1)(c) of the Income Tax Act if the assessee had acted in a bona fide manner.

The appellant-assessee, Inspectorate Singapore Pte. Ltd., filed its return of income for the year under consideration on 27/09/10 declaring total income at ‘nil’. This filing was selected for scrutiny and notice under section 143(2) along with a detailed questionnaire and notice under section 142(1) of the Income Tax Act, 1961 (the Act) was issued to the assessee. In response to the statutory notices, the assessee appeared before the Assessing Officer(AO) through representatives and filed requisite details as called for. The AO observed that assessee provided import and export commodity inspection, testing analysis, evaluation and consultation services to customers of the assessee in India and passed an order under section 144C read with 143(3) of the Act, determining income at Rs.54,44,180/-. It was also submitted that assessee though not in agreement with the addition made, did not file an appeal to avoid litigation.

Subsequently, the AO initiated penalty proceedings under section 271(1) (c) of the Act for concealment of particulars of income and/or furnishing of inaccurate particulars of such income. He accordingly levied the penalty of Rs.5,44,418/-in the hands of the assessee which was further confirmed on appeal before the Commissioner of Income Tax (Appeals).

The bench consisting of Vice President R.S. Syal and Judicial Member Beena A Pillai applied the test of bona fide and upheld the plea stating, “ In the facts of the present case assessee had offered explanation and the submissions as to why receipts were not offered to tax for the year under consideration, by relying on the legal position. Thus assessee had acted in a bona fides manner and had also furnished all material facts and particulars in respect of the same. Thus in our considered view keeping the entirety of the facts, and in view of explanation offered by assessee, penalty for concealment of income under section 271(1)( c ) of the Act should not be imposed.

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