The Income Tax Appellate Tribunal (ITAT) of Jaipur bench has held that the penalty for inaccurate particular is not imposable when the assessee paid tax before the issue of reassessment notice under the Income Tax Act, 1961.
Pooja Upadhyay, the assessee challenged the order of the National Faceless Appeal Centre, Delhi dated 06.05.2022 (NFAC/CIT(A)) passed under section 271(1)(c) of the Income Tax Act, 1961. A show cause notice (SCN) issued under section 274 of the Income Tax Act, 1961 and the consequent impugned penalty order dated 21.01.2020, is quite vague and does not specify which limb of Section 271(1)(c) of Income Tax Act, the penalty proceedings had been initiated and imposed i.e., whether for concealment particulars of income or furnishing of inaccurate particulars of income.
The assessee filed a return of Income declaring total income at Rs. 12,95,940/-, which was accepted and assessed by the AO under section 147/143(3) of the Income Tax Act. While completing the assessments under section 147/143(3) and for the income so offered in the FRO and accepted by the AO, the AO initiated the penalty proceedings under section 271 (1)(c) and Show cause notice under section 274 issued in response which the assessee filed a detailed reply reproduced of the penalty order.
The assessee is an individual and had invested in FDR with “The Urban Co-operative Bank Ltd” and had earned interest income thereon of Rs. 12,95,940/- during FY 201 1-12. However, no return of income was filed for the relevant year under section 139 (1) of the Income Tax Act.
Therefore, the case was re-opened under section 148 of the Income Tax Act, 1961, after recording reasons and obtaining approval from the Pr. CIT-2, Jaipur. Notice under section 148 of the Income Tax Act was issued and duly served upon the assessee.
In response to the notice under section 148, the assessee filed her return of income. The AO completed an assessment under section 143 (3)/147 on 24.07 2019 determining a total income. The AO also initiated penalty proceedings under section 271 (l)(c) for concealment of income by issuing notice under section 271 (1)(c) dated 24.07.2019 fixing the date of hearing on 26.08.2019.
The assessee sought adjournment. Thereafter, the final opportunity was given to the assessee by issuing a show-cause notice under section 274 on 06.09.2019 fixing the date of hearing for 12.09.2019. in response to the show-cause notice, the assessee submitted hers-written submissions.
The AO held that the assessee has concealed his particulars of income and concealed his taxable income. Finally, imposed the penalty of Rs. 2,40,795/under section 271 (1)(c) of the Income Tax Act, 1961. The AO merely alleged but failed to bring any material whatsoever by making independent inquiries to
A two-member bench comprising Shri Sandeep Gosain, JM & Shri Rathod Kamlesh Jayantbhai, AM observed that the assessee participated in the assessment proceeding, paid the tax, and filed the computation of income before the issue of notice under section 148 of the Income Tax Act. The ITAT held that levy of penalty is not sustainable and the same was quashed. The appeal of the assessee was allowed.
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