The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty of Rs.9,24,760 levied under section 271(1)(c) of the Income Act, 1961 for furnishing inaccurate particulars leading to concealment of income. The tribunal found that there was no willful intention on the part of the assessee to conceal the income which led to the penalty cancellation.
Assessee, Rohit Chatterji residing in Singapore but classified as a resident and ordinarily resident in India for the assessment year 2015-16. The assessee filed the income tax return in India on 30.08.2015 declaring a total income of Rs.12,05,86,110, which included 50% of the rental income from a house property in Singapore jointly owned with his wife.
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The assessing officer ( AO ) scrutinized the assessee’s assessment and issued statutory notices under section 143(2) of the Income Tax Act. The AO found that the assessee had not declared Rs.. 6,21,652 under the head “Income from Other Sources” and 100% of the rental income from “House Property” in Singapore amounting to Rs. 23,71,076. The assessee included all the incomes insisted by the AO and filed a revised income tax return on 30.07.2017
The AO completed the assessment by adding the income declared by the assessee in the revised income tax return and levied a penalty of Rs. 9,24,760 under section 271(1)(c) for furnishing inaccurate information in the original income tax return, which leads to income concealment. The assessee appealed before the CIT(A) with a delay of 186 days concerning the penalty. CIT(A) confirmed the penalty levied by the AO under section 271(1)(c) of the Income Tax Act and dismissed the appeal.
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Aggrieved by this decision by the CIT(A), the assessee appealed before the ITAT, Mumbai. The assessee’s counsel represented by Ajit Jain and Siddesh Chaugule argued that the assessee filed the original income tax return based on the available information at that time, specifically regarding the assessee’s overseas income.
The counsel submitted the tax assessment years in India and Singapore are different which caused the delay in obtaining accurate information about the assessee’s correct overseas income. After receiving the proper details, the assessee filed the revised income tax return. The counsel contended that there was no intention to conceal income and prayed to delete the penalty.
The revenue’s counsel represented by Nayanjyoti Nath argued that the assessee disclosed the additional rental and interest income only after the assessment proceedings began and through the revised return. If the assessment was not selected for scrutiny, the assessee might not have declared the additional income. Thus, the lower authorities were correct in levying the penalty.
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The two-member bench, consisting of Padmavathy S ( Accountant Member ) and Rahul Chaudhary ( Judicial Member ) observed that the assessee intended to file a revised return regardless of the assessment, due to the unavailability of certain information at the time of filing the original return. The tribunal noted that the assessee is a Singaporean and there was a time lag in getting the correct details of his Singapore income.
The tribunal observed that the assessee corrected the salary income in the revised return, reducing it from ₹11,43,06,874 to ₹11,36,98,894. This supported the assessee’s claim that the revised return was intended to correct errors in salary and interest income as per Form 26AS. Thus, the bench directed the Assessing Officer ( AO ) to delete the penalty, citing a Supreme Court ruling and noting that there was no intentional breach of the law by the assessee.
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