Section 271(1)(c) — When Assessing Officer recalculates total income in accordance with law and such total income is different from that calculated by the assessee, there is no concealment of particulars of income or furnishing of inaccurate particulars o

    A.Y. : 2004-05. Dated 15.01.2009

    Section 271(1)(c) — When Assessing Officer recalculates total income in accordance with law and such total income is different from that calculated by the assessee, there is no concealment of particulars of income or furnishing of inaccurate particulars of income or deemed concealment in accordance with Explanation 1 to Section 271(1).

    
    For the relevant assessment year, the Assessing Officer made some addition on a pro rata basis in terms of Section 14A. Thereafter, the Assessing Officer levied penalty u/s.271(1)(c) on ground that the assessee had not furnished full particulars for purpose of computation of its income. The CIT(A) confirmed the penalty by observing that the assessee had concealed its income and had furnished inaccurate particulars of its income.

    The Tribunal deleted the penalty. The Tribunal noted as under :

    1. There cannot be a straitjacket formula for detection of defaults of concealment or of furnishing inaccurate particulars of income. Concealment of particulars of income and furnishing of inaccurate particulars of income may at times overlap. It depends upon the facts of each case.

    2. On consideration of facts of the instant case it was not found that the assessee had concealed the particulars of his income or had furnished inaccurate particulars of such income. The assessee had furnished a note along with the return of income stating, “the interest expenditure was not considered as disallowed u/s.14A as the investments had not been made for the purpose of earning dividend income but for business consideration including capital appreciation. However, without prejudice to the above contentions, if any interest was to be considered as being in relation to dividends earned, the disallowance would amount to Rs.41.18 lacs as per the relevant annexure”, which was also enclosed by the assessee.

    3. Hence, the assessee had disclosed all the relevant material facts for the purpose of computation of total income. The assessee had also offered explanation in this regard, which was not found to be false by the Assessing Officer. The explanation of the assessee regarding claim of interest expenditure was bona fide. The assessee had substantiated his explanation.

    4. When the assessee had furnished all the material facts for the purpose of computation of total income, the Assessing Officer was duty-bound to calculate correct total income in accordance with law, which might have been different than the total income calculated by the assessee.

    5. Mere fact that the Assessing Officer while discharging his duty was recalculating the total income in accordance with law and such income was not the same as calculated by the assessee, it could not be held that the assessee had concealed particulars of his income or had furnished inaccurate particulars of such income or there was a deemed concealment in accordance with Explanation 1 to Section 271(1)(c).

    Therefore, penalty u/s.271(1) read with Explanation 1 could not be invoked. The penalty levied by the Assessing Officer was deleted.