43 Section 271(1)(c) – Penalty – Concealment of income – A. Y. 2014-15 – Condition precedent – No specific finding that conduct of assessee amounted to concealment of particulars of income or furnishing inaccurate particulars of income – Assessee not found to have furnished inaccurate particulars but making incorrect claim of rebate – Voluntary withdrawal of claim pursuant to notice – No concealment of income – Order imposing penalty unsustainable

Gopalratnam Santha Mosur vs. ITO; 399 ITR
155 (Mad):

The relevant year is A. Y. 2014-15. The
assessee sold an immovable property and paid the entire capital gains tax
applicable in respect of the transaction. Thereafter she claimed 50% of the
capital gains tax as rebate under DTAA between India and Canada. The Assessing
Officer issued a notice proposing to disallow the claim for rebate. In
response, the assessee submitted a revised income computation statement,
withdrawing the claim to the rebate and requesting the Assessing Officer to
give effect to the revised tax payable and issue the refund. The assessment
order was passed considering the revised statement. The Assessing Officer also
imposed a penalty of Rs. 23,31,787 u/s. 271(1)(c) of the Act for concealment of
income.

The assessee filed a writ petition
challenging the order of penalty. The Madras High Court allowed the writ
petition and held as under:

“i)  Until and unless the
authority had rendered a specific finding that the conduct of the assessee
amounted to concealment of particulars of her income or had furnished
inaccurate particulars of such income, the provisions of section 271(1)(c)
could not be invoked. The Assessing Officer had to form an opinion that it was
a case where penalty proceedings had to be initiated and reasons were required
to justify and order imposing penalty.

ii)  The basic parameters had
not been fulfilled. In response to the notice, the assessee had submitted a
reply stating that after she was served notice u/s. 143(2), she had furnished
all the required documents called for during the course of assessment and that
the Assessing officer had asked for the details on the rebate claimed by her
according to the DTAA and in response to the show-cause notice, the assessee
had mentioned that she had inadvertently claimed a rebate of 50% on the total
tax payable and had submitted a revised computation withdrawing the rebate
claimed. The assessee had filed a revised computation statement and
accordingly, the assessment was completed.

iii)  Thus, the withdrawal of
the rebate claim was voluntary and could not be brought within the expression
concealment of particulars or furnishing inaccurate particulars. There was no
concealment of income nor submitting of inaccurate information, as all the
relevant details were furnished by the assessee. There had been no
misrepresentation of the facts to the Assessing Officer and that the
inadvertent claim to rebate on the tax liability which had admittedly been paid
in the other country showed that the intention of the assessee was not to
furnish inaccurate particulars or conceal her income.

iv) The Assessing Officer had
not rendered any finding that the details supplied by the assessee in her
return were erroneous or false or that a mere claim for rebate amounted to
furnishing of inaccurate particulars. Thus the order passed u/s. 271(1)(c)
levying penalty was unsustainable.”