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271(1)(c) - urgent

CA Shraddha (Mcom, CS Exe.) (Service) (224 Points)

19 December 2011

Hello friends,

An assessee due to complexity and peculiar nature of its business as well as high volume of transactions of business failed to disclose comi. income in return. Now the same is identified on going through 26AS statement and the same is offered to tax. But AO initiated penalty proceedings u/s. 271(1)(c). Any remedy available? Any case laws?

Thankyou.

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7 Replies

nagaraj (student) (206 Points)
Replied 19 December 2011

Apparantly non disclosure of income leads to Concealment of fact.

This should be taken care before filing the return of income...

If any time left try to make a revised return !!! ( based on your conduct with Assessing Officer )

1 Like

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 19 December 2011

Look, I think you filed the revised return after receipt of 143(1) intimation. It is believed that an opportunity of defending yourself might have been granted by the AO. Imposing penalty is discretionary on AO's part. Try to convince him that your intention was not to defraud the revenue.

You may consider filing appeal against the penalty order.

Regards,

1 Like

CA Chirag Haraniya (Chartered Accountant) (902 Points)
Replied 19 December 2011

When the assessee discovers any ommission or worng statement in the return filed. the Income Tax Act permits the filing of the revised return of income. The discovery of the omission or wrong statement may be by the assessee himself. Thus, if a revised return is validly filed under Sectiion 139(5) before the detection of concealment by the department, provided

(i) the omission was not deliberate

(ii) or was not the result of the fradulent conduct of the assessee and

(iii) was a voluntary act,

then penalty for concealment would not be levied.

( However if filing of revised return is after the same is detected by the AO, the assessee cannot plead for absolving himself from the penalty by filing the revised ROI)

1 Like

HAROON BASHA T.M.Z (CHARTERED ACCOUNTANT) (27 Points)
Replied 20 December 2011

Though Penalty is leviable it is not mandatory and is subject to discretionary power of the assessee. However first thing to levy penalty is to prove "mens rea" : a mind or intention to commit fraud. If there is no mens rea penalty should not be levied.

Penalty is only for wilful mistake

1 Like

Sunil (Internal Auditor) (334 Points)
Replied 30 December 2011

Dear Shardha

There is a Supreme Court Decision in Central Exciese Act in the case of Dharmendra Textile Processors (2007) 295 ITR 244 (SC) for penalty under sec.11AC of the act. It is decided in the case that Mensea is not an essential condition for imposing penalty. And also it is seen in some articles in this regard is that mensrea is considered only in procecution cases.