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Penalty u/s 271(1)c

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Yogesh Sadashiv Kulkarni

Chartered Accountant

21 Points Posted on 08 April 2014

Hello Everyone,

After completion of assessment u/s 143(3), One of our clients has got notice u/s 274 asking to show cause why penalty u/s 271(1)C should not be levied for concealing income details, which is Interest on Income tax refund. (happened untentionally).

My question: Is there any case law/ circular/notification through which we can reply for non levy of penalty?.

Thanks in advance.

Replies (1)

Guest

Posted on 09 April 2014

You can reply requesting for non levy of penalty as the error was unintentional (assuming that you have paid the additional tax promptly).

But then, it is clear from Explanation 1(B) to sec. 271(1)(c) of the Act that while computing the total income of assessee, if the assessee fails to prove that there is bonafide explanation to omit the income then there will be a deemed concealment by the assessee.

MAK Data P. Ltd vs. CIT (Supreme Court)

Under Explanation 1 to s. 271(1)(c), voluntary disclosure of concealed income does not absolve assessee of s. 271(1)(c) penalty if the assessee fails to offer an explanation which is bona fide and proves that all the material facts have been disclosed. It is the statutory duty of the assessee to record all its transactions in the books of account, to explain the source of payments made by it and to declare its true income in the return of income filed by it from year to year.