Facts of the Case

The assessee, Shri Anurag Kumar Gupta, proprietor of M/s Anurag Enterprises, was engaged in business activities and filed the return of income for the relevant assessment year.

During assessment proceedings under Section 143(3), the Assessing Officer observed discrepancies between the income declared by the assessee and receipts reflected in Form 26AS, where tax had been deducted at source under Sections 194C and 194J.

Based on these discrepancies, additions were made to the income. Subsequently, penalty proceedings under Section 271(1)(c) were initiated for alleged concealment of income or furnishing of inaccurate particulars.

Issues Involved

  1. Whether additions arising from Form 26AS mismatch automatically justify penalty under Section 271(1)(c).
  2. Whether the assessee had concealed income or merely failed to reconcile receipts properly.
  3. Whether penalty can be levied when additions are based on estimated or disputed income.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that there was no deliberate concealment of income.
  • Differences between Form 26AS and declared income were attributable to accounting or reconciliation issues.
  • All primary facts were available to the department through TDS records.
  • Penalty provisions should not apply where income determination involves estimation or interpretation.

Respondent’s (Revenue’s) Arguments

  • The Revenue argued that receipts appearing in Form 26AS were not fully disclosed in the return.
  • Failure to reconcile such receipts amounted to furnishing inaccurate particulars.
  • Therefore, imposition of penalty under Section 271(1)(c) was justified.

Court Order / ITAT Findings

  • Penalty proceedings are distinct from assessment proceedings.
  • Additions arising from differences in Form 26AS do not automatically establish concealment.
  • Where the issue relates to reconciliation of receipts or estimation of income, penalty may not be warranted without clear evidence of deliberate concealment.

The ITAT evaluated the facts, evidences, and surrounding circumstances and adjudicated the penalty issue accordingly, emphasizing that concealment must be clearly established for invoking Section 271(1)(c).

Important Clarification by ITAT

Penalty for concealment cannot be imposed merely because additions were made during assessment. The Revenue must demonstrate conscious concealment or furnishing of inaccurate particulars; discrepancies in Form 26AS alone are insufficient.

Link to download the order -

https://itat.gov.in/public/files/upload/1662984506-ITA%20No.%20272%20Alld%202018%20Sh%20Anurag%20Kumar%20Gupta.pdf

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