By TIOL News Service

HYDERABAD, DEC 28, 2017: THE issue is - Whether when the assessee fails to mention any details at any stage of scrutiny proceedings as well as appellate proceedings, same amounts to a clear case of 'concealment of income'. YES is the verdict.

Facts of the case

The Assessee, an individual, engaged in the business of running a Xerox machine. The Assessee had filed his return for the relevant AY declaring its total income. In the course of the assessment proceeding, the income declared by the Assessee was accepted by the AO. Subsequently, the AO noted that the Assessee had made a number of transactions by cash deposits and withdrawals in the financial year. It was also observed that there were few deposits in Canara Bank at Kundhanbagh, Hyderabad, which were not reflected in the Assessee's balance sheet. Accordingly, the AO reoponed the assessment by issuing a notice u/s 148. In reply, the Assessee had filed his revised return and thereby admitted his additional income which were not reflected in his balance sheet. Therefore, the AO added the total cash deposits and completed the assessment. However, the same was set aside by the Tribunal and directed the AO to work out the peak credit. Accordingly, the AO accepted the additional income offered by the Assessee in response to a notice issued u/s 148. However, the AO again noted that the amount deposited in the bank account was not even reflected in the balance sheet and additional income was offered to tax only in the revised return. The AO believed that the case was of concealment of income and furnishing of inaccurate particulars of income and hence, notice u/s 148 was issued. In reply, the Assessee submitted that the peak credit working was based on the bank accounts in the name of Assessee and his wife. But, the AO refused to accept the Assessee's contentions. On appeal, the CIT(A) held that the revised return was filed only after cash deposits were detected by the Department and thus it was a clear-cut case of concealment of income.

On appeal, the Tribunal held that,

++ the assessment order itself makes it clear since the AO specified that the Assessee concealed particulars of income and furnished inaccurate particulars of income; therefore the AO did not find it necessary to strike off one of the reasons in the printed format. The only mistake, if any, is retaining the word "or". However, such trivial omission should not be considered in isolation, so long as the reasons for issuance of notice are made known to the Assessee;

++ the assessment order categorically indicates that penalty is leviable on both counts and even penalty order details the nature of default on the part of the Assessee, followed by a specific conclusion that the Assessee has concealed income and furnished inaccurate particulars of income. Under these circumstances, it cannot be assumed that the Assessee was not given a proper opportunity of responding to the notice by virtue of not striking off the word "or" in the penalty notice;

++ the AO has all through made it transparent that the initiation of proceedings were not only for 'concealment of penalty' but also for 'furnishing of inaccurate particulars of income'. In the assessment order as well as in the penalty order, it was specified. In the notice one of the portions was not struck of, to achieve the purpose for which notice was issued, and the Assessee has understood it in the same perspective. Therefore, Assessee never raised any objection with regard to issuance of notice, either before the AO or before the CIT(A);

++ the Assessee having declared the additional income only after discovery of the AO with regard to total deposits not reflected in the balance sheet, it was a clear case of 'concealment of income' and non-recording of the deposits in the balance sheet would amount to furnishing of inaccurate particulars of income. Therefore, the order passed by the CIT(A), in levying penalty, does not call for any interference.

(See 2017-TIOL-1812-ITAT-HYD)