ITAT, HYDERABAD BENCH `B’, HYDERABAD ,
V. Kumara Swamy Naidu Vs. ITO,
APPEAL NO: ITA No. 108/Hyd/2009,
DECIDED ON May 14, 2010
5. We have heard both the parties and perused the material on record. The main contention of the assessee’s counsel is that the assessee has co-operated with the Department in the course of assessment proceedings, the assessee also paid the due tax. Because of the smallness of amount involved, the assessee has not filed an appeal in the case of quantum addition. The assessee has given bona fide explanation for the lapse which was not accepted by the assessing officer. That itself cannot be a reason for levying penalty. Alternatively, she prayed to levy minimum penalty. Admittedly, in the present case, the assessee has claimed `development expenditure’ w.r.t. capital assets which was not able to substantiate with the evidence in spite of giving opportunity to the assessee. Having regard to these circumstances, the assessing officer reached the conclusion that the assessee has furnished inaccurate particulars of income thereby it lead to concealment of true income and levied maximum penalty u/s 271 (1) ( c ) of the Income Tax Act. We have carefully gone through the factual position of the case. The assessing officer has given ample opportunity to the assessee to prove the expenses incurred towards the development charges. The assessee had not furnished any evidence. The primary burden cast upon the assessee was not discharged. In these circum stances, it is to be construed that assessee has concealed his income and there is a provision regarding deemed concealment in the form of explanation in section 271 (1) (c) of the IT Act which reads as follows:
Explanation 1: Where in respect of any facts material to the computation of the total income of any person under this Act, (A) Such person fails to offer an explanation or offers an explanation which is found by the assessing officer or the Commissioner (Appeals) or the Commissioner to be false, or
(B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub section, be deemed to represent the income in respect of which particulars have been concealed.”
6. It is clear from the above Explanation that the statute visualized that the assessment and penalty proceedings to be wholly distinct and independent of each other. Part B of the Explanation is that the person must provide an explanation which is bona fide and he should substantiate that explanation by some evidence with him. If he fails to do so, his Explanation is treated as untenable. Only when the assessee is able to offer reasonable explanation, based on some evidence, the assessing officer cannot invoke Part B of the Explanation unless the assessing officer has given finding based on some contradictory evidence to disprove that explanation offered by the assessee false. When the assessee is not able to substantiate the explanation and failed to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then the amount added or disallowed in computing the total income of the assessee as a result thereon, shall, be deemed to be represent income in respect of which particulars have been concealed. In the present case, assessee is not able to substantiate his claim of expenditure with any evidence and in the circumstances, we are of the opinion that penalty is leviable u/s 271 (1) (c) of the Act.