1. e- News Journal July 2014
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Draft letter for reply to penalty proceeding U/s 271(1)(c)
By CA PRADEEP KUMAR SAXENA
FCA, ISA ( ICAI ), B.COM
Income Tax Officer
Ward – ….., Room No. …..
Vikas Bhawan,
New Delhi – 110 002
Sub : Penalty proceedings u/s 271(1)(c) of
the Income Tax Act, 1961 for the A.Y. 2003-
04
Ref. : xxxxxxxxxx PAN : xxxxxxxxxxx
Dear Sir,
With reference to above stated matter,
the date of hearing is fixed for today
i.e., 13.03.2014, I
wish to submit as under
1. That sec 271(1)(c ) says “has concealed the
particulars of his income or furnished
inaccurate particulars of [such income]”.
2. CIT Vs Reliance Petroproducts Pvt. Ltd.
(SC 2010) : The Honrable Supreme Court of
India has answered the question – “where
has assessee concealed the particulars of his
income or furnished inaccurate particulars
of such income ?”
Ans. - “There can be no disputes that
everything would depend upon the return
filed because that is the only document,
where the assessee can furnish the
particulars of his income. When such
particulars are found to be inaccurate, the
liability would arise.”
“It was pointed out that the term and quot :
inaccurate particulars & quot : was not
defined anywhere in the Act”
“The Court Came to the conclusion that
since sec 271(1)(c) indicated the
element of strict liability on the
assessee for the concealment or
for giving inaccurate particulars
while filing return” [para no. 8
of above case law, copy
enclosed].
3. Sec 271(1)(c) says that
(i) there has to be concealment of the
Particulars of the income of the assessee
(ii) the assessee must have furnished
inaccurate particulars of his income.
On going through the Assessment orders for
all the above assessment years, nothing
have mentioned that
(i) The assessee has concealed the
particulars of the income in her income tax
return filed by her.
(ii) That the assessee has furnished
inaccurate particulars of her income in her
income tax return filed by her.

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It is worth mentioning here that during the
asseement proceedings assessee had
cooperated
and furnished all the relevant
informations / documents / explanations
asked by A.O. and nothing concealed there
from.
Further, as per para no. 9 of the above case
law Supreme Court says “we must hasten
to add here that in this case, there is no
finding that any details supplied by the
assessee in its return were found to be
incorrect or erroneous or false. Such not
being the case, there would be no question
of inviting the penalty under section
271(1)(c) of the Act. A mere making of the
claim, which is not sustainable in law, by
itself, will not amount to furnishing
inaccurate particulars regarding the income
of the assessee. Such claims made in the
Return cannot amount to the inaccurate
particulars.”
4. As per para no. 10 of the above case
Hon’ble Supreme Court of the India says “It
was upto the authorities to accept its claim
in the Return or not. Merely because the
assessee had climed the expenditure,
which claim was not accepted or was not
acceptable to the Revenue, that by itself
would not, in our opinion attract the
penalty under section 271(1)(c). If we accept
the contention
of the
Revenue then
in case of
every Return
where the
claim made is
not
acceptable by Assessing Officer for any
reason, the assessee will invite penalty
under section 271(1)(c). That is clearly not
the intendment of the legislature.”
5. In the case of the assessee, the ld. A.O.
had taken his views and made some
uncalled additions of Rs. 46,500/- [on a/c of
(i) Rs. 15500/- for alleged unexplained gifts
and (ii) Rs. 31,000/- for unexplained cash
credits u/s 68 of the I. T. Act, 1961] in the
hands of the
assessee.
That on appeal, the
ld. CIT(A) – XXVII,
New Delhi had
deleted the
addition to the
extent of Rs.
21,000/- while sustaining the addition of Rs.
25,500/-. Though, the ld. CIT(A) had
sustained addition to the extent of Rs.
25,500/-, yet keeping into consideration the
higher appeal filing cost and litigation cost,
the assessee had preferred not to file appeal
before Hon’ble ITAT, New Delhi
Whereas the ld. A.O.’s views could not be
proved in his assessment order that –
(i) The assessee has concealed the
particulars of the income in her Income Tax
Return filed by her.
(ii) The assessee has furnished inaccurate
particulars of her income in her income tax
return filed
by her.
That the assessee had neither concealed her
income nor furnished inaccurate particulars
of such income. It is not the case, where the
assessee had not disclosed any income
earned by her. The additions were made by
your ld. Predecessor, only because of
difference of opinion. As such, the provision
of section 271(1)(c) are not applicable.
As per para no. 5 of the above case,
Supreme Court says “the assessee claimed
that all the details given in the Return
were correct, there was no concealment of
income, nor were any inaccurate
particulars of such income furnished. It
was pointed out that disallowance made by
the Assessing Authority in the Assessment

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Order under section 143(3) of the Act
were solely on account of different
views taken on the same set of facts
and, therefore, they could, at the
most, be termed as difference of
opinion but nothing to do with
concealment of income or furnishing
of inaccurate particulars of such
income.”
6. It may also be relevant to point out
that similar notice issued by A.O.,
Ward – 35(3) dated 30.12.2011 was
responded and the points referred to
above we are emphasized (copy
enclosed). It was also stated that
A.O., during assessment proceedings
never asked the assessee to furnish
documentary evidence in support of
such gifts.
In the light of above facts and
keeping the reliance upon the Apex
Court Decision in the case of CIT,
Ahmedabad Vs. Reliance
petroproducts Pvt. Ltd., you are
hereby requested to kindly drop the
penalty proceedings u/s 271(1)(c) as
none of the conditions are fulfilled in
the case of the Assessee, as laid
down in the section 271(1)(c) of the
Income Tax Act, 1961. Submitted
Assessee
Place: Delhi
Date : ………2014
Encls. as above
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