2020 (2) TMI 1175 - ITAT DELHI

Penalty levied u/s 271(1)(c) - assessee has furnished inaccurate particulars of its income while claiming the expenditure for which neither the liability has arisen nor revenue has accrued - CIT-A deleted the penalty - HELD THAT:- Penalty proceedings u/s 271(1)(c) were neither initiated by the AO during assessment proceedings nor by the Ld. CIT(A) during the appellate proceedings in respect of the aforesaid disallowance - CIT(A) has also not levied any penalty under Section 271(1)(c) of I.T. Act.

Scope of penalty proceedings u/s 271(1)(c) of IT Act cannot be widened later to include within its scope such additions which were not sought to be covered within the scope of penalty U/s 271(1)(c) of IT Act, at the time when penalty proceedings were initiated and assessment order was passed.

Regarding disallowance and consequent addition amounting to aforesaid ₹ 102,60,80,000/- was highly disputable issue, on which two different views were legitimately possible. There was full disclosure of materials facts and circumstances by the assessee in the Returns of Income and during assessment proceedings; and that no relevant information of fact was withheld by the assessee from the revenue’s authorities during assessment proceedings. When there was full disclosure of materials facts and circumstances by the assessee in the Return of Income and during assessment proceedings; then, on a the disputable issue of quantum addition, on which two different views are legitimately possible, of which the one favourable to the assessee has been adopted by the assessee; eventually, the Assessee may or may not succeed in the quantum proceedings and the disputable issue, on which two different views were possible, may eventually be decided against the Assessee in quantum proceedings

Assessee cannot be burdened with penalty u/s 271(1)(c) if on a disputable issue of quantum addition, on which two different views were legitimately possible, the Assessee decided to adopt the view which was favourable to the assessee; in a case in which all necessary details were filed by the Assessee in support of the claim and when no material inaccuracies were found in these details, and when the assessee is not guilty of suppression of any material facts. In quantum proceedings, when two different views are legitimately possible on a disputable claim made by the assessee; one of which is favourable to the assessee, the multiplicity of legitimate views and disputability of the claim has the effect of excluding the scope of penalty U/s 271(1)(c) in respect of such disputable claim even if the disputable claim is decided against the assessee in quantum proceedings; because in such a case the disputable claim made by the assessee neither amounts to ‘concealment of particulars of income’ nor to ‘furnishing of inaccurate particulars of income’

CIT(DR) has failed to bring any facts and circumstances legal provision or judicial precedents to our attention to persuade us to take a view different from the view taken by the Ld. CIT(A) deleting the aforesaid penalty vide his impugned appellate order dated 01.12.2016 - this is not a fit case for penalty under Section 271(1)(c) - Decided in favour of assessee