2015 (3) TMI 1146 - HC - Income Tax

Penalty u/s 271(1)(c) - whether deduction under section 54F of the Act is applicable or not? - Held that - Where penalty is imposed in respect of any addition where the High Court has admitted the appeal on substantial question of law then the sustainability of the addition itself becomes debatable and in such circumstances penalty cannot be levied under section 271(1)(c) of the Act. Penalty can only be imposed for concealment of material particulars or furnishing of inaccurate particulars by the assessee. In the facts of the present case we are of the view that the assessee cannot be held guilty of the concealment of any material particulars of his income or having furnished inaccurate particulars of such income so as to attract the provisions of section 271(1)(c) of the Act. - Decided in favour of assessee

Summary

Issues:
Penalty imposition under section 271(1)(c) of the Act for alleged concealment of material facts by the assessee for the assessment year 2008-09.

Analysis:
The appeal pertains to the imposition of a penalty on the assessee for allegedly concealing material facts during the assessment year 2008-09. The Assessing Officer imposed the penalty, which was challenged in the appeal and upheld. However, the Tribunal later set aside the order, stating that there was no material concealment by the assessee and that the penalty was not imposable. The Tribunal canceled the penalty imposed under section 271(1)(c) of the Act, leading to the Revenue filing the current appeal. The primary issue revolved around whether the assessee had concealed material particulars of income or furnished inaccurate particulars, as required for imposing a penalty under the Act.

The facts of the case involved the sale of a commercial building by the assessee and his claim for deduction under sections 54 and 54F of the Act. The denial of the benefit under section 54F was based on an inspection revealing the demolition of the purchased property for a hospital and maternity home construction. The High Court was yet to decide on the benefit under section 54F, as the appeal was pending. The substantial questions of law raised included the Tribunal's authority to delete the penalty based on the High Court's admission of the assessee's petition and the satisfaction of penalty ingredients under section 271(1)(c) of the Act.

The High Court analyzed the case and found that the assessee had provided full details of the properties involved in the transactions, indicating no concealment of material information. The denial of the benefit under section 54F was still under consideration by the High Court, making the imposition of a penalty premature. The Tribunal's decision was upheld, emphasizing that penalty could only be imposed for concealment or furnishing inaccurate particulars, which were not evident in the present case. The Court dismissed the appeal, stating that no substantial question of law warranted further consideration, and no costs were awarded in the matter.