2015 (5) TMI 1096 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - In this case, the Assessing Officer has not brought out any specific charge for which the penalty has been imposed on the assessee u/s 271(1)(c) of the Act. He has not brought out whether the assessee has concealed the particulars of income or whether the assessee has furnished inaccurate particulars of income. Assessing Officer in this case levied the penalty for both the charges without mentioning any specific charge. In CIT v. Atul Mohan Bindal (2009 (8) TMI 44 - SUPREME COURT) wherein considering the same provision, it observed that the assessing officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. Thus the satisfaction of the Assessing Officer about the concealment of particulars of income or furnishing of inaccurate particulars of such income is essential before levying any penalty u/s 271(1)(c). The Assessing Officer as is apparent from the penalty order has not satisfied about the concealment of particulars of income or furnishing of inaccurate particulars of income on the part of the assessee. On this basis itself the penalty deleted. -Decided in favour of assessee

Issues:
Penalty under section 271(1)(c) for assessment year 2005-06.

Analysis:
1. The appeal was filed against the penalty imposed on the assessee under section 271(1)(c) for the assessment year 2005-06. The Assessing Officer initiated penalty proceedings and imposed a penalty of 100% of the tax sought to be evaded, amounting to Rs. 5,24,845. The assessee appealed before the ld. CIT(Appeals), who upheld the penalty.

2. The crux of the issue lies in the interpretation of section 271(1)(c) of the Income Tax Act, 1961. The section allows for the levy of a penalty if the Assessing Officer is satisfied that the assessee has concealed income or furnished inaccurate particulars of income. It is crucial to note that penalty proceedings are distinct from assessment proceedings, and clear findings must be provided regarding the specific charge for which the penalty is imposed.

3. The Tribunal referred to legal precedents to emphasize the necessity of a clear finding on whether the penalty is imposed for concealment of income or furnishing inaccurate particulars of income. The case law highlighted the importance of the Assessing Officer stating the specific charge for which the penalty is being levied, failing which the penalty order would be invalid in law.

4. The Tribunal further discussed the distinction between concealment of income and furnishing inaccurate particulars of income. It was noted that the Assessing Officer must establish the charge against the assessee based on material on record. The burden of proof lies on the Assessing Officer to demonstrate either non-disclosure of income or the presence of deeming fictions created under the explanations.

5. In this particular case, the Assessing Officer failed to specify the charge for which the penalty was imposed under section 271(1)(c). The penalty order did not provide a clear finding on whether the assessee concealed income or furnished inaccurate particulars of income. As per legal principles, the satisfaction of the Assessing Officer regarding the concealment or furnishing of inaccurate particulars of income is essential before levying any penalty under this section.

6. Consequently, the Tribunal allowed the appeal filed by the assessee, highlighting the lack of specific charges mentioned in the penalty order as a ground for deleting the penalty. The judgment underscores the importance of clarity and proper application of mind by the Assessing Officer while determining the basis for imposing penalties under section 271(1)(c) of the Income Tax Act, 1961.

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