2010 (9) TMI 280 - HC - Income Tax

Penalty - disallowance of expenses - which was an excess expenditure claimed by the assessee on account of difference between unaudited and audited figures - business loss was not accepted by the AO - Held that - change in the head of income by the AO from business loss to speculative loss had made the assessee disentitled to thereby resulted in addition to the total income of the assessee - mere treatment of the business loss as speculation loss by the AO does not automatically justify inference of concealment of the income justifying imposition of penalty under section 271(1)(c) of the Income Tax Act - assessee is not liable to pay penalty under Section 271(1)(c) of Act - appeal is dismissed

Summary

Issues:
Challenge to order under Section 260A of Income Tax Act for penalty imposed under Section 271(1)(c) for Assessment Year 1999-2000.

Analysis:
1. The Tribunal set aside the penalty under Section 271(1)(c) for disallowance of expenses based on unaudited statements, as the assessee adjusted the difference in the revised return, showing no deliberate attempt to conceal income or furnish inaccurate particulars.
2. The penalty for disallowance under Section 43B was deleted as the tax audit report was not available before filing the return, showing no deliberate attempt by the assessee to conceal income.
3. The penalty for late deposit of service tax interest was set aside as it was compensatory, not penal, and an allowable deduction against business profits.
4. The Tribunal held that a claim made in consonance with Tribunal orders does not imply concealment of income, leading to the deletion of penalty on disallowable interest under section 10A.
5. The penalty for fall in value of shares held in stock in trade was cancelled as the assessee's belief in treating the loss as business loss was found to be bona fide, not warranting penalty under Section 271(1)(c).
6. The respondent-assessee made full disclosure without concealment or furnishing inaccurate particulars, with the Tribunal finding the justification bonafide, falling within the ambit of Explanation 1 to Section 271, thus not liable for penalty.

Therefore, the appeal challenging the penalty under Section 271(1)(c) for the Assessment Year 1999-2000 was dismissed as the respondent-assessee was found not liable for penalty under the Income Tax Act.