2010 (12) TMI 106 - HC - Income Tax

Penalty Assessee claiming revenue expenditure Penalty imposed holding expenditure capital Finding by commissioner (Appeal) as well as Tribunal that issue debatable Penalty not attracted

Summary

Issues:
1. Condonation of delay in refiling the appeal.
2. Tax treatment of interest accrued on FDR.
3. Penalty imposition under section 271(1)(c) of the Act.
4. Decision of the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal regarding penalty.

Condonation of Delay:
The judgment begins by condoning a delay of 90 days in refiling the appeal for reasons stated in the application, thereby allowing the appeal to proceed despite the delay.

Tax Treatment of Interest Accrued on FDR:
The issue arises from the assessee not offering interest accrued on Fixed Deposit Receipt (FDR) for tax. The Assessing Officer initiated penalty proceedings, but the Commissioner of Income-tax (Appeals) deleted the penalty. The Income-tax Appellate Tribunal upheld this decision, emphasizing that there was no concealment of material facts by the assessee.

Penalty Imposition under Section 271(1)(c) of the Act:
The Assessing Officer imposed a penalty of Rs. 7.50 lakhs on the assessee under section 271(1)(c) of the Act. However, the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal ruled in favor of the assessee, stating that there was no concealment of income or furnishing of inaccurate particulars of income, leading to the dismissal of the penalty.

Decision of the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal:
The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal both held that the assessee did not conceal any material facts, and therefore, the penalty imposition was unwarranted. They emphasized that the claim made by the assessee, although not accepted by the Assessing Officer, did not amount to concealment or furnishing of inaccurate particulars of income. The Tribunal affirmed that there was no basis for penalty imposition, as there was a genuine difference of opinion regarding the tax treatment of the interest accrued on FDR. Consequently, the appeal was dismissed, as no question of law arose for determination in this context.