2010 (10) TMI 617 - AT - Income Tax

Penalty u/s.271(1)(c) - Assessing Officer had made additions/disallowances towards bottling charges suppression of sales etc - It is a settled proposition of law in matters of penalty that disallowances of expenditure for technical reasons and the consequent additions by itself could not make out a case of concealment against an assessee to justify imposition of penalty u/s.271(1)(c) - there is no case of concealment or furnishing of inaccurate particulars for the purpose of section 271(1)(c) - Penalty is deleted - Appeal is allowed

Summary

Issues:
Penalty appeal u/s.271(1)(c) for assessment year 1992-93 - Addition/disallowances towards bottling charges, suppression of sales - Deletion of penalty by ITAT based on earlier Supreme Court judgment - Challenge by Revenue before High Court - Reexamination directed by High Court based on subsequent Supreme Court judgment and Explanation u/s.271 - Assessment of concealment of income based on explanations offered by assessee - Application of Explanation to Section 271 - Interpretation of additions made by Assessing Officer - Determination of concealment of income or furnishing inaccurate particulars.

Analysis:

1. Background and Initial Assessment:
The appeal pertains to a penalty appeal u/s.271(1)(c) for the assessment year 1992-93 filed by the assessee, who was a liquor dealer. The Assessing Officer had made additions/disallowances towards bottling charges and suppression of sales, resulting in a penalty of Rs.2,69,974 being levied on the assessee.

2. Tribunal's Initial Decision and High Court Challenge:
The ITAT, Bangalore 'A' Bench initially deleted the penalty based on a Supreme Court judgment. However, the High Court directed the Tribunal to reexamine the issue in light of a subsequent Supreme Court judgment and the Explanation inserted u/s.271. The matter was brought before the Tribunal for reconsideration.

3. Examination of Concealment of Income:
The Tribunal considered the facts of the case and the justification of penalty, emphasizing the need to determine whether the additional income offered by the assessee amounted to concealment. The Tribunal highlighted that the additions made by the Assessing Officer were regular business expenses and did not inherently indicate concealment.

4. Interpretation of Explanation to Section 271:
The Tribunal analyzed the Explanation to Section 271, which provides rules of evidence for cases where explanations offered by the assessee are not satisfactory. It clarified that the Explanation is a rule of evidence applicable when explanations are found unacceptable. In this case, the Tribunal found that the additions made did not constitute concealment or furnishing of inaccurate particulars.

5. Conclusion and Decision:
Based on the analysis of the facts and legal provisions, the Tribunal concluded that the additions made by the Assessing Officer did not amount to concealment of income or furnishing inaccurate particulars to attract the penalty under section 271(1)(c). Consequently, the penalty imposed was deleted, and the appeal was allowed.

In summary, the Tribunal's decision focused on the interpretation of the legal provisions, including the Explanation to Section 271, to determine the presence of concealment of income. The Tribunal emphasized the need for satisfactory explanations from the assessee and concluded that the additions made did not signify concealment, leading to the deletion of the penalty.