2011 (2) TMI 957 - HC - Income Tax

Penalty u/s 271 - Tribunal deleted penalty levy - Held that - A concurrent finding has been recorded on facts that there was valid explanation that the assessee had raised debatable issue for claiming the expenditure and disallowance is no ground for levying penalty. Mere erroneous claim in absence of any concealment or giving of inaccurate particulars is no ground for levying penalty - Appeal is dismissed

Summary

Issues involved:
1. Appeal against deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Appeal against deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961

The appeal was filed by the revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Delhi Bench, relating to the assessment year 1993-94. The primary contention was the deletion of a penalty of Rs.4,78,640/- imposed on the assessee for furnishing inaccurate particulars of income. The revenue raised substantial questions of law challenging the Tribunal's decision to delete the penalty. The core issue was whether the Tribunal was correct in deleting the penalty under Section 271(1)(c) of the Act.

In the judgment, the Court considered the arguments put forth by both parties. The revenue contended that the burden was on the assessee to prove no concealment, especially when the explanation offered by the assessee was not accepted in the quantum proceedings. On the other hand, the assessee argued that there was no deliberate concealment, and the income classification issue was debatable. The Tribunal and the CIT(A) had both concluded that there was no deliberate concealment or misstatement of facts by the assessee.

The Court analyzed the principles established in previous cases, including the initial burden on the assessee to prove no concealment or deliberate inaccuracy in particulars. It was noted that the CIT(A) and the Tribunal had specifically found no deliberate concealment or misstatement of facts in the case at hand. The Court highlighted that the income classification issue was debatable, and the Tribunal had previously accepted a similar plea in a related case involving the assessee's sister concern.

Based on the findings and reasoning provided by the CIT(A) and the Tribunal, the Court concluded that the revenue's arguments lacked merit. The Court cited previous judgments to support its decision, emphasizing that a debatable issue or an erroneous claim, in the absence of concealment or inaccurate particulars, was not sufficient grounds for levying a penalty under Section 271(1)(c). As a result, the Court dismissed the appeal, stating that no substantial question of law arose for consideration in the case.

In summary, the judgment addressed the appeal against the deletion of a penalty under Section 271(1)(c) of the Income Tax Act, 1961, focusing on whether the Tribunal's decision to delete the penalty was justified. The Court analyzed the arguments presented by both parties, considered relevant legal principles, and ultimately dismissed the appeal based on the findings and reasoning provided by the CIT(A) and the Tribunal.