2012 (2) TMI 171 - HC - Income Tax

Waiver of penalty u/s 271(1)(c) dis-allowance of bad debts assessee funished records & confirmations during penalty proceedings non-examination of documents by A.O./CIT(A) Held that - Tribunal went into the details, examined the records and the confirmations which were furnished by the assessee and has come to the conclusion that the levy of penalty u/s 271(1)(c) was not justified. In the present case, A.O. and the CIT(A) failed to consider/examine the veracity and correctness of the said papers without any reason. Revenue is unable to show what and where the tribunal has made a factual error or mistake Decided against the Revenue.

Summary

Issues Involved:
1. Deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal.
2. Assessment of taxable income for the assessment year 2001-02.
3. Disallowance of bad debts on three heads.
4. Additional evidence submitted by the assessee before the CIT(Appeals).
5. CIT(A) decision on dealer discount, special drought discount, and subsidy.
6. Respondent-assessee's submissions in penalty proceedings.
7. Justification of penalty under Section 271(1)(c) by the CIT(Appeals).
8. Tribunal's examination of records and confirmations furnished by the assessee.

Analysis:
1. The High Court considered the appeal against the deletion of penalty under Section 271(1)(c) by the Income Tax Appellate Tribunal. The assessee had initially reported a loss, but the Assessing Officer made additions resulting in a taxable income of Rs.2,59,52,863/-. The CIT(Appeals) granted relief, except for specific additions, leading to a negative taxable income of Rs.4,35,20,671/ for the assessment year 2001-02.

2. The CIT(A) upheld the additions related to dealer discount, special drought discount, and subsidy. The respondent-assessee provided additional evidence, including confirmations and relevant documents, in the penalty proceedings. However, the Assessing Officer did not adequately examine these aspects and documents in the penalty order under Section 271(1)(c).

3. The CIT(Appeals) confirmed the penalty, stating the appellant concealed taxable income without providing sufficient material to prove otherwise. The tribunal, after examining the records and confirmations, concluded that the penalty was unjustified. The tribunal found that the Assessing Officer and CIT(A) failed to properly consider the fresh material/evidence submitted by the respondent-assessee.

4. The tribunal's decision was based on a thorough examination of the evidence presented by the assessee, which was not adequately addressed by the lower authorities. The High Court dismissed the appeal, stating that no substantial question of law arose for consideration, and upheld the tribunal's decision to dismiss the penalty under Section 271(1)(c) due to the lack of factual errors or mistakes in the tribunal's assessment.