2013 (10) TMI 1135 - AT - Income Tax

Penalty u/s 271(1)(c) Held that - No penalty u/s 271(1)(c) of the Act is leviable in the given facts and the circumstances of the case - There can be no dispute with regard to the position of law that under section 271(1)(c) penalty can be levied only if either the act of concealment of particulars of income or furnishing of inaccurate particulars of income is found to have been committed by the assessee - By the mere reason of such concealment or of furnishing of inaccurate particulars alone, the assessee does not, ipso facto, become liable to a penalty - Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271 (1)(c) - A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - Such a claim made in the return cannot amount to furnishing inaccurate particulars - the Penalty Deleted Decided in favour of Assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2005-06.

Detailed Analysis:

1. Background and Assessment Details:
The appeal concerns an assessee for A.Y. 2005-06 against a penalty order passed under section 271(1)(c) of the Income Tax Act, 1961. The assessee initially declared a total income of Rs. 3,53,690 but later revised it to Rs. 8,82,690 after a search action. The additions made during assessment included undisclosed income, bogus share capital, and unaccounted amount received against the sale of a flat. Subsequently, penalty proceedings were initiated leading to the imposition of the impugned penalty.

2. Legal Position on Penalty under Section 271(1)(c):
The Tribunal examined the legal framework for levying penalties under section 271(1)(c) of the Act. It emphasized that penalty imposition requires a deliberate act of either concealing income particulars or furnishing inaccurate income details. Mere negligence or omission does not constitute deliberate concealment. The Tribunal referenced judicial pronouncements and highlighted that penalty imposition is discretionary and not automatic, even in cases of quantum additions or inaccurate particulars. The Supreme Court's ruling in CIT vs. Reliance Petroproducts Pvt. Ltd clarified that penalty can only be imposed if inaccurate particulars are furnished, not merely due to incorrect claims.

3. Decision and Rationale:
After a detailed analysis of the facts, the Tribunal concluded that no penalty under section 271(1)(c) was applicable in this case. It noted that the additions made were part of the surrendered income during search proceedings and covered by Explanation 5 of section 271(1)(c). The Tribunal found the decisions cited by the CIT(A) to be distinguishable and relied on a previous bench decision to delete the penalty. Consequently, the impugned penalty of Rs. 14,99,553 was set aside, and the appeal of the assessee was allowed.

4. Outcome:
The Tribunal pronounced the order on 26th September 2013, allowing the appeal of the assessee and directing the deletion of the imposed penalty under section 271(1)(c) for A.Y. 2005-06.

This comprehensive analysis highlights the legal intricacies surrounding penalty imposition under section 271(1)(c) of the Income Tax Act, 1961, and provides a detailed overview of the Tribunal's decision in the referenced case.