2013 (11) TMI 6 - AT - Income Tax

Penalty u/s 271(1)(c) of the Income Tax Act Held that - Addition made due to difference in production sheet and excise records. From the facts of the case, we find that this discrepancy arose because proper reconciliation of records could not be arrived at by the assessee due to the cumbersome process of production Therefore, relying upon the judgment in the case of Navjivan Oil Mills v. CIT, 2001 (7) TMI 81 - GUJARAT High Court , this is not a fit case for levy of penalty No penalty - Decided in favor of Assessee.

Summary

Issues:
Penalty under section 271(1)(c) for furnishing inaccurate particulars and concealment of income.

Analysis:
The appeal was filed by the assessee against the order of the CIT (A) confirming the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act. The assessee argued that the penalty was unsustainable as they had not furnished inaccurate particulars or concealed any income. The AO had imposed a penalty of Rs. 2,09,323 for the assessment year 1993-94 based on additions made during the search conducted on the business premises. The CIT (A) upheld the penalty, stating that the appellant had suppressed production based on seized materials, justifying the penalty. The appellant contended that the penalty proceedings were barred by limitation, the AO did not consider their submissions, and the addition was made on an estimate basis. However, the CIT (A) disagreed, upholding the AO's decision. The appellant then appealed to the ITAT.

The ITAT reviewed the case and observed that the addition of Rs. 3,64,039 was sustained by the Tribunal in the quantum appeal due to discrepancies in production records and excise registers. The ITAT noted that the discrepancy arose from the complex production reconciliation process, not deliberate concealment. Relying on precedents cited by the appellant, the ITAT concluded that this was not a suitable case for penalty imposition. Consequently, the ITAT overturned the penalty imposed by the AO and upheld by the CIT (A).

In conclusion, the ITAT allowed the appeal of the assessee, ruling in favor of the appellant and deleting the penalty levied under section 271(1)(c). The judgment highlighted the importance of considering the circumstances leading to discrepancies and the intention behind the errors before imposing penalties for inaccurate particulars or income concealment.

Order pronounced in the open Court on 13-09-2013.