2014 (1) TMI 1331 - AT - Income Tax

Deletion of penalty u/s 271(1)(c) of the Act Held that - The decision in ITO vs. Balotra Cooperative Marketing Society Ltd. followed - To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous - 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 order of the CIT(A) upheld Decided against Revenue.

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act.

Analysis:
1. The appeal was filed by the department against the order of the Ld. CIT(A) deleting the penalty imposed under section 271(1)(c) of the Income Tax Act. The case involved the assessee declaring an income for the first time, which led to the Assessing Officer making additions based on doubts regarding the opening capital shown by the assessee.

2. The Assessing Officer imposed a penalty under section 271(1)(c) on the grounds of concealed income and discrepancies in the capital account. However, the assessee argued that the addition was made on an estimated basis and not as concealed income. The Ld. CIT(A) observed that the Assessing Officer's penalty was based solely on the estimated addition confirmed by the ITAT, which was not sufficient for penalty imposition. The CIT(A) referred to various judgments to support the view that penalty proceedings should be separate from assessment proceedings.

3. The ITAT upheld the CIT(A)'s decision, emphasizing that the addition made by the Assessing Officer and sustained by the ITAT was only on an estimate basis, not indicative of concealed income. The Tribunal cited a previous case where it was held that inaccurate claims do not amount to furnishing inaccurate particulars of income, as required for penalty under section 271(1)(c).

4. Ultimately, the Tribunal dismissed the department's appeal, stating that the penalty was rightly deleted by the CIT(A) as the addition was based on estimates and not evidence of concealed income. The decision was in line with previous judgments and the principles outlined by the Supreme Court regarding penalty imposition under section 271(1)(c) of the Income Tax Act.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the rationale behind the decision to dismiss the department's appeal against the deletion of the penalty.