2014 (2) TMI 71 - HC - Income Tax

Concealment of income - Held that - The assessee has produced certificate from the competent authority who has issued a certificate that the distance of the impugned property is more than 8 kms. from the municipal limit of Sonepat and the District Town Planner is a competent authority to issue a certificate - The Government authority who has issued a certificate to the assessee is a competent authority to issue the certificate - Penalty cannot be levied - The Assessing Officer treated the penalty proceedings as mere continuance of the assessment proceedings and did not bother to make its penalty proceedings as self-contained one, as such penalty order is not sustainable - The Assessing Officer is duty bound to consider the entire material at the time of levying the penalty afresh, independently of the assessment proceedings to levy penalty - This has not been done by the Assessing Officer - As such, penalty cannot be sustained - Relying upon the decision in CIT v. Reliance Petroproducts P. Ltd. 2010 (3) TMI 80 - SUPREME COURT - Mere making of a claim which was ultimately found to be unsustainable may not by itself amount to furnishing of inaccurate particulars regarding the income - Decided against Revenue.

Issues Involved:

1. Whether the Tribunal's findings that the assessee was not guilty of furnishing inaccurate particulars of income were made without properly appreciating the facts available on record.
2. Whether the Tribunal was right in law in confirming the deletion of penalty by the Commissioner of Income-tax (Appeals) without considering the judgment of the Supreme Court in Union of India v. Dharamendra Textile Processors.

Detailed Analysis:

Issue 1: Tribunal's Findings on Furnishing Inaccurate Particulars of Income

The Tribunal upheld the deletion of penalty by the Commissioner of Income-tax (Appeals), noting that the assessee had furnished a certificate from the Sub Divisional Engineer, PWD, stating that the distance from the Sonepat Municipal Committee to the village in question was 8.2 km. The Tribunal observed that there were various certificates showing different distances, and concluded that there was no intention on the part of the assessee to furnish inaccurate particulars. The Tribunal emphasized that:

- There was no deliberate concealment of income by the assessee.
- The certificate relied upon by the assessee was from a Government agency, and there was no evidence to prove it was false.
- The penalty proceedings being penal in nature required the Revenue to prove that the assessee was guilty of deliberate non-disclosure.
- The Assessing Officer collected multiple certificates showing different distances but did not question the authority issuing the certificate relied upon by the assessee.
- Penalty proceedings are separate from assessment proceedings and should be based on fresh material, not merely on findings from the assessment.

Issue 2: Tribunal's Confirmation of Deletion of Penalty

The Tribunal and the Commissioner of Income-tax (Appeals) deleted the penalty imposed under section 271(1)(c) of the Act, which was challenged by the Revenue. The Tribunal's decision was supported by various judicial precedents, including:

- Price Waterhouse Coopers Pvt. Limited's case: The Supreme Court noted that even reputed firms could make inadvertent errors without intending to conceal income or furnish inaccurate particulars.
- Sidhartha Enterprises case: The Punjab and Haryana High Court held that penalty is imposed only when there is a deliberate default, not for mere mistakes.
- Reliance Petroproducts P. Ltd. case: The Supreme Court stated that making an unsustainable claim does not amount to furnishing inaccurate particulars.

The Tribunal found that the assessee's reliance on the certificate from a competent authority was a bona fide act, and there was no evidence to prove the certificate was false or obtained through unfair means. The Tribunal concluded that the penalty proceedings lacked fresh material to support the imposition of penalty, and the evidence did not establish that the assessee consciously concealed income or furnished inaccurate particulars.

Conclusion:

The High Court dismissed the appeals, answering the substantial questions of law against the Revenue and in favor of the assessee. The court upheld the Tribunal's findings that there was no deliberate intention to furnish inaccurate particulars by the assessee and that the deletion of penalty was justified based on the evidence and judicial precedents.

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