2014 (6) TMI 808 - AT - Income Tax

Deletion of penalty u/s 271(1)(c) of the Act - Facts properly not appreciated Held that - The addition in the second round of litigation on the basis of absence of correct address of the parties and in the absence of PAN - the CIT(A) has deleted the penalty u/s 271(1)(c) on the ground that there was clear difference of opinion between the two CIT(A) s - when there were two divergent opinions are possible on an issue, penalty u/s 271(1)(c) could not be levied - CIT(A) has observed that the assessee has offered an explanation regarding sundry creditors which was not found acceptable by the AO - there is no mistake in the order of the CIT(A) while deleting the penalty u/s 271(1)(c) of the Act, as the assessee has disclosed all the material facts before the AO and there were clearly two divergent opinions in separate two rounds of litigation before the CIT(A)s and the lease rentals received from the same sundry creditor parties were accepted by the AO thus, the order of the CIT(A) is upheld Decided against Revenue.

Summary

Issues: Appeal against deletion of penalty under section 271(1)(c) for assessment year 1999-2000.

Analysis:
1. Grounds of Appeal: The Revenue appealed against the deletion of penalty of Rs.3,48,760/- by the CIT(A), citing that the penalty was rightly imposed on the assessee for filing inaccurate particulars of income under section 271(1)(c) of the Act.

2. Contentions: The learned DR argued that the assessee filed inaccurate particulars of income, which was confirmed in appeal before the CIT(A), justifying the penalty imposed by the AO. The DR referred to the penalty order of the AO to support the Revenue's case.

3. Judicial Review: The Tribunal reviewed the orders of the AO and the CIT(A) along with the written submissions by the assessee. It was noted that the CIT(A) had deleted the addition of Rs.9,96,455/- in the first round of litigation, but the addition was confirmed in the second round based on the absence of correct party addresses and PAN details. The CIT(A) deleted the penalty under section 271(1)(c) citing a clear difference of opinion between the two CIT(A)s in separate rounds of litigation.

4. Decision: The Tribunal upheld the CIT(A)'s decision to delete the penalty, emphasizing that the assessee disclosed all material facts, and there were divergent opinions in different rounds of litigation. The AO accepted lease rentals from the same sundry creditor parties, supporting the assessee's case. Therefore, the Tribunal confirmed the CIT(A)'s order and dismissed the Revenue's appeal.

5. Conclusion: The appeal by the Revenue against the deletion of penalty under section 271(1)(c) for the assessment year 1999-2000 was dismissed by the Tribunal, affirming the CIT(A)'s decision based on the divergent opinions in separate rounds of litigation and the acceptance of lease rentals by the AO from the same parties.