2014 (7) TMI 54 - HC - Income Tax

Deletion of penalty u/s 271(1)(c) of the Act Additions made by AO Held that - The assessee has succeeded up to Tribunal, against which the Tax Appeals are admitted - the issues were/ are debatable issue - both the authorities have rightly observed that the assessee had neither concealed the income nor furnished inaccurate particulars of income before the AO for which provision u/s 271(1)(c) was required to be invoked - there was neither concealment of income nor any inaccurate particulars were furnished by the assessee and even otherwise the issues with respect to the addition or disallowances are debatable Relying upon Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Limited 2010 (3) TMI 80 - SUPREME COURT - the orders passed by the Tribunal confirming the order passed by the CIT(A) in deleting the penalty imposed by the AO u/s 271(1)(c) of the Act is not required to be interfered with Decided against Revenue.

Summary

Issues:
1. Dismissal of appeal by Income Tax Appellate Tribunal confirming deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for AY 2004-05.

Analysis:
The High Court reviewed the impugned judgment and order passed by the Income Tax Appellate Tribunal (Tribunal) regarding the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal had dismissed the appeal by the revenue and upheld the order of the Commissioner of Income Tax (Appeals) deleting the penalty. The Assessing Officer had imposed the penalty based on certain additions made during the assessment proceedings for the relevant assessment year. However, the Commissioner of Income Tax (Appeals) set aside the penalty by considering various aspects, including non-charging of interest on a loan to a US subsidiary and excess credit period to customers. The Commissioner concluded that there was no concealment of income or furnishing of inaccurate particulars by the assessee, thus deleting the penalty.

The revenue, feeling aggrieved by the order of the Commissioner of Income Tax (Appeals), appealed to the Tribunal, which also dismissed the appeal and confirmed the deletion of the penalty. The High Court, after hearing arguments from both sides, observed that the issues in question were debatable. The Court noted that the assessee had succeeded before the Tribunal on the issues held against them by the Assessing Officer. Considering the debatable nature of the issues and the absence of concealment or inaccurate particulars, the Court agreed with the lower authorities that the penalty under Section 271(1)(c) was not warranted. Citing the decision in Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Limited, the Court held that the penalty deletion was justified. Therefore, the High Court upheld the orders of the Commissioner of Income Tax (Appeals) and the Tribunal, dismissing the appeal against the deletion of the penalty under Section 271(1)(c) of the Act for the relevant assessment year.