2015 (11) TMI 572 - AT - Income Tax

Levying penalty under section 271(1)(c) - Assessing Officer held that the assessee had routed her undisclosed income in the garb of scrap sales and had also made incorrect claim of deduction in respect of the amount of alleged scrap sales - claim of the assessee for deduction under section 80-IC denied - Held that - The assessee submitted supportive bills and vouchers to justify the receipt of amount from sale of scrap before the Commissioner of Income-tax (Appeals) although the claim of the assessee for deduction under section 80-IC of the Act has been declined by the Revenue authority but rejection of the claim does not automatically attract penalty. Therefore, we reach to a logical conclusion that the Assessing Officer levied penalty in a hasty manner without assigning any justified and reasonable cause which was upheld by the Commissioner of Income-tax (Appeals) in a mechanical manner without going into the facts and circumstances of the case and ignoring this important fact that the assessee submitted details of ledger account, bills and vouchers during quantum appellate proceedings which cannot be ignored. Therefore, conclusion of the Assessing Officer that the assessee routed her own money earned from undisclosed sources in the garb of sale of scrap for levy of penalty under section 271(1)(c) is not sustainable. Finally, we hold that the penalty was imposed on the assessee without any justified reason and the same is not sustainable in view of our foregoing discussion and, therefore we direct the Assessing Officer to delete the penalty - Decided in favour of assessee.

Issues involved:
Assessment of penalty under section 271(1)(c) of the Income-tax Act, 1961 for concealing true particulars of income and furnishing inaccurate particulars of income.

Analysis:
1. The appeal was filed against the Commissioner of Income-tax (Appeals) order upholding the penalty under section 271(1)(c) for the assessment year 2008-09.
2. The assessee, engaged in manufacturing and trading of electrical home appliances, claimed deduction under section 80-IC of the Act. The Assessing Officer found discrepancies in the miscellaneous income related to scrap sales and interest.
3. The Assessing Officer treated the amount from scrap sales as undisclosed income and restricted the deduction under section 80-IC.
4. Penalty proceedings were initiated, and the Assessing Officer concluded that the assessee concealed true particulars of income, leading to the penalty imposition.
5. The appeal to the Commissioner of Income-tax (Appeals) was unsuccessful, resulting in the appeal to the Tribunal.
6. The assessee argued citing legal precedents that the claim for deduction should not attract penalty if it was debatable or disallowed by the Revenue.
7. Additional evidence was submitted during the appellate proceedings to support the genuineness of the scrap sales, which the Assessing Officer did not object to significantly.
8. The Departmental representative supported the penalty imposition based on the lack of supporting documents for scrap sales.
9. The Tribunal noted that the assessee provided evidence during the appellate proceedings to justify the scrap sales, similar to the previous year's accepted amount, indicating no concealment or inaccurate particulars.
10. Legal precedents were cited to support the argument that the rejection of a claim does not automatically warrant a penalty, especially when supporting evidence is subsequently provided.
11. The Tribunal concluded that the penalty was imposed hastily without justified cause, directing the Assessing Officer to delete the penalty.
12. The appeal of the assessee was allowed, and the penalty was deemed unsustainable.

This detailed analysis of the judgment highlights the issues, arguments presented, legal precedents cited, and the Tribunal's conclusion regarding the penalty imposition under section 271(1)(c) of the Income-tax Act, 1961.

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